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Quad-City entrepreneur launches startup aimed at making college tuition costs transparent

Quad-City entrepreneur launches startup aimed at making college tuition costs transparent

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Working in higher education for 25 years, Mark Salisbury grew frustrated as each incoming class struggled to understand how much they'd be paying for college.

"I worked in admissions at a bunch of different schools. And it was painful every time somebody asked what the actual price of college is and nobody could give them a straight answer," he said. "The sticker price is one thing, but then there's scholarships and grants, so you just have to apply and find out. And that drove people nuts."

Davenport resident Salisbury worked as an administrator and teacher at both the University of Iowa and Augustana College. But his new full-time job is running a startup company, TuitionFit. 

He launched the company earlier this month, with the goal of offering an online platform for potential and current students to anonymously share tuition costs and award letters. By viewing award letters received by other students, Salisbury hopes the public will better understand the actual cost of college and make informed choices when choosing an institution to attend. 

"As a consumer, we're asked to narrow down our choices to a small number of schools from thousands of colleges out there, and narrow that down without being able to know the price," he said. "And then maybe you get down to four prices, and the colleges are asking to pay a lot more than you can afford. And you feel pressure not to bail on the whole thing because of social stigma. And that's why people borrow the amount of money they borrow."

June 2018 study by New America found "students and families confront a detrimental lack of information and transparency when making one of the biggest financial decisions of their lives: paying for college." 

According to the study, out of 515 award letters from different institutions, more than one-third did not include any cost information to explain the financial aid offered. Out of the sample, 40 percent of schools calculated what students need to pay, but those 194 institutions had 23 different ways of calculating remaining costs. 

A majority of the award letters also included misleading or confusing jargon, according to the study, such as referring to loans as awards. 

"A lot of this has to do with our old process of not finding out the actual price until you've applied and been admitted," Salisbury said. "Until 30 years ago, that didn't matter much because the cost was a lot lower. The only people who got financial aid were the people who had financial need. Then 30 years ago, things really shifted. Prices went up and discounts went up like crazy, as schools introduced all kinds of merit aid." 

The price of going to college has been increasing since the 1980s. According to the National Center for Education Statistics, students attending a four-year public institution in 1986 paid, on average, $3,859 in today's dollars. By 2016, the average cost has risen to $19,189. 

That number jumps to nearly $40,000 for private, four-year colleges. 

In 2016, the percentage of freshmen paying the full sticker price at private colleges fell to only 12 percent. On average, private-college freshmen received grants to cover around 56 percent of tuition, according to the National Association of College and University Business Officers. 

"If students had known that, how many students would not pay the price they were asked to pay by one college and gone to a school that would offer these discounts instead?" Salisbury said.

Salisbury argued the "sticker price" of tuition is often misleading, due to an individual student's eligibility for financial aid and other factors. And with the cost of college and the massive amount of student loan debt rising nationally, he wants students to make the best financial decisions they can when considering colleges.

"Economists know this notion called information asymmetry. That's the notion that the seller knows more about the market than the buyer does," he said. "Whenever that happens, prices are always inflated and higher than they would be if sellers and buyers know the same thing about the landscape. It's like Kelley Blue Book and CarMax. They're correcting this information asymmetry when you buy a car." 

He wants the public to "drive the price" of college, plus help schools attract more students. 

"As I've paid attention to this, I've been amazed by how this pricing dilemma was actually really hurting colleges," Salisbury said. "We've all heard about someone looking at colleges and they see the sticker price of school, and it's $60,000, and they're like 'forget it.' And then, they charge $50 to send in an application just to find out if you can get the price cut in half. It’s not worth the risk." 

Salisbury argued the high sticker price has stopped students from applying to certain colleges, leading to dropping enrollment, especially at private institutions. 

Instead of trying to fix the system, Salisbury hopes TuitionFit gives some power back to the public. Students can sign up for free to anonymously share award letters. Then students with similar economic situations and test scores can view the letters to see how much they may receive from the same college. 

Colleges, he said, may pay for a subscription to access the database of award letters, to see what other schools are offering. Administrators can also invite students to consider their schools if they have an award package to offer, Salisbury said. 

"The goal really is that we as a public can solve this problem ourselves. We don't need colleges to do it for us," he said. "We still want college. We need higher education. It's an expensive thing to deliver, and we're willing to pay money for it and borrow money for it. But you just have to let the people be informed."

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