Alternative Approaches to College Pricing Models

OVERVIEW

Lumina Foundation, the Seeker for this Wazoku Crowd Challenge, is searching for tools, models, information, data and/or approaches that could help inform efforts to simplify and clarify college pricing and financial aid. Doing so will enable students and their families to better understand the true cost of college.

In this Prize Challenge, Solvers are encouraged to share models or approaches that make net prices (i.e. the cost ultimately paid by consumers) of high-cost items clearer and more transparent. Eventually, the learnings of this Challenge could be used by Lumina Foundation to improve transparency in college pricing and financial aid within the United States. Your innovative, scalable approach should demonstrate how it simplifies the relationship between the ‘sticker price’ (i.e. list price) and applicable discounts or payment plans, giving consumers a clear understanding of the total cost they will be expected to pay.

Lumina is open to solutions that are based on, combine, or build on specific approaches currently used or previously attempted in higher education to clarify college costs, such as no-loan guarantees, free college/college promise programs, or other affordability guarantees. Alternatively, mechanisms and solutions based on approaches used in other sectors with high-price purchases and delayed or multi-party payment structures (that could be applied to the higher education sector), such as car financing or healthcare co-payment systems, would also be of great interest.

Solvers are asked to provide proof of the efficacy of the solution/mechanism in simplifying and/or more clearly communicating the consumer’s contribution, revealing the net price behind the ‘sticker price’, in the form of quantitative measures and/or qualitative results.

By taking part in this Prize Challenge you are granting Lumina Foundation a right to use (but not own) your submitted information, however Lumina must determine any award winners (with the minimum value of $7,500 assigned) within 50 days from the start of evaluation, otherwise Lumina loses this right.

This Challenge requires a written proposal to be submitted and the best solution(s) have the opportunity to win awards from $2,500 to $15,000 for meeting enough of the requirements criteria. There is no assignment of IP Rights with this Challenge.

Solvers may:

• Submit ideas of their own
• Submit third-party information that they have the right to use and further, the authority to convey to Lumina this right with the right to use and develop derivative work
• Submit information considered in the public domain without any limitations on use

Submissions to this Challenge must be received by 11:59 PM (US Eastern Time) on November 25, 2024.

- Login or register your interest to start solving!

ABOUT THE SEEKER & ELIGIBILITY

Lumina Foundation is an independent, private foundation in Indianapolis committed to making opportunities for learning beyond high school available to all. We envision higher learning that is easy to navigate, addresses racial injustice, and meets the nation’s talent needs through a broad range of credentials. We are working toward a system that prepares people for informed citizenship and success in a global economy. For more information on Lumina, visit: luminafoundation.org.

Employees of Lumina Foundation, as well as members of Lumina’s board of directors and investees of Lumina Impact Ventures, are ineligible to receive an award for this Challenge.

Find out more about participation in Wazoku Crowd Challenges.

THE CHALLENGE

Background

The cost of higher education continues to place college out of reach for millions of potential students in the United States, limiting their ability to achieve financial security and constraining the economic prosperity of their communities. Despite some students having access to affordable local institutions, the complexity and opacity of tuition pricing, financial aid, and related costs create significant barriers to enrollment and success.

College costs can vary wildly based on students’ personal circumstances and their choice of program and institution. Variations in program costs, the number and type of courses, period (i.e. length) of enrolment, and mandatory and discretionary fees can all have profound effects on the total amount that an individual could be charged. This perception of high costs is compounded by the fact that the ‘sticker price’ of a higher education program listed on a website, prospectus, or calculator is quite different from the net price that a student actually pays.

The true cost of a program is often only discovered by students and their families after numerous burdensome application processes, including, but not limited to applications for: admission, federal student aid, state aid, aid from the higher education institution itself, and private scholarships. This is not to mention that the cost of a course or program can actually differ year-on-year, with colleges changing pricing to reflect inflation, changes in state funding, and other variable costs.

The landscape for calculating potential costs of a higher education program does include some freely-available methods, however these have considerable drawbacks.

• From a federal level, the College Scorecard and College Navigator websites include data on both college costs and the available financial aid for every institution that takes part in the federal student aid programs. However, this data is based on averages which can over- or underestimate the amount a given student will pay, due to the inherent variation in institutional charges and the aid a student is personally eligible for.
• College-side net price calculators for applicants to view customized estimates often provide inaccurate or out-of-date data, and in some cases colleges do not have a posted calculator – though required under federal law.

