Straight Up Conversation: A Kelley Blue Book for College Costs
Mark Salisbury is co-founder and CEO of TuitionFit, a venture that aggregates data on the actual price of college. Previously, Mark was an assistant dean of academic affairs at Augustana College and a researcher at the University of Iowa. I recently talked with him about how TuitionFit is attempting to give students more leverage over what they pay for college, and here's what he had to say.
Rick Hess: So Mark, what is TuitionFit?
Mark Salisbury: TuitionFit is an online platform that we launched in January 2019 with the goal of empowering the public to take back some control over college pricing. Students share financial-aid award letters, making it possible to create a central data resource that lets us crowdsource a customizable "Kelley Blue Book" for actual college prices. Students share basic academic and financial-need data—SAT or ACT score, high school GPA, and Expected Family Contribution from completing the FAFSA—which allows us to organize the results so that any student can see the actual prices that colleges are offering students just like them. As a result, the public can make far more informed choices and maybe start to impact college prices the way they can in a normal marketplace.
Rick: What prompted you to launch TuitionFit—and why is there even a need for a tool like this?
Mark: There is a need for this because sticker prices at colleges and universities have skyrocketed over the last several decades, but the actual prices that students are asked to pay are now, on average, less than half the sticker price. Unfortunately, an individual student's actual price can vary by tens of thousands of dollars depending on where they apply. Since students have to choose where to apply before knowing what their price will be, many students end up stuck with prices they can't afford.
Rick: So if most people aren't paying the sticker price, how do they know if they're being fairly charged? And how do we know how much college actually costs?
Mark: The education research graveyard is littered with the remains of folks who've tried to figure out how much it really costs to successfully educate a college student! Absent that, the next best option is to be able to compare any price you've been offered with the prices that other colleges are offering similar students. This is what made simple innovations like Kelley Blue Book so valuable for folks trying to figure out if a car was fairly priced. Until TuitionFit, we couldn't do this with college pricing.
Rick: Will having this information actually allow students and families to influence prices, though?
Mark: Well, the short answer is yes. What the public doesn't know is that there are now far more seats in college than there are students to fill them—and in the next few years, the number of high school seniors graduating each year will begin to decline steadily for almost a decade. That means that the public should have some power to influence prices—if they have the information.
Rick: OK, so how does this work? How do you get the data?
Mark: All the pricing data on TuitionFit comes directly from the financial-aid award letters that college-bound students share with us. We redact all of the private information on the award letter and calculate the actual price that a student would see on their bill in the fall—we throw out work study, parent PLUS loans, and all the other misleading information that schools often include in their financial-aid offers. As more students share their aid offers with TuitionFit, a data set emerges that allows students—across different academic and financial-need profiles—to see the actual prices that other colleges and universities are offering students just like them. Students can then compare the prices they have received with the other prices and either look elsewhere, negotiate a better price, or accept the financial aid offer they've been given with far more confidence.
Rick: So it sounds like the success of this project mostly depends on how many students upload their offer letters. How do you get the word out to them about TuitionFit?
Mark: The success of this project has depended upon students, parents, and school counselors spreading the word. We've tried a few other marketing ideas, but in the end, the most effective approach has been people sharing the word about TuitionFit.
Rick: I know TuitionFit just started about a year ago. Given that, how widely has it been used so far, and how many people have contributed data?
Mark: Our first nine months were a real adventure because we didn't know for sure if people would share their financial-aid award letters or not. But once word of mouth starting buzzing around the internet, we saw students from over 40 different states join the platform. Ultimately, we finished our first cycle in August with over 4,000 award letters. And this summer, we heard from organizations all over the country that want to partner with TuitionFit.
Rick: How will you judge the success of this effort? Do you have any success stories to share?
Mark: We've already heard some wonderful success stories. In one case, a student shared two award letters with actual prices of about $33K and $39K, and then saw that the range of prices that other students just like her were seeing went from just $6K to north of $51K. This student was able to save over &10,000 per year on college just by using this new information to apply to one of the less expensive schools that she wouldn't have known about without using TuitionFit. My hope is that maybe we can help to cultivate a more transparent marketplace that will give many of the lesser-known colleges out there a better chance to compete. And maybe colleges will be pushed to focus more on outcomes in order to make the case that their price is worth the expense.
Rick: OK. So what's the financial model here to make this venture sustainable?
Mark: Right now, we are focused on bringing price transparency to the college marketplace. Once that happens, I think there will be several ways for us to maintain financial stability. We think there are a variety of different entities that would pay for access to this pricing data, whether it be individuals who don't have or don't want to share financial-aid letters, colleges and universities that could improve their ability to compete if they knew the actual prices of their competitors, and organizations that could improve their products if they had access to more accurate pricing data—like student loans, income-share agreements, or tuition insurance.
Rick: Can you tell me a bit about what the reaction from colleges has been?
Mark: The ultra-selective schools don't seem to care one way or the other. But the rest of the higher education institutions seem to be all over the place. We've heard enthusiastically positive responses on the one hand, and on the other, we've seen folks react with wide-eyed fear.
Rick: Speaking of colleges, you also offer colleges a subscription account. What could they get out of TuitionFit?
Mark: The public isn't the only loser in this college-pricing mess. Many higher education institutions are now struggling to make enrollment, in part because the pricing philosophy that set this debacle in motion in the first place—the idea that the public will equate price with quality and be more likely to apply to more expensive schools—has become a curse as those high sticker prices are now scaring away potential applicants. So we built a way for colleges and universities to subscribe to TuitionFit and benefit in two ways. First, subscribing institutions can see their competitors' actual prices. This information substantially improves a school's ability to design an optimal financial-aid strategy. Second, subscribing institutions have the opportunity to reach out to students on the platform when the institution knows that it can offer that student a better price than the one he or she has uploaded.
Rick: On that note, could there be any adverse consequences for students who upload their offer letters?
Mark: We investigated that possibility before starting TuitionFit, and our initial findings have been borne out by our experience. Students have been posting unredacted award letters online for years now, and given what happens on social media these days, an award letter posted for the world to see is the least of their concerns. We don't know of any college or university threatening an accepted applicant who shared data. Having worked in higher education for a long time, I find it hard to imagine an admissions or financial-aid professional who would benefit their institution's reputation by going after a student trying to find a better financial fit.
Rick: OK, last question: You spent most of your career in higher ed administration before launching TuitionFit. So based on your experience so far, what advice would you offer aspiring education entrepreneurs?
Mark: More than anything, please focus your entrepreneurial powers on solutions that actually help students gain access to college, learn in college, or graduate from college at lower costs and with less debt. There are way too many startups in the higher education ecosphere right now that are just preying on an already dysfunctional system. In many cases, these folks are making the system worse and driving costs up. And who's ultimately paying for it? The students and the public.
This interview has been condensed and edited for clarity.