Desperate economic times call for desperate economic measures — for both colleges and their students.
Students who are unable or are unwilling to pay the full price of tuition are being wooed by colleges and universities through tuition discounts. The discounts offset published tuition and fees and come in the form of institutional grants and scholarships. Depending on their financial situation, academic standing, or athletic ability, students at the same institution can end up paying different amounts as a result.
In the 1970s, college affordability began with private schools and is one of the motives behind discounting. Some institutions use credit affordability to attract specific students, to shape their incoming class in terms of demographics, or to boost enrollment, depending on their mission.
ââWe discount because we have a commitment to affordability and to diversity in income and background,'' said Kathy Collins, Rice University's vice president of finance. ââStudents may think we're too expensive, when we're less expensive than a state school because of how generous we are.''
Public institutions, however, are overtaken by private institutions like Rice which are more generous with discounts. According to a survey by the National Association of College and University Business Officers, in the year 2012, the average tuition discount rate for full-time freshmen at private schools rose to a record 45%, marking the sixth consecutive annual rate increase. According to Renee C Lee of The Boston Globe, in the Houston area the discount rate is slightly higher at private institutions, about 48% at Rice. This year, the sticker price is $38,941 at Rice. A student would pay $18,691 when the average tuition discount is applied. Increases in the average published tuition-and-fee rates at private schools have slowed as institutional aid has grown over the past five years.
However, with reference to College Board data, this year net prices at private schools have gone up about 8% from $11,550 in 2011-12 to an estimated $12,460. The trend is similar for public institutions. Referring to the College Board data, this year posted the smallest published price increase, 2.9%, in three decades.
As federal aid has declined, the net price heads in the opposite direction as it has increased by 60% from $1,940 in 2009-10 to about $3,120. Different time frames for public and private institutions were used in the study. 58% of institutional aid is awarded to freshmen at Rice.
The university doesn't consider an applicant's financial situation for admission – a need-blind admission policy. After determining what the family and student can contribute, Rice officials then subtract that amount from the full cost of attendance to calculate the unmet need. With a combination of institutional grant aid, federal and state aid, subsidized loans and work-study (loans and work study are not included in tuition discounts), the university covers 100 percent of the unmet need.
The university provides institutional grants rather than loans for families with incomes of less than $80,000.