Is tuition discounting the right move to get ahead?
- Many universities have started to resort to tuition discounting, a widespread practice of offering deals on the cost of college for select students, with some institutions even cutting the price tag by 50% — which has more consequences than benefits, writes Frank Wu, Distinguished Professor at University of California Hastings College of the Law, Frank Wu, in a guest post for Inside Higher Ed.
- Tuition discounts are not like financial aid scholarships, but rather are unfunded and affect revenue redistribution, writes Wu. The practice, however, particularly at non-elite institutions that don't have large endowments to offset the costs, allows universities to rise in rankings by being seemingly "need-blind" in admissions, but actually ends up leaving out the most disadvantaged students — because the money is often repackaged to draw in students with high test scores.
- And as another consequence, Wu says that institutions that are discounting too much are "imperiling their continued existence," by reducing and redistributing revenue in ways that don't have return. He suggests college leaders instead consider an overall tuition reset, because it's evident that the cost of higher education is too high for the average consumer.
The original purpose of the tuition discount was to offer financially strapped, typically disadvantaged students the opportunity to still enroll in college if they weren't getting enough financial aid, and it was generally the practice of elite universities with large endowments that could sustain some additional expenditures without risks toward the necessary revenue needed to pay off operational costs. But Wu highlights a trend by which tuition discounting may come with more long-term consequences than benefits to higher education stakeholders. With smaller colleges and universities feeling pressures over missed new student enrollment targets, budgetary constraints and a rise in non-traditional students and adult learners looking for shorter alternative credentialing options, tuition discounts have been a last-ditch effort to raise enrollment. Data from a 2016 Tuition Discounting Study from the National Association of College and University Business Officers reports that the average rate for for first-time, full-time students was 49.1% in 2016-2017 — a 1.1% increase from the prior year.
But this continued rise and the spread of tuition discounting to many more institutions means that some players in the industry get to "beat the system," by advertising the discounts to students with a great deal of merit and high test scores — which negatively affects those needing the money the most, and even more long-term, potentially leading to institutions shooting themselves in the foot by not having enough money to cover necessary expenditures. Wu suggests that institutions "wean" themselves off the drug of tuition discounting as an option and instead recognize that the price of a higher education is too expensive overall. Rather than opting for a discount, he says, he might be more worthwhile for industry players to consider a tuition reset. Additionally, campus leaders can be proactive by keeping data and measuring what types of students are getting the discounts the most, so they can pay attention to whether they disproportionately leaving out disadvantaged students — which could actually hurt institutions' reputations.
- Inside Higher Ed Tuition Discounting: The Problem, not the Remedy
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