Getting Out of Discount Game, Small Colleges Lower the Price

The New York Times reports:

A higher education riddle: When can a college slash tuition by almost half, without losing revenues? Answer: When nobody much pays full tuition anyway.

When Converse College, a tiny women’s college here, announced that it was “resetting” next year’s tuition at $16,500, down 43 percent from the current year’s published price of $29,000, the talk was about affordability, transparency and a better deal for struggling families.

But of Converse’s 700 undergraduates, only a small number — in the single digits, its president said, paid the full sticker price in recent years. Almost everyone received a tuition discount from the college, along with, in many cases, financial aid from the state and federal governments.

Now, like some other small private colleges, Converse is cutting tuition and reducing discounts. Betsy Fleming, Converse’s president, said the tuition discount rate would drop to 25 percent, well below the national average, from the current 56 percent. The college will still offer aid to talented students, but only to the extent covered by its $39 million endowed scholarship funds.

While Converse’s reset was the most drastic, others including Concordia University, St Paul, in Minnesota, Ashland University in Ohio, Ave Maria University in Florida, Belmont Abbey College in North Carolina and Alaska Pacific University in Anchorage, have also recently announced tuition cuts.

For decades, most private college pricing has reflected the Chivas Regal effect — the notion that whether in a Scotch or a school, a higher price indicates higher quality.

The higher education bubble has burst.