Lee S. Wishing III, vice president for student recruitment at Grove City College, testified before the House Subcommittee on Higher Education and Workforce Development to help bring light to a troubling practice in American higher education: unfunded discounting. We invite you to watch the testimony (video below) and also to read Lee’s printed testimony (below the video).
Watch the testimony on YouTube:
Testimony of Lee S. Wishing, Ill, VP for Student Recruitment/CMO, Grove City College Subcommittee on Higher Education and Workforce Development September 16, 2025110:15 a.m.I Rayburn Office Building I Room 2175
Chairman Owens, Ranking Member Adams, and distinguished members of the Committee, thank you for the opportunity to testify on “unfunded discounting”-a misleading tuition pricing practice widely used by colleges and universities that benefits institutions at the expense of students and parents who frequently do not understand the intentional vagaries of college pricing. My name is Lee Wishing, and I am vice president for student recruitment at Grove City College in western Pennsylvania. My institution does not practice unfunded discounting, but we compete daily in an environment wherein unfunded discounting is the norm. I want to stress that my testimony is my own, not that of my institution. I have a unique position with which to understand the nature of unfunded discounting because I am responsible for competing every day on behalf of Grove City College for freshman enrollment. It’s tough competition out there.
Understanding Unfunded Discounting
What is unfunded discounting? Most universities without large endowments set their tuition prices well above their actual costs. This is done for three main reasons.
- First, a high sticker price creates a potentially inflated perception of
- Second, it allows the school to offer impressive-looking scholarships to every student, making them feel valued and
- Finally, and most importantly, this scheme allows students to unwittingly fund their classmates’ scholarships.
It’s important to note that this scheme is the norm in college pricing, and that most consumers do not understand it. Yet, higher education leaders, the associations we belong to, and the marketing firms that serve us do understand it. In other words, from my perspective higher education leaders and marketing practitioners know what is happening, but consumers do not.
A simple example
How does it work? Let’s use a simple example. A university sets its tuition at a sticker price of $65,000, but its actual cost to educate a student is only $35,000. Therefore, it can give every student a $30,000 scholarship without losing any money. Everyone is a winner! But what happens to the student who receives a smaller $20,000 scholarship? That student will pay $45,000, which is $10,000 more than the school’s breakeven cost. This extra $10,000 is then used to give a more desired student, perhaps one with a high SAT score or special talent, a larger scholarship, say $40,000.
Essentially, students who receive smaller scholarships are subsidizing those who get larger ones. Yet, the scheme seeks to make the subsidizers feel good about their unwitting overpayment. The goal: Nearly every student gets a trophy and feels happy.
The Risks and Reality of This Practice
This practice puts students and families at risk of overpayment and excessive debt. They may take on federal student loans, federal Parent Plus loans, or private loans to pay for a portion of their classmates’ education and could be burdened with that debt for years after graduation. Furthermore, many schools have a minimum GPA requirement to maintain these scholarships. If a student loses their scholarship, they may be forced to pay the full, inflated sticker price, potentially driving them further into debt, and/or drop out of college altogether sometimes with a large debt burden. No degree, big debt.
My college, Grove City College, competes in the higher education marketplace without practicing unfunded discounting. We charge our breakeven price of $35,290. We are transparent in our pricing. Our pricing is straightforward-We set our tuition price at breakeven cost and then offer fully funded need and merit aid to reduce the price. About 65% of our freshmen receive some form of institutional aid. No student at Grove City College pays for another because Grove City’s aid is fully funded by our endowment, alumni, and friends. Moreover, although we do not accept federal student loans or aid, we have one of the lowest student loan default rates in the nation.
My experience speaking with families who are participating in the college search process for the first time expect that all colleges fund aid like Grove City. Yet, families are perplexed by the large sticker prices and large scholarships offered by other institutions. They know something is odd about pricing but are not sure what is going on.
The winners and losers
Although Grove City doesn’t practice the discounting scheme, I see many of the competitors’ big trophy winners because we attract high-achieving students who receive competitor otters that cover 75%-100% of tuition cost. Of course, most of the small trophy winners don’t know they are paying for the big trophy scholarships.
Debt risk
Students who receive small competitor scholarships often must borrow significant sums to finance their education and the subsidies they pay unwittingly. From my perspective and experience, it’s far too easy to borrow large amounts of money from the federal government via the combination of Direct Subsidized Loans and Parent Plus Loans.