Other geographies have analogous higher education cost transparency and clarity tools and mechanisms to help prospective students anticipate potential costs. Finland’s StudyInfo and Australia’s StudyAssist have loan eligibility details before applications, and regularly-updated tuition and fee overviews.

Rising costs of higher education, the increased perception that courses cost a lot, and an extremely difficult-to-navigate landscape for determining true ‘net direct cost’ for an individual are all contributing to declining public trust in higher education (Gallup, 2024). Low-income or low-wealth families are particularly affected by the current system’s lack of transparency or clarity in college costs – as the difference between the sticker price of an institution and the net direct cost to a prospective student could be a more crucial datapoint to make the decision between undertaking higher education or not.

The Challenge

Lumina Foundation is seeking ideas and solutions for alternative approaches to make college pricing clearer and more transparent to prospective students and their families.

Your tool, model, method, approach, or solution should make it possible for students to know what they will be expected to pay from the very outset of, or substantially earlier in, their college search process. If adopted widely, your detailed approach should also allow students to easily compare colleges, institutions, and postsecondary programs without the need for multiple burdensome applications.

Lumina is looking to identify details of the approach to simplify complex costs and the proof of its efficacy, with an optional description of its applicability to the specific context of the U.S. higher education landscape.

Approach

Proposals could be completely novel but based on sound research and concepts, sourced from within the higher education sector (within or outside the United States), or proposed from other sectors and industries (e.g. car financing, healthcare).

No matter the source of your solution, Lumina requires a detailed description of how the mechanism/solution improves the clarity regarding the costs of an item. For instance, how are the net costs visualized and communicated to an individual for high-price items? These items often have complicated add-ons or discounts that affect the sticker price: the presence of other fees/costs, discounts available, and payment processes which can significantly alter the price one actually pays. Lumina is interested in how this difference is calculated and communicated.

Proof of efficacy
Your specific approach should be accompanied by proof of efficacy – with quantitative and/or qualitative measures that demonstrate your solution either already achieves increased clarity for consumers, or is rooted in proof-of-concept research that indicates increased clarity for consumers.

How has your existing model or proposed solution been effective in broadening access to higher education, increasing understanding of net direct costs for high-price items in other industries, or improving clarity of the myriad of price modifiers behind the sticker price of an item in an analogous sector?

Lumina Foundation is aware that often these may be affected by multiple, complex factors – which is why the proof of efficacy of your proposed mechanism should be supported by detailed descriptions of the approach and any supporting references and research.

1. Please provide quantitative and/or qualitative measures and data on how your mechanism/solution achieves increased clarity on the price of items with complex/variable financing structures.
   
   For example, this could take the form of details about how, for example, college application numbers increased after X country instituted Y method, or about how a specific payment mechanism in Z industry expanded access to or understanding of details around an item’s true direct cost.
    
2. Each submission needs to be accompanied by supporting research that indicates the efficacy of the proposed approach – particularly for detailing impacts on the take-up by low-income/low-wealth communities.
   
   For example, if your submission details a novel pricing model from the automobile industry, supporting research about how e.g. implementing a clearer cost calculator that detailed payments and discounts into one net price ensured greater access for people from low-income communities. This proof could take the form of impact reports, comparative numbers from different sales cycles, survey data, etc.

Please note: while proof of efficacy is critical through reports and data investigations, Solvers are not required to provide the background datasets themselves that prove the efficacy of their approach (particularly due to potentially Personal Identifiable Information (PII) handling concerns).

Applicability

Additionally, Lumina is interested in the applicability of your detailed method and how it could be applied to the U.S. higher education sector. If available, please detail how your solution, approach, model, or mechanism for calculating complex costs and communicating them clearly would be applied within the context of the U.S. higher education system.

This includes accounting for the vast and changeable landscape of financial aid from federal, state, institutional, and private sources.

While your sourced mechanisms, approaches, or solutions for communicating the net direct cost of an item might be sourced from outside the United States or outside the higher education sector, this section of the Challenge should be used to prove its specific applicability to the U.S. context and therefore to Lumina Foundation’s work in expanding ease, equity, and access of postsecondary education.

Lumina Foundation is particularly interested in solutions, mechanisms, and approaches to pricing models that can simply and coherently communicate the net price of an item that is affected by multiple, complex factors.

