College: Nobody pays retail anymore …

Lots of talk these days re: skyrocketing college tuition prices.

That’s certainly true of list prices, but these prices are becoming more and more like new car sticker prices – maybe even worse.

According to the latest annual studies done by NACUBO (National Association of College and University Business Officers), approximately 89 % of first-time, full-time freshmen at institutions surveyed received institutional grant aid.

English translation: in most cases, “institutional grant aid” is simply a discount from the tuition’s list price.

And, the discounts aren’t trivial amounts … they are approaching 50%.

Think, half-off sales at Kohl’s

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So, who is paying retail any more?

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A common characteristic of list-price-payers is that they’re rich.

They have an ability and willingness to pay the sticker price/

The willingness is often linked to “stretch” … going to name-brand universities that are at (or over) the high end of their certifiable abilities.

They want to go to the schools more than the schools want them to come … but the schools are willing to play along since they’re being compensated for the risk of getting a student-clunker.

And, there’s a huge list-price segment: foreign nationals.

Getting a U.S. degree still has sway around the world, so many foreign students want to matriculate in the states.

Universities are very willing partners since the foreign nationals generate high margins — they usually pay full price and tend to use fewer services (e.g. career counseling & placement).

In fact, foreign nationals are so economically attractive that many schools have engaged recruiting agents to bird-dog applicants around the world.

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A handful of colleges are trying to buck the deep discounting trends and “net pricing” – cutting list prices to the “real” tuition rate and offering it to everybody (think, Walmart’s EDLP – everyday low prices).

So far, they’ve seen a boost in applicants but no experts are predicting a sea change in the way business is being done.

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