Treat the price of college more like a car showroom
I bought a new car last month. It struck me how similar car pricing is to college pricing. Both start with a sticker price so high it shocks people. Then it is quickly followed by a list of discounts and options to make the purchase more attractive. Finally, the buyer is offered financing to ease the pain. Each walks away with a different price, a bit stunned and happy it’s over.
But there is a big difference. In the showroom, I overheard two guys negotiating hard with a salesman over every component of the price from the $700 keys to the $2,000 safety package. They sure were doing a better job than I was. They knew what they could afford and were not going to go above it. But in all probability, they won’t use those skills to lower the price they pay for their kid’s college.
Until we can fix the broken college financing system that students and parents currently navigate, we must resign ourselves to treating the tuition price like every other commodity. In the high price/high discount model, prices can always go lower. Sadly, many students treat the numbers in a college acceptance letter as if they are fixed and delivered from on high. They are ecstatic that it is a “yes” letter and they don’t want to blow it by challenging the price, especially first-generation students, or those who do not have college-savvy parents or mentors.
What the students don’t know is — with the recent declines in college enrollment — the colleges want them more than they want the colleges, even the prestigious ones. Colleges have to fill a lot of empty seats and dorm rooms, just like the car salesman has to clear extra cars from the show room. At many colleges these days the leverage is on the side of the students.
A car salesman sizes up customers using clues from appearance to attitude before offering a price. Similarly, a college official considers the extensive financial information available on an applicant to estimate the exact price that they will provide. Colleges aim for the highest return without the student seeking a better deal elsewhere.
This sets up ideal conditions for a negotiation. College access organizations around the nation know this well and offer this service to their students. At La Vida, a nonprofit college prep program in Massachusetts, Executive Director Peter Barros has made it a practice to challenge and appeal the financial aid offers made to his students. He almost always gets more scholarships and lower prices for his students.
Why are we ready to negotiate hard for a car to the point where we storm out of the showroom, but then meekly accept whatever price we get from a college? Is it because we consider car salesmen approachable and college officials remote- Is it a reflection of societal norms to negotiate for a car but not for tuition? Or is it that we don’t know our power?
When a year of college has become the same price as a high-end Mercedes, we must deploy all the negotiation power we have as customers to show that we are not complacent about the rising price of college. We cannot continue to have our kids apply to colleges we can only afford with burdensome debt and never complain about the price.
It’s time to pick up the phone to that college and start hammering out a good deal. Let’s also be sure to work toward affordable, accessible and well-funded higher education options for those who do not have the privilege of bargaining for a better price.
Robert Hildreth is a former International Monetary Fund economist whose professional work involved restructuring South American debt and marketing sovereign debt loans. He founded the Hildreth Institute, dedicated to restoring the promise of higher education.
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