Over Christmas there was an interesting article in the Times about tuition pricing at private colleges--specifically, whether lowering the sticker price actually makes a college more appealing to its prospective applicants, or whether it makes more sense to retain a high official price (say, $35-45K) that in practice almost no one pays. It's an especially interesting read today, as we're bombarded with ads for after-Christmas sales promising us deep, deep discounts on goods that otherwise pass themselves off as luxury items.
Since I've only taught at public institutions and I don't have college-bound children, I haven't thought much about private-college pricing; I know it's high, obviously, and I've read that even those high prices don't fully cover costs, but I did not know that very few students actually pay sticker price, especially at less-selective colleges. According to David L. Warren, of the National Association of Independent Colleges and Universities, "About a quarter of students at independent colleges are full-pay, and at institutions with small endowments and small name recognition, it's single-digit" [as the article makes clear elsewhere "single digit" refers to the actual number of students--not the percentage of students--paying full tuition]. Financial aid at such schools is definitely not limited to students with financial need, or even those of exceptional academic achievement. In other words, the price tag at many schools is a made-up number designed to convince parents and students that a college with only a very local reputation is actually extremely selective and prestigious.
I get some of this logic; growing up, I had a friend whose dad owned an antique shop. Whenever he had trouble selling an item, he raised its price. It's easy to see why people would assume that the no-name private school that charges Ivy League rates must be providing a high-quality product; and if that's their assumption, of course they'd thrill to any discount. According to the article, a majority of the prospective families surveyed by Roger Williams University in Rhode Island reported being more interested in a college that officially charged $36,000/year but offered students an average of $13,000 in aid rather than one that charged $23,000/year.
But although everyone loves a deal, not all discounts on artificially marked-up products are equally appealing; you first have to believe in the product's intrinsic value before you care about how good a deal you're getting. If I find something I love at T. J. Maxx or Nordstrom Rack and I pay a quarter of the (alleged) retail price, then sure, I'll crow about the deal. But I care more about finding something I like, at a price I can pay, rather than any specific savings. And if even your state's most selective, public flagship university is cheaper than a small private college, it seems harder to assert that there's an easy correlation between price and value.
I also wonder how off-putting a high official price tag might be: do all your prospective students and their families know that aid is available, and how much? $23,000/year may already be too high a price tag for many students, but I imagine there are families that figure they could swing that cost, with loans and work-study, who wouldn't pursue an application at a school they believed to cost $36,000. Put another way, I'm probably not going to go into the Hermès store, on the assumption that I'd never be able to afford anything there--even on sale.
But maybe that's the point: a certain kind of college wants the kind of student who will nose around the the Hermès store, hoping for a luxury good at a discount price, rather than the one who's content buying something put out by the Macy's store brand.
Readers: do you have any experience with artificial pricing in the college market--or any thoughts about how it works and whom it appeals to?