Tuition Discounting – How high is too high a discount to offer students? Nearly 10 percent of colleges have rates of 60 percent or more. For some it appears to be a sign of distress, yet others see a strategy.
Tuition Discounting – Read the Article
Tuition Discounting -Tom McDonald’s Comments:
Tuition Discounting -Quite simply, there are institutions out there, that at any price, are not providing marketable educational value to their students (relevant student success outcomes, leading to relevant employment in their chosen field, resulting in sustained relevant contributions to society).
NO ONE buys ANYTHING other than education this way. We don’t just gravitate to the solution that only has the lowest price, the highest subsidy, the most luxurious dorms, the most elaborate student center, with rock climbing walls, etc.. First we look to proven outcomes…What percentage of students graduate with a piano degree and out of those graduates ,how many are employed in their chosen field, making how much? And the remaining graduates, in piano, where are they employed, making how much? Our decisions MUST be outcomes based.
Do they use one to many elearning in a lot of their classes, which benefits the institution at the direct expense of the student (little if any relevant deep student learning occurs with one to many lecture elearning, etc.)
Are they using a disproportionate number of adjuncts (non employees) to teach their classes? This also is a cost cutting approach that directly benefits the institution at the direct expense of the students.
When students = revenue, trying anything to get new revenue makes no sense.
The question these institutions need to ask themselves is: What have we done and what are we doing to advance student success outcomes? (The ONLY reason we exist). If the answer is discounting tuition, adding adjuncts, replacing classroom teaching with one to many elearning, building fancy buildings, rock walls, lazy rivers, luxury dorms (none of which directly and measurably add to student success outcomes) and maintaining the status quo otherwise, you are doomed to closure.
If your educational value to your students is an illusion, a shell game, a dog and pony show, in today’s environment, where the cost of the service exceeds the students ability to pay for it, only the strong will survive (those that directly and measurably provide student success outcomes,(best case scenario), or those that don’t, but are able to continue to subsidize a flawed, institution focused system, (UNTIL they change their current educational paradigm from institution focused to student focused…assuming they have enough money to weather the required change)
Education has been a socialized system, perpetually funded, in spite of its institutional focus, lack of measurable student success outcomes, ineffectiveness or inefficiency.
Rather than fixing it’s systemic problems, those in charge reduce costs (revenues) rather than making changes to advance student success outcomes.
If the deliverable is flawed, the outcome uncertain, only those that are desperate apply, especially if there is an outside funder…catastrophe follows.
Those providers that have been a sleep at the wheel and forgot why they exist may not recover from their poor strategic planning
Buy the buy, David W. Breneman’s credibility has to be eroded some by being a trustee at Sweetbriar.
Tuition Discounting – Discount Much?
Is a high discount rate a guaranteed trouble sign for colleges? Not necessarily, experts say — sometimes colleges can leverage discounts to increase revenue, at least if they are increasing enrollment. But maintaining very high discount rates can be a risky strategy and an indicator a college is in distress.
The average discount rate offered by colleges to first-year students has risen significantly in recent years. In 2014 it was 48 percent — the highest level ever, according to a survey of 411 private colleges by the National Association of College and University Business Officers — up one-fifth from 2007’s average of 39 percent.
Many private college leaders say they needed to raise the rate, even beyond their comfort level for such decisions in prior years, to respond to family concerns about paying for college after the economy tanked in 2008. But if 48 percent is one thing, what about 60 percent or higher? And it’s not lost on many higher education finance experts that Sweet Briar College decided to close when it topped a 60 percent discount rate, even if the college’s alumnae subsequently intervened and the college revived itself. But some colleges are going to large discounts as part of enrollment strategies they think could reshape their institutions.
And of the 411 colleges surveyed, 39 — or 9.5 percent — had discount rates at or above 60 percent. That marks a near doubling from five years earlier, when 5 percent of colleges surveyed had discount rates at or above 60 percent.
In many ways, tuition discounting has become par for the course in today’s pricing structure for colleges. In 2010, 62 percent of colleges surveyed by NACUBO offered 90 percent or more of their students some level of discount. By 2014 that number had grown to 69 percent, according to figures provided to Inside Higher Ed by NACUBO.
In many areas of the country, the number of high school graduates is shrinking and colleges are having to do more — programmatically, academically and financially — to attract students. For many colleges “it might be the case if you discounted more deeply, you might end up with more kids and more net revenue,” explains David Strauss, a principal of the higher education consulting firm Art & Science. In cases where discounting is successful, a college may increase its discount rate and charge less per student, but enroll more students, meaning the overall financial picture is rosier than the discount rate might suggest.
Oftentimes colleges participate in discounting because the market demands it: students and their parents react better to a college with a large sticker price that offers them a large scholarship than they do to a college that is simply cheaper and offers no or little scholarship funds.
“Parents and students are not expecting to pay full price,” says Lucie Lapovsky, a higher education financial consultant who used to help NACUBO compile its tuition discounting study. “This is an industry that’s known for being on sale.”
A more expensive college is perceived to be more valuable by students, and students often see scholarship offers as proof a college values them as an applicant. More and more, families are expecting colleges to offer them a “discount” off a college’s sticker price when their child is offered admittance. It’s far from unusual for families to try to leverage a scholarship offer from one college to seek more money from another potential college.
Tuition discounting can be a way to increase interest in a college and perceived value, and therefore enrollment. More and more colleges are engaging in the practice — with many of them ticking their discount rates up a little each year.
“You [can have] a situation where you’ve got a college in a highly competitive area, people are shopping around for the best deal — or the student body that has gone to that college just can’t afford it — and the college starts to offer more and more of a discount just to get students through the door,” Edith Behr, a Moody’s analyst, said. “The competition has grown to a point where the college is lowering its price to attract students. If that process is accelerated, it may mean the college is approaching, or [is] in, a financial stress situation.”