By Kim Parros
At Parros College Planning we are currently in the process of applying to college with our class of 2020. That year went fast and we are looking forward to some amazing results this year with our students. We are also ready to start completing those dreaded FAFSA’S (Federal Application for Student Aid).
Let’s fast forward now to the final step, let’s talk about paying for college: you applied to college, you got in, you did your FAFSA and now you are afraid, very afraid. That dream college comes with a sticker price of over $55,000 per year. Yep, take a deep breath and exhale. Now what do you do with that? Your child won’t consider any other college so it’s up to you to find a way to pay for it.
Can you get that amazing private college for less? In short you should be able to because of something called tuition discounting. This practice is usually more prevalent in small, private colleges and universities. They do this to allow students to attend their college without the price tag of the college, or their families’ financial situation, preventing them from doing so. Originally this started as need-based aid but now tuition discounting encompasses merit-based aid as well.
BUT WHY? We hear over an over why doesn’t the college just lower their sticker price and leave it alone? Lets chalk this one up to the customer: that the higher the price, the higher quality it must be. So that means that the private college at $55,000 per year must be better than the public college at $25,000, makes sense right? Not! Its crazy to think that offering tuition discounts is a win. But it’s true.
What are the disadvantages of tuition discounting?
On the flip side, tuition discounting can lead to some pretty negative consequences, both for schools and students. Some colleges and universities offer such large discounts to their students that it’s eating into their revenue, which is certainly not sustainable in the long run. What’s more, the high cost/high aid model can sometimes discourage low-income students from attending costly private institutions, mainly because some of these students and their families are unaware that financial aid is available.
According to an annual study by the National Association of College and University Business Officers, or NACUBO, discount rates surpassed 50 percent in 2017-18 and are on course to hit 52 percent in 2018-19. The rapidly rising rates are the result of continued efforts by colleges and universities to aggressively recruit and retain more freshmen. The trend is occurring as college enrollment is declining nationally and competition for students is intensifying.
Our advise to parents is to know the costs, and what scholarships will be available to you before you apply so that you can have the gap shortened between what college your child wants to attend and how much you want to pay. We don’t like surprises at the end of a long admission process. Please schedule a complimentary consultation with us to discuss your college needs.