That has occurred because of demographic trends, doubt about the return on investment for higher education and the loss of the standby of international students
It would be troubling enough to have to chase students with marginally better profiles. On top of that, some colleges and universities cannot fill their seats — never mind whether it is with the most attractive candidates or others. Thus it is not unheard-of for even reputable law schools to be touting scholarships (meaning, in fact, tuition discounts) to students who would have been rejected outright prior to the application downturn. It is an expedient while awaiting the miracle of bouncing back, an optimism that is repeated as if it the repetition will make it so. Or it’s hoping for the demise of one’s peers, which cannot be uttered aloud.
They should not have to
The phenomenon becomes crazy, because colleges and universities cannot but vie against one another. Supply and demand favors the students over the institutions. It once was vaguely unethical to bargain with students. Today it is expected. So institutions are locked into a mutual ratcheting, what economists would characterize as a «race to the bottom.» My colleague across town, for understandable motivations of improving her bottom line, pushes her discount rate a percentage point higher; I am compelled to respond by a percentage point beyond that — and we’re off! The irony is that both she and I can end up with higher tuition, weaker students and, worst of all, even less revenue than before we together walked into the trap. We have less revenue because we cannot raise tuition or enrollment quite enough to cover the mounting deficit from the discount rate.
Tuition discounting is an addiction. That means that it must be recognized for its risks. Presidents, backed by boards, have to wean themselves off this drug. Among the means of doing so is the equivalent of going cold turkey, the so-called tuition reset. The irony is that an institution that slashes its stated tuition might end up boosting overall revenue by bringing down the discount rate to a greater extent to offset, attracting the students who had been deterred by an exaggerated sense of the cost of attendance, or both. A tuition reset might be the only means of doing a discount rate reset. It has not escaped notice that this move likely will increase the real cost of attendance for at least some students, those who otherwise would have received the former discount rate.
But tuition discounting also is a collective action problem. That suggests that the worst effects can best be addressed through cooperation rather than competition. The «overlap» group discussions among about five dozen of the best colleges, and the limited exception from antitrust laws that Congress has already approved, provide a potential remedy. The Ivy League and MIT fought a price-fixing lawsuit a generation ago, and, after losing, obtained a congressional reprieve to a limited extent. They had been, and wanted to continue, sharing information about which students were in https://getbadcreditloan.com/payday-loans-fl/rockledge/ an overlap pool of those holding offers from more than one of the participating schools. The concept was the institutions would meet financial need for that person but otherwise not bid against one another. If colleges and universities could negotiate even further, subject to the requirement that the discussions had to benefit students with financial need (not the institutions themselves), they could collude to avoid the acceleration of discount rates.
Above all, what tuition discounting shows is that the business model for higher education is broken. It is priced out of reach for the ordinary consumer. As much as academics flinch at terms such as «business model» and «consumer,» the institutions that employ them are selling something to somebody. Middle-class families will not pay the price. Expenditures have to be brought in line with revenues.