Tuition Discounts not Paying Off for Private Colleges

Stephen Burd was quoted in Diverse Issues in Higher Education on how private and public colleges are using merit aid to attract qualified, wealthy students.

Among the critics is Stephen Burd, senior policy analyst in the education policy program at New America, a left-leaning think tank based in Washington, D.C.

“NACUBO does go out of its way to try to put the best spin as they can on how these practices are affecting students, by counting ‘merit aid’ that goes to financially needy students as need-based aid,” Burd said. “It’s important to point out that at expensive private colleges, fairly well-to-do students can have some financial need because the prices are so high.

“So just saying that the money is going to students with financial need is a bit misleading,” Burd continued. “In other words, students who come from families making $100,000 a year may show need when attending colleges that have a total yearly cost of attendance of $70,000 — including tuition and room and board, which most four-year private college students pay.”
Burd also said the NACUBO study is important “because it shows the damage that private colleges are inflicting on themselves with their tuition discounting strategies.”

“There is a red-hot arms race occurring among selective private colleges for the best students they can get, as well as the wealthiest,” Burd said. “The richest schools — with billion dollar and even multi-billion dollar endowments — can afford these practices.

“However, the vast majority of private colleges have small endowments,” Burd continued. “As a result, their high-tuition, high-aid model is putting a lot of these schools at risk, as their net tuition revenue is barely rising.”