Why are Promise programs becoming more common?

Tuition prices have far outpaced inflation in recent decades, and, while financial aid is often available to somewhat offset prices, the system is complex.¹ Higher-education costs vary according to students’ and families’ ability to pay, and, in many cases, students from low-income and those from high-income backgrounds will face very different out-of-pocket costs to attend the same institution. The idea behind this model is that students with fewer resources will pay less; however, the system this creates is not transparent. As a result, students considering a college education often lack a solid understanding of what their true out-of-pocket costs will be. In addition, students and families may find it difficult to navigate the financial aid application process, hindering their ability to access aid they are entitled to receive.²

Rapidly rising postsecondary tuition and fees—often referred to as list or sticker prices—are one piece of this cumbersome system. Over the past three decades, published list prices have increased faster than inflation in all sectors of higher education. Over the 30-year period from 1991 to 2021, average list tuition and fees to attend a public, two-year institution rose from $2,310 to $3,800 (65%), accounting for inflation. Costs for public, four-year institutions increased from $4,160 to $10,740 (158%) and in the private, four-year sector from $19,360 to $38,070 (97%). And, of course, the full cost of attendance goes beyond tuition and fees to include expenses like room and board, transportation, books, and other educational materials.³ Such trends have fueled the perception that the United States is facing a crisis of college affordability.⁴

Over the same period, the generosity of grant-based financial aid—aid that students do not have to repay—has also increased. This means that the out-of-pocket costs students face after financial aid is taken into account has increased at a slower rate than list prices and has been relatively stable in recent years.⁵ Of course, even stable net costs are no guarantee of affordability.

In sum, financial aid has grown in importance over time in helping students meet the high sticker price of college. However, these patterns also point to the increasing challenge that students and families face in determining what costs they will confront individually. Under the current system, students do not know the exact amount they will have to pay to attend a particular school until they have applied for both admission and financial aid, received a financial aid package from that school, and if required, verified elements of their financial aid applications with additional documentation. In this context, it is no wonder that place-based financial aid programs that include the nomenclature of free college or a simple guarantee of financial aid have proliferated. Not only do many of these programs provide new financial support, but they also may help streamline the aid process and help alleviate the complexity of the system and the anxiety it can engender.⁶