Some small private colleges are doing remarkable things to compete for students — slashing tuition or guaranteeing that tuition won’t increase over four years.
For instance, The New York Times said Converse College in South Carolina is cutting tuition by 43 percent to $16,500 next year.
“While Converse’s reset was the most drastic, others including Concordia University … in Minnesota, Ashland University in Ohio, Ave Maria University in Florida, Belmont Abbey College in North Carolina and Alaska Pacific University in Anchorage, have also recently announced tuition cuts,” the Times said.
The Associated Press reports that about 320 colleges and universities offered tuition guarantees last school year.
All of this raises the question: How can schools afford to do this, particularly slashing tuition drastically?
The answer is that hardly anyone has been paying the full rate. If you lower the tuition, that means you’ll won’t have to hand out so many tuition discounts and other forms of financial aid. So it’s a wash for schools.
The Times offered this fascinating quote:
“Schools wanted a high tuition on the assumption that families would say that if they’re charging that high tuition, they must be right up there with the Ivies,” said David L. Warren, president of the National Association of Independent Colleges and Universities. “So schools would set a high tuition, then discount it. But when the schools in your peer group all have discounts, it becomes an untenable competition for students, with everyone having to increase their discounts.”
The reduced tuition rate doesn’t necessarily make a school more affordable for students, since they may be paying the same amount either way, but it does make small private schools look more affordable. The Times says many private schools are losing out in the competition with public universities, which are generally less expensive.
The AP says a tuition guarantee for four years is attractive because it makes it easier for students and their families to plan for expenses.
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This article was originally published on MoneyTalksNews.com as 'More Private Colleges Are Slashing or Freezing Tuition'.