Dive Brief:
- A new report shows private schools continuing to increase their tuition discounts for students, but the practice could spell doom.
- NPR reports that students often “anchor” to the sticker price, which serves as a signal of high quality, even though the institution offers its education at a much lower price for many of its students.
- Small private schools with minimal endowments are likely to reach the point of diminishing returns the fastest, failing to entice enough students to their programs to make the discounts financially worthwhile.
Dive Insight:
Because the financial aid process is conducted on an individual basis with each student, the widespread difference between the sticker price and the actual price students pay for tuition and fees is kept under wraps. The National Association of College and University Business Officers’ latest study, however, shows that out of the vast majority of first-time, full-year freshman who get some kind of tuition discount, the average is more than half off — or about 54.3%.
If enough students pay some discounted price rather than nothing, getting less per student works. But with such competition in the higher education marketplace, that result is not a given.