<p>If you're hoping for a merit scholarship or a good financial aid package, then you need to read the 2005 National Tuition Discounting Study published by enrollment management consulting firm Noel-Levitz. It discusses in great detail how colleges manage their merit scholarship funds in order to attract the students they most desire, while maintaining net revenue growth. It makes for fascinating reading. Here's a quote:</p>
<p>"Strategic financial aid management allows you to evaluate the effectiveness of your awards on student recruitment and retention...You can drill down to specific segments of your student population, and make the appropriate merit- and need-based awwards. You wind up having a justification for every aid dollar you spend towards achieving your enrollment goals..."</p>
<p>Thanks for the information. I gave it an initial run through and maybe I missed it but I don't see much "meat" in the report. It's basically a summary illustrating how this person's approach is effective in providing "bank for the buck" to the college when handing out aid. My impression is that this is a marketing glossy for this person to get more consulting contracts with colleges.</p>
<p>I didn't see the approach descirbed in the pdf.</p>
<p>Foomonchew -- Maybe I am reading more into it. I thought it offered a good insight into some of the ways colleges are thinking about tuition discounting, especially as N-L is the largest enrollment management consulting firm in the country. But then, I read about enrollment management issues a lot, so perhaps what is clear to me won't be to others. Sorry you didn't find it helpful in understanding the thinking that goes on behind financial aid/merit decisions. We've talked about enrollment management techniques colleges use here in the past - perhaps one of those discussions will be more useful to you - here's the link to one: <a href="http://talk.collegeconfidential.com/showthread.php?t=101385%5B/url%5D">http://talk.collegeconfidential.com/showthread.php?t=101385</a></p>
<p>The marketing report certainly lays to rest the notion that college admissions are a seller's market.</p>
<p>The size of the "scholarship" is just a marketing ploy. Consumers should really focus on the bottom line cost and realize that there are colleges at every imaginable price point -- any of which can be a good or bad value depending on what they offer for that price.</p>
<p>The report is good for illustrating the "enrollment management techniques" concept effectiveness. It's good to see this to make it clear to College shoppers the rationional behind the amount of merit aid awarded. I'm only saying I had wished it presented the criteria, i.e., what the colleges are looking for to help me maximize aid given to my D (or future kids). </p>
<p>I see your various posts on the topic around the forums here. I do thank you for the information.</p>
<p>Consumers should really focus on the bottom line cost and realize that there are colleges at every imaginable price point -- any of which can be a good or bad value depending on what they offer for that price.>></p>
<p>Absolutely. I think I have posted the College Board's materials explaining the laws of supply and demand to financial aid officers here in the past - it really is all about supply and demand, both for admissions and for financial aid. </p>
<p>That is why I stress the importance of a well-targeted list that includes schools that want and need what you have to offer, especially if you have financial considerations. By the same token, of course, students and parents have to decide what their price elasticity is going to be for various college choices, and weigh their own supply and demand issues. Some families may be perfectly willing to pay full price for an Ivy league school, some would rather opt for a different school with a discounted price. But, thinking of it in terms of students having something of value to sell to colleges (and all students have something to sell to some college) instead of all of the value lying in the lap of colleges, puts some of the power back into the hands of applicants, where, ultimately, it should be.</p>
<p>"I'm only saying I had wished it presented the criteria, i.e., what the colleges are looking for to help me maximize aid given to my D (or future kids)."</p>
<p>Yes we would all like to know but the fact is they are not all looking for the same thing. One school might be terribly concerned about increasing the number of URN's while another might be interested in average SAT scores or scores over a cerntain break point, a third might be interested in geographic representation because they want to crack in to distant markets, some might even be interested in finding opportunities for the proverbial poor but honest lad. The point is the same enrollment management tools can be used for any of those ends. They cannot change the marketplace or the hidden hand - to increase one thing you will have to trade off somewhere else if you don't want total revenue to drop.</p>
<p>I think the real lesson to take away is that when the school says they want passionate, selfless, committed students what they don't also tell you is because we are bloodless accountants ourselves :-)</p>
<p>There are exceptions. But, unless you can identify a specific goal (such as increasing minority enrollment), it's safe to start with the assumption that any school offering merit aid discounting is looking for the same thing: high stat students who will:</p>
<p>a) provide additional tuition net revenue</p>
<p>b) boost the stats so that the college can attract more affluent customers down the road.</p>
<p>The first one is easy to understand. It's a simple adaptation of the airline pricing scheme. A school would be happy to enroll a high stat kid who will pay $20,000 (after the ego-stroke of a merit-aid discount) than having to turn to lower income students who could only pay $10,000 or, even worse, to not sell the seat at all.</p>
<p>The second is equally important. The higher the published stats of a school (think median SATs), the higher the prestige. Prestige is what attracts wealthy customers. Use the merit aid to boost the stats and you can take some lower-stat full-fare customers happy to pay if they can find a "presitigious" degree for little Johnnie. The merit aid discounting boosts the stats and creates an impression of a more selective school than the underlying applicant pool would indicate.</p>
<p>Yes I don't doubt there is many a prestigious school you could buy your way in if you could convince the director of admissions you had no qualms about paying full freight. I had some old stats (1998) on the discount rate at some pretty prestigious schools (not Ivy's don't get excited but all top 50). They ranged up to 32%.</p>
