Sliding Scale Tuition

Two weeks ago, the National Association of College and University Business Officers (NACUBO) released their annual analysis of tuition discounting, showing that for the first time, the collective discount rate for all freshmen enrolling in private colleges topped 50%. That is, private colleges collected on average only 47.5% of their list price for each student. Public schools discount less, of course, but still, it’s a big hit to take, and leaves each family wondering what the actual cost of a college might be. I just heard an interview with the outgoing president of the just-closed Green Mountain College, who said during their final academic year, they didn’t enroll one single student who paid their full listed tuition rate. And that was part of their doom.

In the interviews I conducted for the book, a senior administrator of a private college in the Midwest said that their 3,673 students paid 2,150 different prices to attend. And all of that was just invisible, calculations made for each student that families never knew about when they were thinking about applying.

So here’s an alternative model. I know it’s naive, but unless we try some naive strategies, we’ll just keep doing the same sophisticated failures we do now. Dare to be simple.

We’ll use some round numbers. Let’s say that Whassupwhich U* has a list tuition price (exclusive of room and board) of $50,000, once a horrifying number and now horrifyingly normal, and an operating budget of $50 million for its two thousand students. If all of those students paid full price, they’d make double that amount. They want to practice a form of progressive taxation, in which well-to-do families help to support those students who came from more humble means, so they’re going to discount quite a bit. They could just put the following numbers on their website:

  • Incomes less than $60,000 per year pay no tuition
  • Incomes from $60-120K pay half tuition
  • Incomes from $120-200K pay 80% tuition
  • Incomes over $200K pay full tuition

That’s it. No negotiations, and no questions. So that means that WU needs to enroll a certain number of students from each category to make its numbers. They can talk publicly about that, too. They need 400 students to pay full ride (making them $20,000,000); 600 students paying 80% (making them $24,000,000); 600 students at half price (making them $15,000,000); and 400 students get to go for free. The WU overall tuition income would be $59 million, more than enough surplus beyond their $50M budget that they’ll be okay if something gets hinky. And every student and every family knows how many students they’ll REALLY be competing with for admission, right from the first glance at the website.

I’m very Midwestern, and we hate to negotiate. We go to the store, the can of soup costs $1.69, and we pay it or we leave it on the shelf. We don’t believe that anybody owes us anything, but we like clarity in our prices. We believe in fairness, but we’ll never ask for favors ourselves. So any college that just put a simple sliding scale tuition on their website, and told us how many people they needed to enroll from each group, would immediately be attractive to us. Remember when Saturn auto dealers created the no-haggling model? That was a huge selling point for them, and drew tons of people to their dealer network who hated feeling like they had to go to battle just to buy a car. Any college brave enough to be as simple would get a ton of respect and affection before we ever filed our applications.

*a nod to Bullwinkle, who occasionally used to wear a sweatshirt from Wossamota U