It took a little more than a decade for the University of Chicago to reinvent itself, going from a well-regarded but largely regional school to an extremely selective university with national prestige. In 2006, the Hyde Park university admitted more than a third of its freshman applicants. That rate has plummeted so drastically in the years since—to a record-low 5.9 percent in the most recent application cycle—that the school is now more selective than many members of the Ivy League.
As admission rates have dropped, the cost of attendance has increased—a correlation seen at many highly selective schools. By 2025, the University of Chicago’s sticker price is predicted to pass the $100,000 mark, which would make it the first U.S. college where attendance costs six figures, according to a new analysis by The Hechinger Report, an education-news outlet. The analysis suggests at least a handful of other U.S. colleges will follow suit soon after Chicago hits that milestone, including California’s Harvey Mudd College, New York City’s Columbia University, and Texas’s Southern Methodist University.
And after that, given the way American higher education has been going, it likely won’t be long before six-figure prices are common among selective colleges and universities. “The [colleges] that are expensive are the ones that students want to apply to,” explains the Seton Hall University professor Robert Kelchen, who studies higher-education finance. “Being expensive is seen as being good—if one [elite] college is 20 percent cheaper than another [elite] college, students are going to wonder what’s wrong with it.”
To make his predictions, Pete D’Amato, The Hechinger Report’s data-visualization developer, analyzed annual sticker- and net-price increases at each of the country’s higher-education institutions over the decade starting in 2008. (The sticker price, or total cost of attendance, includes expenses such as tuition and fees, supplies such as books, and lodging. The net price refers to the total cost minus average financial aid, as determined by household income.)
The University of Chicago’s sticker price is currently roughly $80,300. But as is the case across higher education, most of its students in reality pay far less than the sticker price. Students with a family income below $75,000 are paying roughly $5,200 on average to attend the university this year, The Hechinger Report’s analysis indicates (official data aren’t yet available). Even the wealthiest families—those that make at least $110,000—on average are paying just about half of the total attendance cost. Fewer than half—42 percent—of the university’s 6,300 or so undergraduates paid the sticker price in the 2016–17 school year, according to the most recent available net-cost data.
In a comment to the University of Chicago student paper The Chicago Maroon in July, a university spokesman said the school guarantees students whose families make less than $125,000 tuition-free attendance, meaning they’re on the hook just for nonacademic expenses. And starting with the current freshman class, the spokesman noted, the University of Chicago is also covering the fees, room, and board for students with a household income below $60,000.
The gap between sticker and net price is growing at colleges across the country. Data published by the College Board suggest that a typical student at a private, nonprofit, bachelor-granting institution in the United States pays roughly $10,000 less than the average sticker price, which was about $37,000 in the past school year. Much of the sticker-net gap is a result of tuition discounts: The average first-year student at a private, nonprofit college got more than half off her tuition, according to a recent analysis of 2017–18 data. The average discount rate was less than 40 percent a decade prior.
The sticker price keeps growing because of increases to colleges’ operational costs. Elite colleges are spending more and more in their pursuit of prestige. “The University of Chicago may be the first to cross the $100,000 line, but it is inevitable that other schools will follow,” says Caitlin Zaloom, an NYU professor of social and cultural analysis whose book Indebted explores higher education’s financial pressures on middle-class families. “Even though most families will not pay [the sticker price], it is a signal about what a full membership in that college costs … It is information to students about who should apply and who can participate fully in the university.”
The tuition discounts help disadvantaged students attend otherwise cost-prohibitive schools and stabilize enrollment numbers at a time when many schools are struggling to fill their classrooms. But experts say the cuts can eat away at those schools’ bottom lines and force them into a vicious circle of financial triage. That these students are getting so much financial aid, says Michelle Asha Cooper, the president of the Institute for Higher Education Policy, “is good news—but the not-so-good news is that the rising discounts are very tricky and not sustainable.” The average cost of educating each student at public four-year colleges grew by 14 percent from 2011 to 2016, according to an analysis of federal data by the higher-education consulting firm rpk Group.
While the rising demand for fancy amenities could explain some of the increasing costs, personnel spending is, as The Atlantic contributor Amanda Ripley has reported, the biggest expenditure for many schools. That could be fueling the University of Chicago’s march toward a six-figure sticker price. Its president is one of the highest-paid university executives in the country, earning more than $2 million during the 2017–18 fiscal year. Plus, it boasts an “extraordinary” number of Nobel-laureate alumni and scholars. Esteemed professors are one asset that helps schools appeal to prospective students and climb in the rankings, as do smaller class sizes, extracurricular opportunities, and new buildings. Money spent on these things helps schools secure prestige, but it also raises costs.
What often ends up happening is that wealthy students whose families can afford the sticker price help subsidize costs for their less privileged peers. The problem is that, with colleges now more dependent than ever on tuition for revenue, schools such as the University of Chicago enroll a relatively limited number of students from the lowest income brackets. Federal data show that Pell Grant recipients accounted for just 11 percent of Chicago’s students during the 2017–18 academic year, and as of fall 2018, just 5 percent of them were African American. The university also doesn’t enroll any part-time students. All in all, more than three dozen colleges and universities in the U.S. enroll more students from the top 1 percent of the income scale than from the bottom 60 percent, according to a study by a team of researchers, including the economist Raj Chetty.
Those divides underscore why sticker prices matter—even for the students whose attendance would be subsidized. Just seeing six figures attached to a school’s name could deter lower-income students from applying. Plus, all the information is extremely confusing—in a survey of students and parents, roughly three out of four respondents said they struggled to make sense of all the numbers included in financial-aid offer letters and online.
Nationally, surging sticker prices have “already gotten out of control,” Cooper says, pointing to numerous colleges that have had to shut down in recent years because of financial difficulties. And as long as colleges remain in an arms race to retain or gain prestige, many more schools are bound to tack another digit onto their sticker prices.