Tuition discounts… and the future of the private sector in higher education

Tuition Discounting Increasing in the Private Sector of Higher Education

Getting information about college and university tuition discount rates is as challenging as finding the Holy Grail.

Tuition discount rate (the amount a school has to reduce the “sticker price” to enroll students) is an important indicator of strength in the market place, for everyone from University of Chicago competing against Ivy League rivals to far less well-known schools competing against regional public universities. Not many people like to admit it, but without substantial tuition discounting the private sector of higher education would look far different than it does today.

The current financial crisis (and that’s still very much the environment for both the public and private sectors) in higher education has placed even greater strains on tuition discount rates. That fact was confirmed at the 2010 meeting (“Securing a Better Future”) of college presidents hosted by the Council of Independent Colleges on Florida’s Marco Island.

A reporter for InsideHigherEd was allowed to sit in on a meeting where presidents talked about the need for higher tuition discounting to maintain enrollment for the freshmen entering in 2009. The reporter promised not to mention any individual colleges. No individual discount rates were reported.

Steady enrollment but less tuition income

Here are some of the important points of that meeting:

  • “Most” colleges met enrollment goals.
  • A “large majority” said their discount rates had increased.
  • When talking about increased applications this year, a “bubble burst” as presidents acknowledged that there are not enough high school graduates to translate this increase into more students. (Without an increase in accepted students who are likely to enroll, pressure on tuition discounting will not ease.)

Other problems identified:

  • Banks that have reduced lines of credit and increased interest rates.
  • More reliance on “adult” students to maintain total enrollment levels and thus a change in the traditional profile of many colleges.
  • Interest only in academic programs with strong individual reputations. Parents are reluctant to spend $$$ on private sector tuition for programs without perceived strong rewards.

Private Sector Transformation

While “paradigm shift” is an overused term, the college president who used those words at the CIC meeting was on target. Many if not most private sector institutions will be far different 5 and 10 years from now than they were 5 years ago.

Obviously, “securing a better future” isn’t going to be easy. The journey starts with presidents who can talk frankly to faculty, staff, students, and alumni who may have different views of just what “better” means.

Tomorrow I’ll write about one president who is doing just that: Charles Edmundson at Alfred University.

That’s all for now 



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