The best kept open secret
In my experience, every college leader of an institution that practices unfunded discounting understands the practice and its ethical challenges; every college association knows the discounting scheme; and college marketing conferences feature marketing firms that develop sophisticated discount models. To see these models demonstrated without addressing the attendant ethical challenges can be disturbing. What I’m trying to help you understand is that unfunded discounting is the best kept open secret in higher education finance. It seems like everyone in the industry knows what is going on except the consumers.
Challenging the industry
A college association
Effectively challenging the industry to be transparent is difficult because unfunded discounting is essential for institutional survival. Grove City College is a member of a consortium of colleges and universities that mandates adherence to an ethics statement emphasizing transparency, trust, and the provision of accurate information. Yet, its members practice unfunded discounting. I wrote to the organization’s leadership asking them to encourage its members to end the practice and align with the apparent ethical aspirations of the association. The organization’s board of directors discussed my request, and I received the following response after much internal deliberation:
The challenges such a policy would present to our members would be quite difficult to implement and sustain. Thus, there isn’t a desire from the BOD to offer a statement on the practice through (our organization) or our (operating guidelines). Given each of their institutional policies, it would be disingenuous to the recruitment philosophies and detrimental to their enrollment efforts.
Data modeling services
To enhance enrollment, many college and universities use sophisticated data models generated by leading higher education marketing companies. I recall attending a national conference here in Washington, D.C. and watching a routine discount modeling demonstration. The presenters skillfully operated the model raising and lowering discounts favoring one sector of students over another. I was as stunned by the model’s ethical implications as I was by how unmoved other college admissions professionals were by what I deemed to be glaring ethical offenses.
College presidents
Last spring I attended a small retreat sponsored by a leading Christian denomination. There were 25 or so pastors, seminary representatives, colleges presidents, and denomination leaders in the room when the issue of college pricing came up. I explained the unfunded tuition model and there was a palpable uneasiness in the room when I said, “The very first transaction a student has with most Christian colleges is based on deception.” The tension broke when one of the college presidents acknowledged that I spoke the truth.
Wiping out an endowment in two years
A group of universities using a common marketing platform mistakenly assumed I was a high school student. Soon my inbox was flooded with college marketing emails. Believing me to be a good student (much better than I actually was in high school}, one college offered me a huge scholarship based on what it believed to be my high GPA. I quickly calculated that its gross annual scholarship awarding would deplete its entire endowment in less than two years, thereby proving “my scholarship” was an unfunded discount.
Stock in trade for private K-12 schools, some publics too
Many K-12 schools publicize the amount of scholarship money its graduates receive annually. It’s been my experience that nearly all K-12 guidance counselors do not understand unfunded discounting. Moreover, they generally do not understand that the actual value of the scholarships their graduates earn is grossly overstated.
An old friend
I attended three Christian college conferences last summer. At one of them I saw an old friend who left Grove City College to become a leader of a friendly competitor. When I inquired about his employer’s huge sticker price and discounting policy, he wryly replied, “Where’s the outrage?”
A possible Light regulatory solution
I provide the above examples to you not to generate outrage but to help you understand how widespread, sophisticated, and misleading the practice of unfunded discounting is. These problems notwithstanding, you might find it surprising that I am not a fan of government intervention in the higher education marketplace. Congress, in my opinion, has intervened too far in higher education by trespassing the 10th Amendment in favor of Article I, Section 8’s spending clause. If I were alive in the mid-19th century, I would have cheered President Buchanan’s 1859 veto of a land-grant colleges bill and opposed President Lincoln’s 1862 signing of a similar act. Moreover, I think the best solution would be for our non-profit colleges and universities to self-regulate. But the market is not self-regulating and, therefore, risks inviting your involvement. Therefore, I’ll offer you a simple and light solution.
Ironically, as you know, the 1984 Grove City College Supreme Court Case, Grove City v. Bell, gives you the power to regulate institutions that receive federal financial aid. Therefore, you may want to require institutions receiving federal aid to modify already required cost of attendance information by requiring colleges to publish the following:
- their breakeven cost of attendance per student,
- the real, fully funded value of a student’s scholarship (my experience is the real value of unfunded scholarships is 10% – 30% of stated value) and,
- the premium it charges to a student that benefits other
Conclusion
As I go to work daily, it feels like most of the higher education world is aligned to mislead students for the benefit of the institutions. I prefer that our market would self-regulate. Afterall, like you, I prefer honest and transparent college pricing, but the higher education marketplace seems to have normed misleading pricing in favor of institutions at the expense of consumers.