Redefining Aid Choices

Should colleges be credited for helping students with financial need, even if their aid policies aren’t explicitly designed to do so? That’s a question that a new survey from the College Board raises, and critics can reasonably disagree on the answer.

Private college presidents have for years defended the practice of tuition discounting in the form of merit aid, saying much of the support they provide inevitably winds up in the hands of students who also have financial need. A new report from the College Board, titled "Tuition Discounting: Institutional Aid Patterns at Public and Private Colleges and Universities," lends credence to that argument. Indeed, the report notes that the largest portion of discounting aid — 64 percent — was "meeting need" at private four year colleges in 2007-8, even if the discounts were provided without consideration for a student’s ability to foot the bill.

Tuition discounting has become prevalent at private colleges, which often place the sticker price of attendance beyond the reach of many families, only to "discount" that price by offering institutionally funded financial aid to many or, more typically, most students. Critics of the practice say it steers institutional aid dollars toward students who could pay more, while also artificially inflating the sticker price of many colleges.

While discounting has remained relatively steady at public institutions, the College Board’s survey shows the practice remains on the rise at private colleges. The discount rate, which illustrates the gap between a college’s published price and the amount of tuition and fees it actually collects from students, is estimated at 33.1 percent for 2008-9 at private colleges, up from 28.6 percent in 2000-1.

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