How Sticker Shock Happens

March 28, 2013 | Blog

A colleague who is skeptical of my argument that students and families are susceptible to sticker shock, and that this particularly affects the choices of those without financial strength, raising a good question: If these students and families don’t know about financial aid (or changes in financial aid), why would they know about institutional sticker price (or changes in institutional stick price)?

The answer appeared during a trip I took on the New York City subway today. Look at this ad and you tell me– isn’t the message quite clear?  If this is the number you see as you stare at subways ads for an hour commute to work, don’t you think it will sink in?  With so many ads all the time telling the buyer “Trust us, big discount! Just file papers!” why would anyone believe another one, let alone one that comes with a long complex set of forms.

It’s a mistake to focus merely on the question of whether a net price intervention can move the dial a bit, helping some students overcome sticker shock. That’s just a tiny chip at the iceberg. Instead, consider the massive iceberg we’re created, allowing sticker prize to escalate, and begin to melt it.

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