Student Leverage – Not Just Financial
Chris Corrigan is a veteran CFO of several colleges, and he has written a very cogent article about the rise in college discount rates over the last 10 years. You can read the article here, on the website of the James G Martin Center for Academic Renewal.
Chris brings the reader up to date on what college discounts mean, the recent trend, and the implications of this trend for students and colleges alike.
To quote from his piece:
“The National Association of College and University Business Officers (NACUBO) released its biennial tuition-discounting survey in April. The results indicate that increasing discounts may be the canary in the coal mine for serious financial difficulties looming for private colleges.
The headline from the NACUBO press release is that discount rates for private higher-education institutions are up from 46.4 percent to 56.2 percent in the last 10 years. (The numbers in question apply to first-time undergraduates.) NACUBO defines the tuition discount rate as “the total institutional grant aid awarded to undergraduates” by colleges and universities, as “a percentage of the gross tuition and fee revenue the institution would collect if all students paid the full tuition and fee sticker price.”
In addition to the higher discount rate, the number of students receiving some kind of “grant” rose from 88 percent 10 years ago to 91 percent this year, and the amount of the average grant rose from 53.1 percent to 62.1 percent.
Lower tuition is good for students and families, of course, but enticing students with cheaper fees can be extraordinarily damaging to colleges’ bottom lines.”
The implications for colleges are clear, as they battle to attract students in a shrinking demographic pool. Admitting students at less than half the published tuition rate can’t continue forever, but at least it contributes to some fixed cost coverage in the short term.
Chris’ commentary prompted me to think about the other implications of this trend for students. With very few exceptions (Harvard, Yale, etc), the leverage has moved from the institution to the student applicant. Students and their parents can negotiate for lower tuition as part of the acceptance package, and they have been doing so in recent years.
But students also have leverage on the academic programs they are offered, and should be exploring these as well. As just one example, let’s consider the use of course electives.
Colleges require a certain set of courses in the selected majors, and an additional set of electives drawn from what the college considers its “core curriculum” – a compendium of courses designed so that each student will be exposed to a diversity of thought in the sciences, arts and humanities.
Finally, there are “free electives” – courses that any student can take of their own choosing, subject to completion of prerequisites or “permission of the instructor”. That’s the rub, and students are now in a stronger position to insist on an increased number of free electives, and access to any course they choose.
In my book “Welcome to College – Your Career Starts Now!” I walk the new student through the successive steps of selecting a major, determining what career options are available for that major, and how to customize the learning experience through the use of free electives that support the student’s career objectives. I refer to free electives as “golden coins”, and students are in a position today to harvest more of this gold than historically has been the case.
Colleges will resist this type of request, citing the fact that they want the higher education experience to reflect an institution’s carefully developed core programs, that too many academic departments would have to agree individually, etc.
But the student should not be deterred on these reasonable requests, or any other. The colleges want the student in the classroom, and thus have every financial incentive to agree to allow reasonable customization of their program for the student. In fact, academic accommodations in place of some tuition discounts may be a win-win for student and institution.
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