Please note: ideas and proposed solutions should be scalable and not limited to use/efficacy in one state or region. The costs of your solution/approach – while not critical to fully cost out at this stage – should not depend on massive new investment of public funds.

SOLUTION REQUIREMENTS

Lumina Foundation is primarily interested in solutions detailing pricing models and mechanisms with the potential to meet the following requirements:

1. Clear and effective communication of the net direct cost – especially compared to original ‘sticker’ prices, detailing eligible discounts or additional fees.
2. Proof of efficacy – detailed descriptions, validated data, and references/research that prove the performance of the pricing model/mechanism – was it effective in increasing clarity, indicated by expanded access to the item, increased purchases, or improved customer satisfaction?
3. The proposed solution should provide Lumina Foundation "freedom to practice” or be available for potential licensing, there should be no third party patents or patent applications preventing the use of the proposed solution in commercial applications.

Additionally, your solution could also meet the following nice-to-have factors:

1. Applicability to the U.S. postsecondary context – while your solution may be used to clearly and effectively communicate net prices in higher education outside the U.S. or in sectors with complex payment structures, any proposed submission could also detail its applicability to the U.S. system. Please provide detailed descriptions that prove your mechanism could be applied to the U.S. postsecondary system.

Solutions with Technology Readiness Levels (TRLs) 4-9 are invited.

This Prize Challenge has the following features:
 

1. By taking part in this Prize Challenge you are granting Lumina Foundation a right to use (but not own) your submitted information, however Lumina must determine any award winners (with the minimum value of $7,500 assigned) within 50 days from the start of evaluation, otherwise Lumina loses this right.
2. This Challenge requires a written proposal to be submitted and the best solution(s) have the opportunity to win awards from $2,500 to $15,000 for meeting enough of the requirements criteria. There is no assignment of IP Rights with this Challenge.
3. Awards will be contingent upon the theoretical evaluation of the proposal by Lumina Foundation against the Solution Requirements.
4. Lumina Foundation may also issue “Honorable Mentions” to notable submissions that are not selected for monetary awards.
5. Solvers may;

• Submit ideas of their own
• Submit third-party information that they have the right to use and further, the authority to convey to Lumina this right with the right to use and develop derivative works
• Submit information considered in the public domain without any limitations on use

YOUR SUBMISSION

Please login and register your interest, to complete the submission form.

The submitted proposals must be written in English and can include:

1. Participation type – you will first be asked to inform us how you are participating in this challenge, as a Solver (Individual) or Solver (Organization).
2. Solution Level - the Technology Readiness Level (TRL) of your solution.
3. Problem & Opportunity - highlight the innovation in your approach to the Problem, its point of difference, and the specific advantages/benefits this brings (up to 500 words).
4. Solution Overview - detail the features of your solution and how they address the Approach and Proof of Efficacy noted in the SOLUTION REQUIREMENTS (500 words, there is space to add more in the summary field, and attach supporting data, diagrams, etc).
5. Solution Feasibility – Please ensure you add here supporting information concerning the Approach and Proof of Efficacy requested in the Solution Requirements, that will help Lumina Foundation evaluate and validate the feasibility of the solution (up to 500 words).
6. Experience - Expertise, use cases and skills you or your organization have in relation to your proposed solution.  (up to 500 words).
7. Solution Risks - any risks you see with your solution and how you would plan for this (up to 500 words).
8. Timeline, capability and costs - describe what you think is required to deliver the solution, estimated time and cost (up to 500 words).
9. Online References - provide links to any publications, articles or press releases of relevance (up to 500 words).

Wazoku encourages the use by Solvers of AI approaches to help develop their submissions, though any produced solely with generative AI are not of interest.

Find out more about participation in Wazoku Crowd Challenges.

Submissions to this Challenge must be received by 11:59 PM (US Eastern Time) on November 25, 2024.

Late submissions will not be considered.

Your submission will be evaluated by the evaluation team first reviewing the information and content you have submitted at the submission form, with attachments used as additional context to your form submission. Submissions relying solely on attachments will receive less attention from the evaluation team.

After the Challenge submission close date, Lumina Foundation will complete the review process and make a decision with regards to the winning solution(s) according to the timeline in the Challenge header. All Solvers who submit a proposal will be notified about the status of their submissions.