by Teresa R. Manning
Colleges are quietly inflating prices and shifting costs between students, creating a system that rewards insiders, misleads families, and leaves Congress chasing symptoms instead of the cause.
On November 6, the Senate Committee on Health, Education, Labor, and Pensions held a hearing on Reforming Financial Transparency in Higher Education, while in September, the House Committee on Education and Workforce had its own hearing on college pricing, No More Surprises: Reforming College Pricing for Students and Families. That same House Committee convened again on November 18 to hear testimony on The Future of College: Improving College Outcomes and Lowering Costs. That’s a lot of attention on college—and rightly so, since tuition continues to rise and graduates continue to struggle financially, with jobs scarce and salaries not keeping pace.
But even when witnesses testify to bad actions by schools, this reality does not seem to sink in with Congress. Colleges are gaming the system to benefit themselves, not students, such that the entire federal student loan program should be revisited. Why throw good money after bad?
The most important testimony of the House’s No More Surprises hearing was given by Pennsylvania’s Grove City College Vice President of Student Recruitment, Lee S. Wishing III. He explained that tuition pricing is a racket where schools charge what they want, when they want, favoring some students and disfavoring others, without applicants knowing and almost always misleading them about the true cost of their education and therefore what the real price should be.
He explained that schools engage in what is called “unfunded discounts,” where students are flattered with “financial aid packages” purporting to give them scholarships when, in fact, they are being charged more than the cost of their education. The surplus is then used to subsidize other students.
Wishing testified, Most universities without large endowments set their tuition sticker prices well above their actual cost—the break-even cost. This is done for three main reasons: First, a high sticker price can create an inflated perception of value; second, it allows a school to offer large, impressive-looking scholarships … and finally, and most importantly, this scheme dupes some students into unwittingly funding their classmates’ scholarships.” He continued with an example: “A university set a sticker price at $65,000, but its actual break-even cost to educate a student is only $35,000. Therefore, it can give every student a $30,000 scholarship without losing any money.” [emphasis added]
One wonders if this is ethical.
Wishing continued: The student who pays $45,000 is actually paying $10,000 over the actual cost, though he’s been told he has a $20,000 scholarship. The extra $10,000 is given to another student: “Essentially, students who receive smaller scholarships are unknowingly subsidizing those who get larger ones.”
If this cost shifting were need-based—that is, to benefit lower-income applicants—students and families should know. Many might approve and have no problem with subsidizing those in need. Some Catholic dioceses work this way for high school tuition: the diocese pools resources and offers assistance to families on a need basis, and families willingly participate.
But given the politicization of American higher education documented in books such as Tenured Radicals by Roger Kimball and more recent publications by the National Association of Scholars and its Virginia affiliate, schools are almost certainly engaged in preferential treatment for politically correct reasons—preferring immigrants, for example, including illegal ones, or minority racial groups, whom they call “underrepresented,” or applicants in trendy sex and gender categories. Not only are such preferences undisclosed to families, but they’re also likely illegal under the 2023 United States Supreme Court opinion, Students for Fair Admission v. Harvard, which found racial preferences in admissions unlawful and unconstitutional. In that opinion, Justice Roberts went on to say, “Eliminating racial discrimination means eliminating all of it.” So racial preferences are illegal whether for admissions, grading, hiring, or financial aid.
Obviously, more investigation is needed to know if schools are engaged in such race-based favoritism when it comes to “unfunded discounts.” But we now know that schools are engaged in tuition gamesmanship, cherry-picking winners and losers without a transparent or standardized reason. This means no discussion, no knowledge, and no consent.
In the Senate Committee hearing earlier this month, this lack of transparency was the focus. Equally disturbing information was provided by American Enterprise Institute Fellow Preston Cooper. He explained how schools charge students one price their first year but then jack up the price in subsequent years in a way that resembles “loss leader” practices or even predatory pricing:
[F]inancial aid offers are usually given on an annual basis—meaning that for new students, the aid offer covers only the first year of college. After a student has been enrolled in a particular institution for a year, she is more captive to the school… That gives colleges more power to reduce financial aid awards for returning students, thereby raising prices further. According to estimates by Mark Kantrowitz, upperclassmen face an annual net price $1400 higher than the net price they paid as freshmen. [emphasis added]
Graduates often refer to the schools of their past as “my alma mater,” a Latin phrase meaning “nourishing mother”—a term of reverence, affection, and gratitude. But it turns out that schools are misleading them at best and price-gouging them at worst. Wolf in sheep’s clothing seems more accurate.
Congress often features school administrators in these hearings, and of course, they claim to care about students. And they’re nice enough. But let’s get real. School administrators care about their jobs first. Students? Maybe second, maybe third, maybe less than that. Administrators are part of a system that takes student money in a rob-Peter-to-pay-Paul scheme, all the while pretending to operate in the public interest.
In July, Congress passed the One Big Beautiful Bill Act that contains a few very commonsense reforms, such as loan limits, simpler repayment plans, and evaluation of programs whose graduates consistently earn less than if they had not gone to college. But as sound as these provisions are, they can’t help but seem like nibbles around the edges of a truly self-interested and deceitful system.
What to do?
For starters, policymakers must call a spade a spade. Higher education is comprised of mostly bad actor schools that actually do not deserve taxpayer support—not in its current iteration.
Recognizing that reality could begin a real conversation and serve as the foundation of real and much more meaningful reform, that is, needless to say, very sorely needed.
***
Teresa R. Manning is Policy Director at the National Association
of Scholars, President of the Virginia Association of Scholars, and a
former law professor at Virginia’s Scalia Law School, George Mason
University.
Source: https://amgreatness.com/2025/11/20/college-finance-congress-should-call-a-spade-a-spade-and-see-schools-for-the-bad-actors-they-are/
No comments:
Post a Comment