This is an interesting study shedding light on tuition conundrum.
https://www.insidehighered.com/news/2018/04/30/nacubo-report-finds-tuition-discounting-again
Do you have a question regarding this?
I do but only department of education can answer so I posted it to read opinions of other parents to better understand this issue.
Well, economically it isn’t a good sign for full pay students as they will be paying sticker price and others will be getting a discount. That means they will carry a higher debt load into their careers or the parents will have to ante up despite the actual price being lower for many others.
Maybe you could post the question you don’t understand in the article.
I was wondering if they observe these business practices or conduct studies of their own to offer solutions beneficial to all parties involved and to make it more efficient? Is there any official oversight or do they expect free market to adjust itself by trial and error? As many consumers of these businesses are under 18 and most are under 21, shouldn’t government look out for their interests?
The department of education doesn’t care if one school charges a million dollars in tuition as long as they aren’t conspiring with other schools to charge that same amount. The maximum Pell grant and maximum Direct student loan would be the same at every school.
The fed government doesn’t really worry that much about consumers and the amounts they borrow or spend on goods. The disclosures are regulated by federal law, but the interest rates are regulated by the states. The cost of most goods isn’t regulated at all.
How do you know that the plenty of full payers are not wealthy to begin with?
We’re full pay just about every where and not wealthy. We live urban and have a nice nest egg. My spouse is in his late 50’s. We have a 2nd kid coming up behind our junior. We drive our vehicles into the ground. I have a cheap mini van. We live in a 2000 sq ft 3 bedroom/2 bath, 100 year old house that could use renovation. That’s been an ongoing project. Being full pay on paper doesn’t mean lifestyles of the rich and famous. We can comfortably afford in the range of our flagship U while taking on no debt (kid or us) so that is a good jumping point for a college search.
I suspect those in the top 1% (> $630K) are probably able to swing being full pay comfortably. The further you come down from that, the more painful it can be. Actually, even if we didn’t have to pay for health care, that would and could make a big difference in our bottom line.
Just because a parent is full pay on paper doesn’t mean they are poor planners or cruel parents or being cheap. I’d much prefer EFC to be a percentage of average income over the last 10 years (10% range seems fair). I’m not in favor of making it harder or more expensive for low income families. But I feel like we’ve done a lot right over the past 20 years and still have lots of doors closed.
The study is written from a business perspective. The phenomenon it calls “tuition discounting” is known by another name from the consumer (student/parent) perspective: need-based financial aid and merit scholarships. There’s nothing new here, really, except that both need-based and merit awards are creeping upward as colleges compete for students, and these “discounts” represent a slightly higher percentage of the total tuition revenue that colleges would receive if all students were full-pay. The study also sounds a warning: sky-high sticker prices at private colleges are meeting increased consumer resistance, putting a ceiling on how much higher tuition can go. So if tuition discounts (i.e., FA awards) continue to increase, it will put a squeeze on actual tuition revenue—the principal source of operating funds at most private colleges.
The study focuses on private colleges, but much the same phenomenon can be seen at many public universities which face the additional complication that in most states, legislative appropriations haven’t kept pace with the growth in enrollment and rising costs.
The problem isn’t as acute at colleges with huge endowments, where payouts from the endowment can cover a large fraction of FA costs, or substitute for tuition revenue as a source of duns to support other kinds of operational costs… But it’s not realistic to think every college can just go out and build a huge endowment… So the wealthiest schools become the pacesetters, with generous FA programs (i.e., large tuition discounts) that they can afford, while other colleges struggle to keep up. In truth, however, most colleges find they can’t really afford to compete at that level; their “solution” is to not meet full need, and leave it to students and their parents to sort it all out.
Let’s not pretend that 18-21 year-olds are the ones who are paying ~$60k/year for college. We all know that’s not the case. I think the number of students heading to college who qualify for some aid is increasing and I think the schools that offer grants may have to make adjustments. I don’t think they can afford to give more aid while keeping enrollment at current levels. That doesn’t mean they need more full pay kids, but I do think think they need more students and greater flexibility for class sizes. So maybe they have 35-40 students per section instead of 15-25.
