Tuition Discounting Is a Phenomena

Tuition discounting is a phenomena associated with institutional competition, to a large degree and as in varied, flexible ways institutions use tuition discounting to attempt to fulfill certain goals of the competitive higher education market. The phenomena is multi-faceted in both intention and results as institutions attempt to compete for enrollment goals including academic achievement as well as diversity and overall institutional prestige. (Davis, 2003, Corey, 2005 & Redd, 2000) Different institutions use different goals and tuition discounting plans and strategies to meet the many goals of the institution, some of which are contradictory, i.e. institutional profit or growth and improved access for those unable or unwilling to pay increasing tuition rates. (Redd, 2000)

For the most part the form of tuition discounting plans is one where internal resources are used (or forgone) to supplement tuition and other costs associated with attending college. Current research indicates that tuition discounting plans do not always meet intrinsic or extrinsic goals of the institution, and some even continue to operate such plans even when they mean the institution will be operating at a revenue loss.

Under tuition discounting plans, colleges use their institutional grants to reduce the tuition and fee charges students would otherwise be unable or unwilling to pay to attend particular higher education institutions. The discounts may be funded by tuition and fee revenue (the collective amounts of tuition and fees students and their families pay to attend postsecondary education institutions), donations from alumni or other private sources, and earnings from endowments. Discounts also may be unfunded tuition waivers, with which colleges and universities simply forgo all or part of the total tuition and fee charge that students otherwise would have had to pay to attend their institutions (Allen 1999). (Redd, 2000, p. 5)

According to Redd, the reasons for tuition discounting and its increase across both private and public institutions are many, but all have to do intrinsically with overall increases in tuition, across the board and the limitations and/or failures of strategies that individuals and institutions use to pay for such increases. (2000, pp. 3-5) This idea is supported by Corey, who points out that institutional, government and individual strategies for achievement in higher education attainment (and how it's paid for) have not met the increases that have been seen in broad tuition rates or the overall costs of attending college. (2005, p. 2) The competing and often conflicting intentions of institutional demands are well describes by Davis who states that;

The press to accomplish four objectives simultaneously -- increase revenue, reduce expenses, improve quality, enhance reputation -- leads institutions to attempt an array of proven and unproven management techniques and approaches. By so doing, colleges hope to reconcile these competing and often conflicting demands. (2003, p. 1)

The demands to meet all these goals often lead institutions to tuition discounting, for the various goals of the institution, yet do not always accomplish everything that the institutions hope to accomplish by doing so. Market inflation to some degree is at risk, depending on the goals of the institution and the applications of the tuition discounting plans to again outstrip the ability of institutions and individuals to pay for higher education. When cost reached a high enough level institutions chose to offset costs by paying for them in non-traditional ways. In a more traditional system the offset was met by individuals who simply paid more for tuition, and then expansion of access programs, like government grants and loans.

These include continued growth and expansion of Federal programs, including the Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG) programs, tax credits, and subsidized loan programs. Private entities have also engaged with increased private scholarships and grants as well as privately offered loan programs. (Corey, 2005, pp. 2-3)

These creative attempts to increase enrollment and accesses as well as to offset tuition increases had not gone far enough and therefore institutions needed to respond as well, tuition discounting is the response and as is noted by Corey is funded through various means as noted below;

Institutions have responded with significant increases in institutional grants funded by both endowments and gifts, as well as directly from the tuition and fee revenues of the institution. (Corey, 2005, p. 3)

Now, again these costs are outstripping the ability of institutions to offset them and again other programs or individuals will then be asked to pay them. (Davis, 2003, pp. 1-2) According to these three experts the situation has again reached a pinnacle, as there will be a saturation point, where institutions may begin to reduce tuition discounting, as they become more aware of the risks they take in creating tuition-revenue deficits and begin to lose or be unable to support greater diversity of programming and enrolment. According to Corey, the goals associated with allowance of deficits are softer goals, and less track able, such as increased prestige but they could also be linked intrinsically to poor management, i.e. errors made when tuition discounting goes so far that it creates a deficit without intention, offsetting these deficits institutions argue that they have met goals other than revenue building, like increased economic, racial and academic achievement diversity and have therefore improved prestige and competitiveness in doing so. (Corey, 2005) Yet, like all businesses often asked to make economic sacrifices to meet broader long-term goals the business side of things, i.e. that some institutions are operating at a loss will likely create more and more conflicts within these institutions as they continue. Davis calls this a "breaking point," which will create loss of diversity rather than increased diversity as institutions lose more than they have gained by tuition discounting methods and may begin to lose programming and even faculty at a rate that cannot keep up with enrollment on any level. (2003, pp. 1-2) What Davis found is that some of these outcomes are already occurring, in spite of operational loss associated with tuition discounting. Low-income students are still paying disproportionately for their education, as some discounting plans attempt to stress academic or achievement-based goals of enrollment over economic needs-based programs. The ideal being that students of high caliber who are of lower economic status are being enrolled in greater numbers and yet the system does nothing to support the creation of such students in lower levels of education. To maintain better scores and standards they remove the need portion of the tuition discount plans' goals an stress the achievement portions, thus supporting tuition discounting among those who have been traditionally less disenfranchised than others. (Davis, 2003, pp. 12-14)