Attracting students with tuition discounting has its limits -- and one study suggests a surprisingly large number of small colleges and universities are flirting with those limits.
The study, which is being presented Friday at the American Educational Research Association’s annual meeting, looks at the practice and effects of tuition discounting over 10 years at a group of 448 small liberal arts colleges across the country. Tuition discount rates have risen substantially as institutions offer larger and larger scholarships and grants to students in order to entice them to enroll.
Colleges and universities use tuition discounting as they try to meet enrollment goals and increase net tuition revenue. Under the strategy, institutions offer grant aid to some students in order to lower those students’ cost of attendance. The idea is that the grant aid entices students to enroll who would not have attended if an institution was charging more.
By targeting grant aid to certain students, an institution can theoretically meet its goals -- whether those goals are to enroll more students with top test scores, enroll more students from low-income families, enroll more minority students or simply increase revenue by enrolling more students.
But a large amount of the money institutions spend on grant aid is unfunded or unrestricted, meaning it comes from general funds -- which in turn largely come from tuition revenue. So colleges and universities have to strike a balance between their quoted tuition and the amount they discount to ensure they can bring in enough revenue.
Read more at Inside Higher Ed: https://www.insidehighered.com/news/2017/04/28/new-study-demonstrates-rise-tuition-discounting-and-diminishing-returns