As a practical matter, education of the young is a type of service where the (direct) user is not the same as the (direct) payer. Of course, this is because the payer typically has an interest in the user becoming educated even though the user is financially incapable of paying for the education up front (whether parent and child within one family, or in a more general societal sense, though there are political controversies involved in how much general societal interest there is).
A private college (or private K-12 school) must market itself to both the user and payer, knowing that these are separate people (or entities in the case of payers who are organizations, government or otherwise).
“t isn’t a good sign for full pay students as they will be paying sticker price and others will be getting a discount.”
Just for context, genuine full pay only exists at elite private schools. At ordinary regional private schools, everyone admitted typically gets a discount.
“Everyone”?
Seems like even “ordinary regional private schools” have some students without grants or scholarships.
41% Hawaii Pacific University https://nces.ed.gov/collegenavigator/?id=141644#finaid
22% Sweet Briar College https://nces.ed.gov/collegenavigator/?id=233718#finaid
19% University of Phoenix (Arizona) https://nces.ed.gov/collegenavigator/?id=484613#finaid
17% University of Redlands https://nces.ed.gov/collegenavigator/?id=121691#finaid
14% University of the Pacific https://nces.ed.gov/collegenavigator/?id=120883#finaid
05% Mount St. Mary’s University https://nces.ed.gov/collegenavigator/?id=163462#finaid
@ucbalumnus Do you have statistics for percentage of sticker price payers at Ivies?
^^ @ucbalumnus I think Hanna is referring to those legit regional private schools, not diploma mills like U of Phoenix.
Actually, I think the skyrocketing tuition cost has much to do with too much money coming into the market, a lot of it thru student loans. In the last ten years student loan debt has increased by a trillion dollars —that is roughly $100 billion a year on average and with a million students entering college a year it amounts to $100,000 per student. The student loan industry grew because of implicit government guarantee thru legal and financial means. But getting the government out of student loan programs will be politically difficult. So, in the end you have middle class families getting stuck with big bills and WallStreet getting rich with profitable loans.
Is that right? I look at the Common Data Set of a school like Loyola Chicago. It says that of 10,261 full-time undergraduates, 6,776 got need-based FA (though in most cases not enough to cover full need). Of the 3,485 who didn’t get need-based aid, 2,799 got non-need-based grants or scholarships (other than athletic scholarships). That still leaves 686 who got neither need-based nor non-need-based aid (i.e., tuition discounts). A total of 68 students got athletic scholarships, which reduces the number who got nothing. But that still leaves over 600 full-time undergrads who got neither need-based nor merit awards nor athletic scholarships. Certainly most got something, but not “everyone.”
Similarly at DePaul, roughly 8,600 students got need-based FA, plus another 2,300 got non-need-based aid and 108 who got athletic scholarships, out of a total of 13,000 full-time undergrads. Again, most but not “everyone.”
I haven’t done a systematic study, but this pattern seems pretty common at non-elite schools I have looked at. Unless you’re counting schools like Loyola and DePaul as “elite.”
The others in the list in reply #13 are not for-profit schools of low reputation.
According to Cappex, Princeton has least full pay students among Ivies with 41% while at Brown, 55% are full pay.
56% Harvard University https://nces.ed.gov/collegenavigator/?id=166027#finaid
55% Columbia University https://nces.ed.gov/collegenavigator/?id=190150#finaid
52% Brown University https://nces.ed.gov/collegenavigator/?id=217156#finaid
48% Yale University https://nces.ed.gov/collegenavigator/?id=130794#finaid
47% Cornell University https://nces.ed.gov/collegenavigator/?id=190415#finaid
46% University of Pennsylvania https://nces.ed.gov/collegenavigator/?id=215062#finaid
46% Dartmouth College https://nces.ed.gov/collegenavigator/?id=182670#finaid
42% Princeton University https://nces.ed.gov/collegenavigator/?id=186131#finaid
The percentage receiving grant or scholarship aid can be found on College Navigator pages for the college (links given above). 100% minus the percentage receiving grant or scholarship aid is the percentage who are full pay.