How do the private colleges fight that mentality? They have to be competitive in terms of money by giving discounts. And at many private colleges, the discount rate is getting very high. I've heard of places where the discount rate is over 50 percent, and it's not uncommon to be at 35 or 40 percent.
Is that suitable? You're okay at that rate but it's difficult to sustain. Let's say you had a drop in enrollment due to a decline in population or a major new expense that emerges on campus. That would be tough. The problem at some private schools is that they're already aiding such a high percentage of their students - 80 to 90 percent. There's no upside advantage - you're running out of students.
It seems as if colleges aren't keen on talking about their discount rate. No, they aren't. Because if anybody thinks about it, they realize, "Hey, I'm Mr. High Income and I'm paying for financial aid for some kid who isn't even mine." Yet almost every high cost college in the country sets aside a portion of its tuition income for financial aid.
*Based on Discounts and Deals at the Nation's 360 Best Colleges: The Parent Soup Financial Aid and College Guide by Bruce G. Hammond. Copyright ©1999 Bruce G. Hammond and iVillage, Inc. Published by St. Martin's Press, New York, NY. Used with permission.