College costs for many students attending private schools are shrinking.
Sounds crazy, but it’s true. That’s because what counts is not the sticker price, but a family’s “net” college costs. What do parents and students really pay after they receive financial aid and scholarships? At private colleges, only about 18% of families pay the sticker price.
A new survey by the National Association of College and University Business Officers shows that colleges and universities are providing historic tuition discounts to freshmen. I was even surprised when I saw the latest statistics.
Freshmen entering private colleges in the fall of 2008 typically received a 53.5% tuition discount. So if a school’s tuition was $35,000, the family would pay $18,725. That sort of price break can make the difference between a school being affordable and out of the question.
Many of these college grants are going to families, who don’t need assistance:
NACUBO began its survey in 1994, but this year’s report is the first to show how much aid really goes toward students based on financial need. Unsurprisingly, the report found that about 41.5 percent of the discounting aid – the largest percentage share of dollars – was given based on non-need criteria like academic merit. Need-based aid made up 36 percent, and 22.5 percent was awarded on a combination of need and non-need criteria, the survey found.
The Shrinking Cost of College
Lynn O’Shaughnessy is the author of The College Solution and she also writes for CBSMoneyWatch. Follow her on Twitter.
This article gives hope to some struggling families! In the Northeast these tuition discounting percentages are historically lower unfortunately (20%). Colleges up here caught on early and understood that tuition discounting at 45-50% only eroded their retention rates which cost them more in the long run. Most colleges that understand this dynamic find a balance.
I have seen hundreds of Award letters this year (so far) and I am not seeing this tuition discounting trend in the Northeast. Dr. Paul J. Gilroy was an early leader on this trend and pioneered the concept of subsidized PLUS loans in place of some discounting. Interesting stuff!