Hidden Impacts of College Costs on Applicants and Students

College affordability remains one of the most controversial and hotly debated issues in American higher education. Yet even as headlines focus on tuition spikes, student loan forgiveness, and free college proposals, the pricing decisions by college administrators can influence potential students long before they apply.

College costs can shape a broad range of beliefs and attitudes among potential applicants. From influencing high school seniors’ impressions of their “realistic” college choices all the way to determining how potential students respond to financial aid offers, the perceived cost of college plays a profound and often underestimated role in a wide range of college-related decisions by students and their families.

Experts suggest that for some students, these hidden impacts can begin early. Students may self-select out of certain institutions years before filing their first application, and long before they even understand the critical distinction between a college’s sticker price and its net price, as we discuss below. Misconceptions about the true cost of attendance can lead many to bypass private or out-of-state public schools despite encouraging prospects for financial aid and scholarship awards. Later on as college students, worries about affordability can cut persistence short by driving some students to stop out–or even withdraw.

This article explores some of the covert, less-visible ways that college costs influence student decisions. We’ll look at a few of the ways in which beliefs about affordability shape a variety of student choices related to college admissions.

First, perceptions about cost shape decisions about whether and where students apply to college.

A 2024 Gallup/Lumina Foundation poll found that 56 percent of adults who didn’t enroll in any postsecondary program said that cost was a “very important” reason why they had remained on the sidelines. This result was one of those cited by the recent UPCEA/StraighterLine study of the factors motivating stopouts to go back to college—and the obstacles blocking them from doing so.

Another survey published in 2023 by a Baltimore higher education consulting firm, the Art & Science Group, found that about half of high school seniors interested in a four-year degree decided not to apply to a college based on its published cost of attendance (sticker price) alone. This huge proportion of the sample wouldn’t even consider as few as one or two advantages of the school if it displayed a high sticker price.

The analysts seemed surprised that only about a quarter of the sample was willing to go “behind” the sticker price to find out about the true, lower net cost that they and their families were likely to actually pay, even when such discovery required little time or effort. About 75 percent of the A&S sample refused to either speak with the school’s financial aid staff during a brief phone call or even spend a few minutes with the school’s net cost calculator on its website.

Incredibly, in a counterintuitive result, those students least likely to have taken these steps were those most likely to benefit from them. Comparing results from interviews during the final two quarters of these respondents’ high school journeys, the researchers say:

In our winter fielding, first-generation students were less likely than non-first-generation to have filed a FAFSA (65% vs 73%), used a cost calculator (22% vs 31%), or spoken with financial aid staff (18% vs. 30%). Additionally, lower-income students were less likely to have used a cost calculator across both fielding periods (23% in winter, 25% in spring).

Moreover, fascinating research conducted for the Brookings Institution by Dr. Phillip Levine at Wellesley College even confirms that increases in sticker prices can reduce applications to public colleges, irrespective of students’ eligibility for need-based aid. In other words, college applicants respond to changes in sticker prices even when those prices don’t—or shouldn’t—matter to them.

Second, perceptions about affordability affect whether students stay in college.

In the 2024 Gallup/Lumina poll cited above, nearly a third of currently enrolled students (31 percent) had considered stopping out of school because they couldn’t afford the costs.

Keep in mind that the 31 percent figure is an average based on a sample of about 6,000 respondents polled online by Gallup at colleges and universities across the nation. Unfortunately, the sample’s variance measures like standard deviations aren’t clear from the methodology. Nevertheless, one could reasonably infer that at some of the more expensive colleges, the percentage of students thinking about stopping out at any one time could actually amount to substantially more than a third, potentially as high as 35 or 40 percent.

Of the students who actually did stop out, cost was far and away the reason most frequently cited. In the Gallup poll, a whopping 87 percent of those students said cost was important in their decisions to leave school. This was also an across-the-board result, consistent across all demographic groups including various racial, ethnic and socioeconomic segments of the sample.

However, there’s a silver lining. The good news in that particular poll is that approximately a quarter of those SCNC (some college, no credential) students with no degree also said that during the past two years, they had at least considered going back to college.

Research also shows that many potential college students harbor misconceptions about costs that influence their decisions during the application process. Here are two examples of such misconceptions.

Private Colleges Are Always More Expensive

Among many potential students, a common assumption exists: if a private college’s sticker price is high, then that student assumes they will always be charged higher costs at that college than at flagship state universities. But that’s not necessarily the case in every instance. This assumption doesn’t account for the difference between a college’s sticker price and its net price, and it also doesn’t factor in the real purpose behind many institutional aid policies in 2025.

As we explain in detail in this article, a college’s “sticker price,” also known as the cost of attendance or COA, reflects the full cost advertised in the college’s promotional materials and on its websites. By law, this amount is also on file with the federal government. It includes everything related to college attendance: tuition, fees, room and board, books, living expenses and transportation. These days it’s not unheard of for private colleges to post figures in the range of $70,000 to as much as $100,000 per year. For example, for the first time ever, Wellesley College’s COA for the 2025–26 academic year topped $100,000.

Yet families almost never pay the full sticker price. Instead, the net price is the actual amount charged to students; this is the amount that remains after gift aid such as grants and scholarships. At many private colleges, discounts off high sticker prices actually serve as enrollment incentives that admissions officers use to entice competitive students to attend their school. In fact, despite their stratospheric sticker prices, elite private universities like Wellesley often meet 100 percent of a student’s demonstrated financial need, sometimes by replacing loans with grants.

Understanding the difference between sticker prices and net prices is crucial.

Once one understands this distinction—and understands how admissions officers frequently use “grants” and “scholarships” to provide discounts as enrollment incentives—scenarios where private colleges become cost-competitive with flagship state universities start to seem less far-fetched.

Here’s an interesting example our research turned up: An applicant from a wealthy family living in Virginia with a household income of $350,000 initially received no financial aid at a highly selective private university, Washington University in St. Louis. After filing a series of financial aid “appeals,” WashU reversed its decision and awarded that student $42,000 per year in grants—resulting in a total, four‑year savings of $168,000. That net cost at WashU ended up lower than the net cost of attending the flagship public university in the student’s home state, the University of Virginia.

Applicants Can File Their FAFSA Later

Because the Free Application for Federal Student Aid (FAFSA) technically doesn’t impose a deadline until June, many college applicants assume they can afford to wait before filing. Some of them will put it off for as long as they can. However, our research revealed countless reports that waiting too long can result in missed opportunities, including lost eligibility for state aid, merit scholarships, and institutional grants.

The FAFSA program typically opens for processing each year on October 1. Because federal aid like Pell Grants or Direct Loans won’t run out, the date an applicant files their FAFSA won’t limit their access to those programs.

But state financial aid programs typically have much earlier deadlines than the federal timeline. That makes it essential for students in certain states to file their FAFSA form much sooner. For example, Texas requires filing by January 1 for its state grant, California’s Cal Grant deadline is March 2, and Pennsylvania’s PA State Grant application requires a May 1 deadline.

And when it comes to institutional aid, different colleges allocate their budgets differently. Some schools set aside specific funds for merit aid, irrespective of application timing, and those awards often require separate applications from the FAFSA with different deadlines.

But many colleges award their institutional aid on a first-come, first-served basis. That would mean early filers gain the most access to a school’s limited funding pool which can run out. That’s because such a campus pool might pay for various kinds of aid that could include tuition waivers, supplemental grants, and even some work-study opportunities.

Some schools set priority deadlines as early as December or January. Students who wait beyond these cutoffs risk being shut out of need-based and merit-based aid alike. Even high-achieving students applying to public institutions can lose out on merit funding if they file too late to be considered.