Colleges, pressured by buyer resistance, cut tuition
It's working. Buyer resistance is paying off in that bastion of sacrosanct inflation — higher education.
Hundreds of colleges are substantially “discounting” what they charge to get a diploma. It's not a flood yet, but clearly a thaw.
Apparently the realities of the marketplace cannot be kept off campus. A national dilemma is in the mix. We are turning out millions of book-trained young people into a mediocre job market under $1 trillion in aggregate debt.
Give a sigh for their parents, too. Baby boomers who might have saved more for retirement mortgaged it to put Junior and Sis through college.
So families are digging in.
In answer to tuitions that have chronically risen twice as fast as inflation, they're increasingly responding, “We'll shop.” (And your really nonconforming kids are putting off, or forgetting about, college in favor of military service or blue-collar high wages in the oil and gas boom.)
The temples of higher learning are forced to react.
Hence the average “tuition discount rate” for incoming freshmen last fall hit an all-time high — 45 percent off the sticker price via grants and scholarships.
This according to a new survey by the National Association of College and University Business Officers.
The price cutting could accelerate this fall, The Wall Street Journal reports. Thank a pullback in early commitments from high school seniors to colleges not in the very top tier (not the Harvards, Yales and Stanfords, in other words). Early signs point to a 10 to 20 percent shortfall from second-tier college enrollment targets.
“It's a buyer's market,” a consultant summed up the situation at anything below the crème de la crème campuses, which always enjoy bumper crops of applications. About one in eight U.S. college students go to a private, nonprofit college such as those covered in the NACUBO survey. There are hundreds across the land.
Nearly two out of three of those schools increased their discounts last fall, even as enrollment fell at 46 percent of them. It wasn't a reaction to price alone. The pool of graduating high school seniors is a trifle smaller.
Meanwhile at public universities, too, tuition and fees jumped 4.8 percent on average this year.
There's hardly any state that's not under budget pressure to trim taxpayer support of higher education. Politicians typically compensate by yelling at the colleges not to raise tuitions.
Total higher education prices of $50,000 a year and up are far from unheard of nowadays. Lots of luck to the kids who'd “work their way through college,” an American tradition.
But it's a complex picture. Grants from government and corporations help fill the till at “research universities.” And scholarships make possible a free education to students of ethnicities that will buttress “diversity” on a given campus. At the prestigious University of California at Berkeley, 40 percent of students attend free.
Meanwhile, the paying students pay more. Ivy Leaguers no doubt feel the tab is worth it to mix with “the best” and get a shot at jobs in top-rated law firms, banks and corporations.
But down in the ranks of the merely good (perhaps excellent) schools, market forces work. It's a trend to be applauded.
Jack Markowitz is a Thursday columnist for Trib Total Media. Email him at email@example.com.