Tuition discounting strategies and effects

Tuition Discounting Practices

The educational systems of the Western World has seen great transformation and evolution over the past decades. The rapidly changing environment where technology, social, and political forces are represented signify that education leaders must address problems if they are to stay relevant and effective in their position. The purpose of this essay is to explore the practice of tuition discounting and present a comparative analysis on the benefits and drawbacks of this educational practice.

This essay will use data and empirical evidence to construct an argument which aims to separate the good qualities from the limiting qualities of this practice. The essay will argue that tuition discounting is merely a tool, that when applied, must take into account the purpose or intention of the school leadership itself. By exploring this tool or approach of tuition discounting, college presidents may be able to decipher the information and determine if this course of action is best for their respective school or environment. The essay will conclude with ideas on how to best synthesize these components and integrate them into a secondary educational setting in the best and most efficient manner.

Background

Tuition discounting has been practice for many years, but the recent educational landscape, where resources and funding has become of the highest priority, has seen the practice become more influential in present times. Despite this increased trend, tuition discounting is very simple process that is accomplished in many different ways according to the institution that is offering such a contract. "Tuition discounting is the practice of awarding institutionally-funded financial aid in the form of non-repayable grants and scholarships to students. Similar to state and federal grant programs, colleges provide aid to reduce the "sticker price" students pay for college. In 2008, students attending public four-year institutions received over $14 billion in grant and scholarship aid from federal, state, and institutional providers; campus-based aid programs accounted for approximately 33% of this total amount," (U.S. Department of Education, 2009).

The association between higher education and high costs cannot be ignored when trying to understand the need for tuition discounting. In America, the price of education is very expensive and very few young students can accomplish this mission without going into some form of debt. Federally granted student aid encourages this debt-based programs, where schools appear to need more and more funds to maintain a high level of curriculum educational programs. This social and political problem leaves the educational system in a bind at many levels and the need to bail out the government in the form of these modification programs seems necessary if not urgent.

Tuition discounts work in a very unique and applied fashion. The process starts with a published or offered price of tuition to the student. This is the sticker price of the cost of the education. Tuition discounts come in the form of aid, be it grants, donations, loans etc. This is essentially subsidizing the student's education with other resources that have more of a collective outlook and may not be focused on the students success per se, but the institutional success is held in a higher esteem.

Browning (2013) explained that along with added responsibilities that must be taken on when an institution used tuition discounting as a financial tool. She argued in her research article that "The relationship between tuition discounting and the financial stability of an institution has received little attention in the literature. Available research has examined tuition discounting trends, general differences between institutions, and the sustainability and viability of institutions, but not strictly the financial implications of various tuition discounting practices. Researchers may use financial indicators to explore the relationships between institutional financial position and various resource allocation decisions, such as debt burden, average tuition revenue per full-time equivalent student (FTE), instructional expenditures per FTE, or mean salary of full-time faculty. The versatility of financial indicators is limited only in how scholars choose to apply them in their research."

Issues

Davis' (2003) report helped illuminate many of the helpful aspects of tuition discounting in his report on the matter. "It is also becoming harder for lower-income students to exercise a choice to attend private colleges rather than public colleges. Another unexpected consequence of tuition discounting is that it does not always increase an institution's net tuition revenue. For many private colleges, and for some public colleges during times of economic difficulty and declining state appropriations, losing net tuition revenue means fewer resources are available for academic and student support services. This situation, in turn, may make the colleges less valuable to their students and less able to compete in the marketplace for future students, (p.24).

The trouble appears when those who really need education are those who are financially unprepared to handle this task. Tuition discounting aims to eliminate this imbalance and replace it with some level of fairness.

The major problem with tuition discounting is that ignores many qualitative issues that accompany education and life in general. Profits have replaced the collective need to maintain and promote high functioning citizens within the natural environment. There is little to no doubt that tuition discounting has seriously impaired the nation's ability to promote a healthy and successful secondary educational system. In many ways greed, profits and pure capitalistic instincts have dominated the market.

Carey (2012) argued that the pricing of college tuition is not based on any real world or empirical examples, and many of the problems originate with a lack of understanding of the problems and the implications that colleges and universities experience when forgoing their collective duties to educate and train the next generation of people in the arts and sciences of life. When these duties are ignored, a myopic view of the educational system takes form in the likeness of profits and power. "But the thing about price discrimination is that, eventually, its power to increase overall revenues comes to an end. If you have a limited number of customers and everyone is paying exactly the most they're willing to pay, then they will pay no more. And it is very clear that a number of colleges have run out the string on price discrimination. That's what it means when someone says, We need to bring down our average discount rate's What they're really saying is, our attempts to raise additional money by grasping for a higher point on the demand curve by increasing our sticker price and discriminating back from there have failed."