When students who have been admitted to college ask advice from Lynn O’Shaughnessy, she’s quick to help them take a next step many didn’t know was even an option: haggling over the price.
A higher-education author and consultant, O’Shaughnessy suggests those students she advises leverage favorable offers of financial aid and discounts they’ve received from some colleges and universities to win a better deal from others.
“There are plenty of schools that will say, ‘Okay, scan over your offers so we can see them,’” O’Shaughnessy said. “And they might match it or do better.”
As college acceptance season has kicked into gear, and students and their families begin to receive financial-aid offers, higher-education officials report that more of them than ever are negotiating.
“It has become something that’s almost expected,” said Tom Green, associate executive director of the American Association of Collegiate Registrars and Admissions Officers.
That’s in part because, as college costs have increased, consumers are becoming more aware that college “sticker prices” aren’t necessarily what most students pay. And with enrollment flattening out and even falling, institutions — especially private, nonprofit colleges that are heavily dependent on tuition — have become more willing to cut deals to fill seats.
The number of students at colleges and universities dropped for the eighth semester in a row in the fall, down nearly 2 percent below what it was at the same time the previous year, according to the National Student Clearinghouse, which tracks this.
In that climate, Green asked, “How do you get those brilliant students if you’re not offering something to incentivize their enrollment? Unless your market position is so strong that students who come to you gladly pay full price.”
So while average published tuition and fees are up 20 percent since 2008 at private, nonprofit four-year universities, the College Board reports, the actual net price students pay has increased a much slower 4.4 percent. And while those institutions list a published price of more than $32,000 per year, on average, full-time students actually pay an average of less than $15,000.
This kind of tuition discounting is at an all-time high, according to the National Association of College and University Business Officers, or NACUBO, which reports that the average discount is now nearly 50 percent for freshmen. At many private non-profit colleges and universities, many families that appeal their initial offers get more money.
While negotiating for a lower price is now more common, it’s wealthier students whose parents also went to college and understand the system — or who have savvy college counselors in private or suburban high schools — who are often most likely to know about it.
“Some people go, ‘Oh, I got $15,000 or $30,000’ in financial aid or discounts,” O’Shaughnessy said. “‘Is that good?’”
Lower-income and first-generation students don’t always know to ask for more, their advocates and others said, even as they are already put at a disadvantage by high tuition,
“Those are the students who are the most likely not to know how to negotiate,” Green said. “They’re likely to be poorer, more in need of aid, and they’re likely to be less sure and less confident about going to college in the first place. And so what is really difficult in that equation is that they are the students who, if they got just a little more, might be able to go to that school and might be able to stay at that school long term.”
Nor do all universities and colleges make it easy for them. While some offer students their best and final offers right off the bat, Green said, others will initially hedge. That way if students ask for more, the college can come through. But if students don’t, “then there’s more net revenue to improve the university,” Green said.
The low-income, first-generation California students served by the non-profit organization Bright Prospect, for example, don’t always know they can appeal a financial-aid offer, Ari Damasco, its database and scholarship coordinator, said.
“They tend to receive a financial aid package and just receive it as the given,” Damasco said. “It is surprising for them to hear that we could help in trying to advocate. In fact, when we do advocate for students, I’ve encountered some students not feeling very optimistic about anything coming from the process.”
In most of his cases, however, Damasco said he has been able to work something out on behalf of his students, whether that means more money up front or an easier payment plan.
Though some schools including the University of Maine and Rowan University that are trying to make their published prices more in line with what people actually pay, most private non-profit institutions advertise high sticker prices few students end up paying.
And while the practice is not inherently damaging, if institutions cannot offset the cost of discounts with other revenue streams, it can cause problems.
Thanks in large part to discounting, NACUBO found, net tuition revenue at 411 private, nonprofit four-year colleges and universities it surveyed has slowed significantly.
“You can really be in trouble as an institution financially very, very quickly,” Green said of schools that rely too heavily on handing out such breaks.
Many are trying to compensate for this and balance their books by raising scholarship money, leasing out their facilities, and offering graduate programs that make money, said Richard Ekman, President of the Council of Independent Colleges.
“A rising tuition discount rate is not a good thing but it has proven to be much more controllable by being offset by other sources of revenue,” Ekman said.
Many colleges and universities have figured out the balance, Green said. But the ones that haven’t could be in trouble.
Several that have closed have blamed financial damage done by tuition discounting, among other things. As enrollment flattened out, and students kept negotiating for lower prices, the math eventually doomed them.
“Ultimately, if you don’t have real money in the bank to support those financial aid awards,” said Ekman, “essentially what you’re doing is depleting the amount of net revenue of the institution in order to help strongly build the quality of the institution.”