LEADING Strategies

Tuition Discounting and Socioeconomic Diversity at Larger Private Universities

Tuition discounting is a tactic deployed by many private four-year institutions as a means for enhancing either tuition revenue or institutional image. This study examines associations between socioeconomic diversity and two aspects of institutional grants—freshman discount rate and freshman grant recipient discount rate—at the 30 largest private not-for-profit schools in the Midwest. Figures from a national database for two time periods, 1999–2001 and 2008–2011, were averaged. Socioeconomic diversity was defined as the percentage of freshmen who received a federal Pell grant. Comparisons of the two time periods revealed that 73.3% of the schools increased socioeconomic diversity, but overall the increase across the study population was small (2.4%). Concurrently, most schools became more selective; freshman acceptance rate declined at 82.1% of the schools and the overall decrease for the study population was 7.3%. In both periods, associations between the socioeconomic diversity and each of the predictor variables (freshman discount rate and freshman grant recipient discount rate) were negative. Overall, the findings indicate that when institutional grant funds were given to a higher proportion of the freshman class, the size of the individual grants and socioeconomic diversity declined.

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