How to get your share of college discounts even when college costs are rising
College costs are increasing, but so are tuition discounts. The nation’s colleges and universities raised their tuition prices again this year, continuing a practice that has been making higher education more expensive for many consecutive years.
College Board reports that tuition, fees, and room and board at private colleges increased 3.4% to $45,370 this academic year.
In-state students at four-year public colleges saw their costs rise by 1.8% to $20,090 given funding cuts from lawmakers.
Many families do not realize that private colleges offer deep discounts from their sticker prices in the form of merit scholarships and other non-need based awards. Only the elite, highly-selective colleges refrain from awarding these tuition-discounts.
A recent study by the National Association of College and University Business Officers found that over 50% of incoming first-year students received discounts which reduced their tuition by as much as 40%. In many cases, these institutional funds also lowered private college tuition costs into the same price range as public universities.
With the 94% of all private schools discounting and the average discount being 46%, you should definitely consider the opportunity tuition discounts play in your situation.
Why do colleges offer tuition discounts?
It allows colleges to:
- Increase their rating average
- Boost net revenues
- Improve the diversity of the student body
- Attract legacies (students of alumni)
- Attract better students and students from wealthy families (increase alumni contributions)
- Compete with public university prices
- Increase the freshman class-size
Understanding where and how to find colleges that offer these discounts is critical. It can give students the opportunity to receive a quality education while reducing their overall college costs.
When the college sets a sticker price for tuition, many higher-income families pay full price subsidizing lower-income families who qualify for financial aid. This practice is how the system has worked for years allowing colleges to attract a more socio-economic group of students or other types of students that meet the enrollment management goals for the university.
In reality, not all higher-income families pay full tuition and not all lower-income families will receive enough financial aid to pay for college.
How does it work?
Colleges arrange incoming first-year students into pools and set a range of tuition-prices based on those groups. This process is called financial aid leveraging. This practice is the strategic investment of financial aid funds to help campuses enroll the students they desire and achieve their desired net revenue.
The amount of income and assets a family shows on the FAFSA and PROFILE financial aid forms places them into a specific pool. Then, the college uses a mathematical formula to craft an offer to specific students in each pool. The institution’s goal is to attract and enroll the best students based on their goals in each pool using financial aid dollars as an enticement.
Who does it help?
In other words, at a $50,000 school, an enrollment manager will take a $40,000 scholarship customarily given to one needy student in a lower-tier pool and break it into four $10,000 scholarships. Those four $10,000 scholarships will be offered to wealthier students in an upper-tier pool. The goal is to change their admissions decision since they are being offered a discount they never thought was possible.
So, by discounting, a school can get an additional $30,000 a seat from a wealthy family verse getting only $10,000 for a seat given to a student who has a high financial need. Net gain $120,000 for four years if they just have one family accept (a huge windfall if two or more accept).
This money is then used to attract other students the school wants to fulfill its enrollment management goals. By knowing what a school is looking for can help other types of families benefit from this practice as well.
“Financial aid leveraging” is a game colleges play, and they play it well.
By knowing how to play the game, you can avoid paying the full sticker price regardless of your wealth.
How to Get Your Share of College Tuition Discounts
Families hoping to be considered for institutional grants must position themselves correctly to be recruited by private colleges. Proper positioning begins early in high school and involves these seven factors:
- Good grades
- Good SAT/ACT test scores
- A solid resume of achievement
- Making application early in the academic year
- Applying to schools which recruit the same students
- Identifying and applying to schools which have low-yield factors
- Having 6 to 10 colleges on your application list
Good grades are self-explanatory. The presumption is that good grades in high school will mean good grades in college and ultimately graduating from college and becoming an alumnus. As an example, a student should have a minimum of a 3.0 GPA in high school to be in the running for a tuition discount.
SAT/ACT Test Scores
The SAT/ACT college prep test scores are merely qualifiers, but colleges have no other way to compare the academic abilities of a student from Ohio with a student from California. Students should have a minimum 24 ACT or 1250 SAT test score to be in the running for institutional aid.
Solid Resume of Achievement
Throughout their high school years, students should build a solid resume of achievement and list any civic groups or community service projects in which they’ve participated. This will demonstrate to the colleges that the student is well-rounded and active in student affairs outside of regular studies. Treat this the same as preparing a resume for a job! Send a resume with the application to each school.
Making Application Early in the Academic Year
Apply to colleges early in the senior year of high school (September – December). The rule of thumb is, “the earlier, the better!” Once a particular school begins to fill the upcoming year’s freshman class, the need for a private college to offer institutional aid diminishes.
Applying to Schools which Recruit the Same Students
Private colleges often compete with each other for the same students. These schools are more likely to offer significant institutional aid if they know the student is also applying to a competing school.
Identifying and Applying to Schools which Have Low-Yield Factors
The number of students actually enrolled divided by the number of students admitted = YIELD.
Apply to colleges which have a high amount of admitted students, but a lower number of enrolled students. Private colleges fight a constant battle to fill seats. Enrollment is key to a college’s survival! Many colleges select students for admission to their school only to have them enroll and attend another leaving enrollment managers scrambling to fill seats.
Second-tier private colleges are even more challenged because they compete with the low costs of public universities and elite schools.
As a result, the student is more likely to receive institutional aid from private colleges with a low enrollment yield percentage.
Having 6 to 10 Colleges on Your Application List
Students should apply to a minimum of 6 to 10 colleges. At least four should represent private colleges which compete with the student’s first-choice college.
Applying to several colleges also gives the student the opportunity to hopefully receive institutional aid from one college. This award can be used to ask for a similar or better award from the college the student would prefer to attend.
There are two prices for college that families pay:
- A price for families that have a financial gameplan;
- and a higher price for those who do not.
Obtaining an in-state tuition cost for a private college is just one of the many strategies you should consider. If you need a college funding gameplan or want to learn more, please schedule a free 30-minute strategy call.