Five Facts about Tuition Discounting

College costs can play an important role in the college selection process. As early admission and early decision time is upon us and since nobody wants to graduate with a lot of debt, knowing what tuition discounting is as well as how it can be impacted by changes in finances and academic performance is important.

Tuition discounting is a common practice used by institutions (colleges and universities) to decrease costs and attract students.

  • Tuition discounting represents the amount of grants and scholarships that a student gets but does not have to repay it back. The main source for these discounts is institutional aid (the institution’s funds). Applying for other scholarships can help boost the discounting amount, but the largest amount of funds would typically come from the institution.

  • Tuition discounts tends to be highest for freshmen students. In other words, freshman students are the ones that will be the recipients of the largest amount of grants and scholarships as compared with transfer students.
  • The tuition discounting packet can change over time. Grants and/or scholarships (discounts) can be awarded in the form of merit aid – for students with high scores and/or GPAs –, need based aid – for students meeting certain requirements in terms of financial background –, and in some cases a combination of merit and need based aid. However, meeting eligibility criteria can be difficult over time. For example, meeting a certain GPA threshold can be difficult especially when switching from high school standards to college standards (my first semester in college was the hardest one) and this can impact eligibility for merit aid. Additionally, changes in the financial background such as a parent getting a better paying job, getting married, can occur and impact eligibility for need based aid.
  • Almost all costs associated with college may increase every year. Specifically, tuition, fees, and room and board costs can change every year, but the discount typically does not cover these increases. Therefore, when the college costs are a several tens of thousands of dollars a 1-3% increase in tuition, fees, cost-of-living, etc. annually or biennially can add up. Please plan accordingly.
  • Recently, a number of institutions announced that they are slashing/adjusting/right-pricing/resetting in essence decreasing their tuition. That typically is good news for future as well as current students. Current students are unlikely to get extra discounts, but they will not have to worry about significant tuition increases. For example, if a college is slashing its tuition from $50K per year to $35K per year, then an increase of say 2% would be slightly less costly ($700 as opposed to $1,000).

Overall, the most important takeaway from this post is that tuition discounts (the large chunk of institutional grants) can be lost. Changes in family finances can prompt changes in tuition discounting, when the discount is need based. Changes in grades and GPA (academic achievement) can decrease or wipe out the tuition discount all together when the discount is merit based. When these grants are lost students need to come up with other ways to finance their education and sometimes that can involve loans.



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