College Guide
Blog
When considering how much it costs to actually attend college, critics often forget that there’s a big difference between how much colleges officially charge and how much most families actually pay. According to a piece by Jacob Goldstein at NPR:
But the sticker price for a year of college is a lot different than what people actually pay — and private colleges have grown a bit more aggressive in offering discounts in recent years, according to a report out today from the College Board.
Colleges don’t, of course, call it a “discount rate.” Such a direct reference to commerce would seem a little tacky. As Goldstein puts it:
The combination of higher prices and more scholarships can be good marketing. In an article today, U.S. News wrote: “College officials fear that Walmart-esque everyday low pricing would actually drive more applicants away because many students and parents assume that higher tuition prices mean a higher quality education.”
But it looks like as tuition rises, so does financial aid, at about the same rate.
Check out this graph from the College Board. The top line represents the publicized tuition rate at private colleges over the last decade, the bottom line represents what the average student actually pays.
Of course, the real amount people pay to go to college is still rising, but it’s not nearly as high as we think.
Facebook
Twitter
Anonymous on September 17, 2010 6:53 PM:
Colleges don’t, of course, call it a “discount rate.” Such a direct reference to commerce would seem a little tacky.
Yes they do. I have sat in on many meetings where admissions people call it exactly that. It is term used internally to refer to financial aid that is not backed by endowment.
We just do not use this term externally.
Jon Oberg on September 21, 2010 4:59 PM:
These are excellent points but both the author and the previous commenter have only scratched the surface of discounting manipulations. Colleges and universities, public and private, want to see their discounts backed by real dollars as much as possible ("funded" as opposed to "unfunded"). This is where federal and state aid to the financially needy come in to the aid packaging process.
When government aid for the lower income is increased, it often is used to put real dollars under low income students so that their previously unfunded discounts can be moved to recruiting the non-needy. This is why increases in Pell grants show up, after packaging, as an explosion of unfunded "merit aid" rather than a reduction in the student debt load of those with financial need.
Reporting net price "average" reveals the important difference between list price and actual price, but misses the manipulations of funds among income groups and masks the fact that increases in government grants to the financially needy have done little to provide access and affordability as intended.