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Colleges Are Lowering Tuition | Forbes

As colleges and universities continue to struggle to meet their enrollment goals, more colleges are realizing that the strategy of increasing their published tuition every year by several percent and concurrently, increasing their financial aid to entering students to offset some or most of the increased price is not working. Between 2006 and 2017, private colleges, on average, increased their tuition by 29% while their average net price increased only 6% over this period (College Board Trends). This meant that the colleges received little of the revenue from their price increases and some institutions actually experienced decreases in net price. Further compounding the price issues for private colleges is that the average income of students at public four-year institutions is higher than it is at private colleges indicating that many middle-income families choose public colleges where they know that they can afford the tuition. Today, the average discount rate for institutional financial aid for new freshmen at private institutions is 50% according to the latest survey by the National Association of College and University Business Officers. This means that the average new freshman at a private college or university pays only half the published price and many pay significantly less than half the price. A study by Longmire Associates found that 60% of students and their parents are unaware that private colleges discount their price. In addition, at a significant number of private colleges and universities, there are no students who pay the full price.

The confluence of these factors along with the serious enrollment issues that many schools, both public and private, are facing is leading many institutions to question their high aid/high discount pricing policies and to consider changing their strategies. The impetus to change pricing strategy at private colleges has been further motivated by changes that public colleges are making in their strategies to attract more out-of-state students. Among the early adopters of a significant change in pricing strategy at public institutions was the University of Maine which announced a few years ago that students from the surrounding states could attend the University of Maine for the price that they would have paid to go in-state in their home state. This strategy has been effective in increasing the number of out-of-state students at the University of Maine. Jumping on this bandwagon, are Central Michigan University and Southern Illinois University Edwardsville which will charge U.S. students from anyplace in the country their in-state tuition rate. The University of Nebraska at Kearny, like many public universities, offer instate rates to students from nearby states all in an effort to increase access to programs and increase enrollment.

Over the last 20 years, more than 39 colleges have reduced their price by $1,000 or more some by more than 50% and many have made significant price reductions for this fall including Drew University, Mills College, Sweet Briar, and Birmingham Southern to name a few. Others have announced significant price cuts for next fall including St. Johns, the great books school, which will slash its price from over $50,000 to $35,000 and The University of Cumberland will cut its tuition by 57%; many other schools are expected to announce price cuts within the coming month.

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Colleges Are Lowering Tuition.