Research

Report: Automatic Textbook Billing Better Deal for Publishers than Students

• By Dian Schaffhauser
• 03/03/20

Is automatic textbook billing a good deal? Not for the students, according to a new study by the U.S. Public Interest Research Group (U.S. PIRG) Education Fund, an advocate for the public interest in education. The research found that almost half of the contracts publishers sign with universities and colleges fail to spell out the discount structure; and two-thirds include language allowing for the removal or reduction of the discount when the number of participating students doesn't meet a set quota — which is sometimes as high as 90 percent of the class. Also, the wide use of these programs tends to eliminate other options for students in those courses, such as buying used textbooks, renting them or borrowing them from the library.

The researchers behind the report, "Automatic Textbook Billing: An Offer Students Can't Refuse?" studied 52 contracts from 31 colleges, affecting 700,000 students. The idea of the contracts is to allow publishers to enter into inclusive access arrangements with institutions in which students are charged for course materials at the start of the semester, "purportedly at a significant discount." According to the report, the reality is different.

The report stated that three companies control about four-fifths of the college textbook business: Pearson, Cengage and McGraw-Hill. By promoting their own versions of automatic textbook pricing, what the companies have really done, the report asserted, is obfuscate pricing practices, making it difficult for students and faculty to know what kind of discount they're really getting, in spite of two requirements in the 2008 Higher Education Opportunity Act that have stipulated that materials sold to students under automatic billing must be below market price and students must be able to opt out.

Among the other details shared in the report:

• Four in 10 institutions (42 percent) have signed at least one contract that appears to restrict publicity about the partnership, and possibly allowing the publisher "to veto any campus marketing materials that would inform students and faculty about program value or how to opt-out."
• Twenty percent of contracts place a limit on how many students can purchase print versions of the course materials; those limits are "typically capped at 15 percent" of enrolled students.
• A third of publisher contracts were open to "annual uncapped price increases"; and 21 percent had the potential to be increased twice during the year.

The report also provided several recommendations regarding the use of or replacement of automatic billing:

• Use a clearly marked pricing structure that is publicly available, which shows the original price of the assigned material, the discount off the national list price and multiple format options;
• Reject efforts by publishers to restrict the use of promotional materials on campus intended to educate students on their purchasing options for course materials;
• Eliminate quotas altogether; as the report pointed out, the discounts alone ought to be enough to get students to participate at a high enough level to make the program worthwhile;
• Cap annual price increases to no higher than the rate of inflation, which is currently 2.3 percent annually;
• Eliminate restrictions on the number of students who can obtain print copies; and
• Have the billing mechanism structured as opt-in, rather than opt-out, and listed as one of several methods of payment — alongside credit cards and cash — that students can use at the bookstore. "There is nothing wrong with institutions seeking to negotiate bulk discounts for students, but students should be able to choose whether to take advantage of it and how they pay," the report stated.

"You shouldn't need to be studying to be a rocket scientist to know that there's something wrong with the textbook-buying process at colleges these days. Phrases like 'inclusive access' may sound great for students. In reality, publishers reap the benefits while students have fewer options than ever to save money," said Kaitlyn Vitez, higher education campaign director for U.S. PIRG Education Fund, in a statement. "These programs create a virtual monopoly, undercutting academic freedom and low-cost options."

The report is openly available on the U.S. PIRG website. The organization has also made its automatic billing investigation materials readily available in a 377 MB zip file for download.