The jump in aid shows that many colleges are losing pricing power as more families focus on cost and value, with about 65% increasing their discount rate in the fall of 2012. Except for the most exclusive schools, private colleges increasingly are vulnerable to the stagnant wages of many families, deepening student debt, the uncertain job market, growing questions about the value of costly four-year degrees and unfavorable demographics. […]Because of economic factors and political pressure on colleges to hold the line on tuition, “we have hit a tipping point on price,” said John Nelson, managing director at Moody’s Investors Service. Last year, the median sticker price at about 280 private colleges and universities tracked by the debt-rating firm rose 3.9%, the smallest increase in at least 12 years.
For too long, colleges haven’t really felt the need to compete with one another on price, choosing instead to attract students with state-of-the athletic facilities and other flashy but nonessential projects. These days, fear of indebtedness and cost-consciousness on the part of students and parents are focusing the pressure on colleges where it needs to be: providing a quality education for less money.This is an encouraging sign, but we’ll know colleges are really getting serious about cutting costs when they start paring down their bloated administrative staffs.[College quad image courtesy of Shutterstock]