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Over the years, the practice of tuition discounting has become increasingly commonplace.

The concept is simple, but the influences and effects are quite complex. Colleges provide discounted tuition to select students in the form of grant money and scholarships, allowing them to attend at a cheaper rate than the sticker price. In theory, such discounts can increase enrollment, leading to an overall increase in total tuition revenue for the university. In this context, tuition discounting appears to benefit all concerned: deserving, low-income students have access to a pricey college education, while the colleges are able to fill their classes with the kind of students that they desire and need.

But recently, as discounted tuition increasingly becomes the norm at universities, analysts have uncovered some potential problems with this practice in terms of the financial health of the institution.

A Numbers Game

In offering tuition discounts, universities take a gamble that their enrollment will increase. If enrollment decreases or stays the same, tuition discounting can lead to an overall loss of revenue. That’s because tuition discounts decrease the net tuition revenue per student, meaning that colleges must enroll more students to make it worthwhile.

Unfortunately, it often doesn’t work out that way. Over time, institutions lose money by giving steep discounts to students. The more students they enroll under these terms, the greater the loss. These losses can really add up after a while, especially if enrollment doesn’t meet expectations.

Factors Affecting Financial Impact of Tuition Discounting

Of course, not all universities are the same. Each of them is affected differently by the growing phenomenon of tuition discounting, and some can ride out the wave much better than others. Schools that have significant endowments already earmarked for financial aid do not need to employ tuition discounting to the same extent as colleges that aren’t so lucky. They can provide grants to needy and deserving students without as much effect on their bottom line, whereas other schools have no choice but to take the cost of discounted tuition out of the tuition revenue.

Additionally, schools at which a high number of minority and low-income students enroll have more access to Pell grants, making it much easier to invite such students to attend without breaking the bank. Unfortunately, schools with a high sticker price suffer because most of these students are easily scared away by that high sticker price.

Tuition discounting is one of many creative methods in which higher education institutions are trying to combat the rising costs of college tuition. But they may need to find other solutions that are not quite so damaging to their overall financial stability.

Getting students to enroll in a university is important, but the real test of higher education’s impact on learning is the graduation rate at every college.

University leaders can boost their graduation rates with these strategies.

Seek edtech solutions

One of the ways colleges are improving their graduation rates is with software solutions like Starfish. By measuring continuous progress, academic achievement, student engagement, and providing feedback, the company has shown efficacy in helping universities increase retention rates with early alerts for college students. Starfish connects students with measuring progress toward meeting goals toward finishing degree programs.

Get a life coach

Having a coach who can help you overcome obstacles and meet the milestones you set in completing your degree can help you acquire that sheepskin and move forward with your career.

Surprisingly, the academics aren’t the most significant challenges most students face when trying to complete a degree. Non-academic obstacles can thwart hopeful candidates from getting their degrees.

Unlike therapists, who work on issues from the past with their clients, life coaches work in the present to help a client identify barriers to graduation. The coaches also help these students identify solutions and implement them so they can reach the higher education finish line.

Go Greek

Positive peer pressure works.

Research at DePauw University in Indiana revealed that the students most likely to drop out of college were the ones who did not identify with any one particular group. Students who were members of sororities and fraternities, however, were more likely to complete the college degrees.

By encouraging involvement with Greek societies in college or creating structured engagement opportunities for non-Greek students, universities can improve their graduation rates.

Merge and integrate rather than separate

Students complain about increasing tuition costs, but the cost of operating a university is rising as well, thanks to reduced funding.

Although a merger between similar schools can raise college costs, a merger may make sense when it comes to attracting, enrolling and graduating students. The most effective mergers take place between two- and four-year schools, like Perimeter College and Georgia State University, where there is a strong academic rather than a vocational focus. Because they have similar, shared goals, the merged system can save money. Systems are expanded rather than replicated.

As a result, students have a pipeline to graduation. Course credits transfer easily throughout the system, which helps students stay focused on completing their degrees with as little frustration as possible.

Boosting graduation rates in higher education can be done. Leaders have to be willing to explore new alternatives or tweak those attempted in the past. The end result of graduating more students will be worth the effort.

Affirmative action has roots going back to 1957, with the Civil Right Movement. As part of the Civil Rights Act, college admissions officers were tasked with the responsibility of ensuring that higher education is equally available to all students regardless of race or ethnicity. Historically, most colleges and universities have taken this mandate even farther with policies that actively pursue racial and ethnic diversity on their campuses.

In the last few years, such policies have become increasingly controversial. Here is a look at some of the issues around affirmative action and where it may be headed in the future.

Is This Discrimination?

Some argue that Affirmative Action, when not carried out according to the mandates of the Constitution, actually results in discrimination against white Caucasian applicants. A few years ago, a young white woman named Abigail Fisher brought a case against the University of Texas at Austin claiming that she was unfairly discriminated against based on her race. Although the case was not decided in her favor at the district court, she brought it to the Supreme Court and was successful.

Last year for the first time, Harvard admitted an incoming class in which the majority was non-white, begging the question as to how much race weighs in their admission decisions to the possible exclusion of other relevant factors. Is Affirmative Action still necessary? Or has it devolved into reverse discrimination?

Who Really Benefits?

Even today, it can’t be denied that there are deserving but underprivileged students among us who need some admissions advantages. One study found that the top colleges in the U.S. admit more students in the top 1% of income levels than from the entire bottom 60%. And the pursuit of racial diversity seems to accomplish little to nothing in resolving this discrepancy: even among admitted minority students, 86% are in the middle or upper class.

Alternatives

It is unlikely that we will see Affirmative Action go away in the future. Ethnic and racial diversity is essential to preserving a vibrant, meaningful campus life. But many schools are revising the way they think about Affirmative Action to keep it in the true spirit of the Civil Rights Act. In most cases, they are required to show that they’ve made an effort to choose students on racially neutral measures before resorting to Affirmative Action. As a result, we will see more inclusive and race-neutral policies, such as granting an admissions edge to economically disadvantaged students or admitting the top 10% in every high school class. Such policies can help ensure diversity without employing race as a primary factor in the admissions process. We have already seen such policies at play in places like Texas A&M and the University of Florida.

While diversity will always be cherished, it may be a good moment for college admissions officers to redefine the term.