David Dulberg
November 2018

It’s Black Friday for Smaller Private Colleges

‘Tis the season for slashed prices and crowds looking for a deal. Black Friday is as much a part of American culture as Thanksgiving. But big-box retailers aren’t the only entities hoping to lure in customers with steep price cuts. Private colleges have joined the sales frenzy. Based upon a recent report from Moody’s, nearly one out of five private schools offered discounts to first year students of 60 percent or more.

Deep Discounts and Stiff Competition

This is up significantly from 2017, when 13 percent of schools proffered similar discounts. As student loan debt levels have risen to the level of crisis, prospective students have become more cautious about their financial obligations. Private colleges face mounting pricing pressure. Not only have the number of students entering college flattened, or even decreased, but competition is complex and intense. Private colleges are being forced to respond to the discounts offered by other private colleges. In addition, they are competing against public institutions, such as community colleges and state four-year colleges that cost much less.

Some scholars suggest that discounts on tuition open accessibility, especially for middle-income families. Others are more doubtful, predicting that these decreases will undermine the financial viability of these colleges. Additionally, because the “sticker price” remains high, many low-income students will be too intimidated to apply.

These high discount rates are mostly from smaller private colleges that offer mostly undergraduate courses. Experts predict that in 2019, the median discount rate for first-year students at all private colleges will be 39 percent. This is a steady five percent increase from 2014.

The First Year Only?

Unfortunately, the first year discount also has ethical challenges. Students enter college paying one price and then are on the hook for much more in the following years. Though it’s important to make college more accessible to lower and middle-income students, it’s also important not to lure them into student loan debt that might hinder future life prospects.

This ethical concern may take a back seat to these private institutions’ fight for survival. The long-term forecast for private colleges is somewhat grim. As tuition revenue dips, expenses will continue to increase. In addition to grim statistics reported by Moody’s, they also predicted that at least some of the 1,700 private colleges will merge, while others will decrease course offerings. Others will simply close.

There is an air of desperation to Black Friday sales — for both the buyers and the sellers. The increasingly steep discounts of private colleges have a similar feel. Students are desperately looking to pay the least amount of money for the most effective education. Private colleges, especially smaller ones that have lesser endowments, are desperately fighting for survival.

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David Dulberg

David Dulberg lives with his wife in the coastal hills above a narrow creek, mid-canopy in a redwood forest. He has been writing for non-profits for many years, and volunteers as a pilot on the Baum Squad, a tandem bike riding program for the Earle Baum Center for the Blind. He does not have a pet. This does not make him a bad person.

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