<p>Only within reason. I'm not suggesting that any student can buy a spot in any school with a full tuition check. But, within a school's "range", schools are looking to maximize the tuition revenues.</p>
<p>It's actually instructive to look at the discount rates of schools. Combine the overall rates with a look at the proportion of need-aid to merit aid, and you can get a pretty good handle on the school's admissions strategy. </p>
<p>There's a bit of a hinge point at the extreme top end. As you increase in selectivity (i.e. the ability to attract full-fare customers), the discount rate decreases. However, at the extreme top end of the selectivity (and endowment) scale, it flips back the other way and the discount rate increases again at schools that can afford very high levels of need-based aid in order to achieve diversity goals. At the extreme top end, the very fact that the schools attract lots of full-fare customers allows them to fund generous need-based aid.</p>
<p>I think the real lesson to take away is that when the school says they want passionate, selfless, committed students what they don't also tell you is because we are bloodless accountants ourselves :-)</p>
<p>Many top schools insist they are "need blind" -- that the admissions committee doesn't know whether you are applying for financial aid. But, often there's a box right there asking whether you are doing so.</p>
<p>I wonder if failure to apply for aid, especially in cases where you are not expecting much if any, can increase chances for admission in many schools.</p>
<p>Interesteddad, your points are an excellent starting point. But I'd take it a step further and keep in mind that colleges are also looking at their bottomline. That means, in some cases, that colleges would rather give a discount (merit scholarship) to a student who can pay full freight, or close to it, than to a student who can only pay $10,000, regardless of whether one student is all that much more qualified than the other. </p>
<p>Going back to your airline scenario: empty seats cost money. You want to fill them and are willing to use discounting to do so. But you'd much rather discount 10% than 50% because you'll earn more/lose less with the customer you can get for 10% than the customer you need to entice with a 50% discount. </p>
<p>Colleges have lots of ways of identifying who's a 10% discounter and who's a 50% discounter - zip code analysis, demonstrated interest, whether the student is applying for financial aid, even, in some cases, that applicant with lower stats who probably doesn't have as many options as the one with higher stats. Again, it all goes back to simple economics and price elasticity.</p>
<p>I wonder if failure to apply for aid, especially in cases where you are not expecting much if any, can increase chances for admission in many schools.>></p>
<p>The answer is yes. Not at all schools, but at many, especially those who admit to being "need aware". However, not applying for financial aid is more likely a tipping point in admissions --- in other words, it won't get you in in and of itself if you don't have the stats...but if it comes down to a choice between two candidates with very similar stats, one who is applying for aid, and one who isn't, the lack of a need for financial aid can tip the one over the other.</p>
<p>
[quote]
You want to fill them and are willing to use discounting to do so. But you'd much rather discount 10% than 50% because you'll earn more/lose less with the customer you can get for 10% than the customer you need to entice with a 50% discount.
[/quote]
</p>
<p>Exactly. They are way ahead of the game giving four $10,000 scholarships to well-to-do high-stat kids than one $40,000 scholarship to some dirt farmer's kid. The four high-stat kids not only improve the schools median SATs on the top end, but they knock off the school's four lowest SAT customers from the bottom end. Double the benefit. And, as an added bonus, enrolling a lot of those students sends a message back to the wealthy high schools that Acme U. is a real up and comer. A place where well-heeled kids go. On the map.</p>
<p>I look at it this way. Let's say the sticker price is $40,000 per year at the top, top schools. But, by any objective measure, Acme is really selling a $30,000 product relative to the market leaders. But, instead of advertising a $30,000 product, they advertise a $40,000 product and offer a $10,000 "discount" to only their really special customers (say a third of the student body) to get back down to the market price. The customer who gets the discount feels better about the transaction because they got the special exclusive discount and the school gets the price they would have gotten anyway. Car dealers have been doing it for years. </p>
<p>On top of that Acme is able to attract some kids who will pay above the real market price (writing a check for $40,000), happy to get Acme's prestige even though they have somewhat average stats.</p>
<p>Tulane was one of the foremost though hardly the only player in that tuition discounting strategy. Don't know if they still will be post-katrina. But with more and more schools playing it aggressively I wonder if it will continue to be effective.</p>
<p>The University of Richmond on the other hand always had relatively low tuition but decided to jack it precipitously last year. The reasoning seemed to be that the lower tuition affected peoples perceptions of the quality of the school (and they needed more money). Whatever the publicly stated reason my guess is they will be getting heavily into the tuition discounting game. But I have a suspicion it is a strategy that has run its course and will be incresingly less effective.</p>
<p>Once everybody starts doing it (and virtually everybody has, though some still hypocritically insist they only give need based aid) they run into the same problem the car dealers do. Have you ever bought a new car and not thought you got screwed on the price? I know I haven't and I think most people feel the same as me. The result is I only buy from no-haggle pricing dealers. I actually tried haggling but couldn't beat the no-haggle price anywhere and I certainly did not need the aggravation.</p>
<p>If I were a school outside the top twenty and wanted to move up the ladder I'd cut my price in today's market, give a few full ride scholarships to attract some real cream into an honors pool and test in the rest after first semester. I think outside the top twenty schools published tuition has gotten so high that there really is price resistance. These schools don't know how many potentially really well qualified students they are scaring off with the sticker price who maybe could pay the real price.</p>