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Schools try radical ways to help students pay for college

Across-the-board tuition cuts, loan caps, and even 'free rides' for those most in need are among the strategies.

By Contributor to The Christian Science Monitor / April 30, 2007

Cambridge, Mass.

Amid the climate of skyrocketing college tuitions and convoluted aid programs, a handful of universities are introducing simple and transparent financial aid programs. Among them: across-the-board tuition cuts, loan caps, and completely eliminating tuition for some.

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Tuition cuts of up to 50 percent are the simplest form of financial aid to understand – and the hardest to believe. Yet in the last 10 years, at least 19 schools have cut tuition dramatically. Among them: the University of South Dakota (USD) slashed out-of-state tuition by 50 percent in 2006; North Park University in Chicago lowered tuition by 30 percent in 2005; and Bethany College in West Virginia dropped tuition by 42 percent in 2002.

"They're really changing their pricing model," says Melanie Corrigan associate director of national initiatives for the American Council of Education. "In many cases, they've cut their published tuitions, but it's important to remember that a smaller percentage of students actually pay that published tuition." In other words, few students pay full price.

Applying for college financial aid has become more complicated than filing a tax return, says Cornell University professor Ronald Ehrenberg, director of the Cornell Higher Education Research Institute.

To make matters worse, students may need financial aid now more than ever. Tuition increases at nearly double the rate of inflation, and "sticker prices" in excess of $50,000 can discourage prospective students before they even apply.

Adding yet another layer of confusion, Sallie Mae and several other major banks responsible for providing student loans have been accused of bribing universities to enlist their services instead of lower-interest federal loan programs.

On average, students at private universities get $9,000 a year in grants and tax breaks, while students at their public counterparts receive $3,100 a year, according to a 2006 College Board report.

By lowering the "sticker" price, schools can give needy students smaller grants. And because part of the grant money comes from other students' tuition, giving needy students smaller grants allows the school to cut other students' tuitions, too. Thus the financial burden on those paying full price eases substantially, while those who need aid still get the level of assistance they require.

"We elected to do this in the view that our discount would not have to be as heavy," says G.T. "Buck" Smith, president of Bethany College, explaining the college's choice to cut tuition. "Not only would we be doing the students and the families a service, but it would actually benefit the college."

Five years after the cut, it's proven invaluable to Bethany College.

The student body has almost doubled in size, from 500 students to more than 900. And even though students pay less, Dr. Smith says they still receive the same level of service. The added expense of accommodating more students was offset by a larger number of students paying less tuition per pupil. The university neither made nor lost money from the increased volume, according to Smith.

With South Dakota experiencing a population decline, the USD decided to use tuition reduction as a means of attracting more students. "In order to maintain our current enrollment, in order to grow," says Cecil Foster, assistant vice president of enrollment services at USD, "we needed a way to remain competitive in recruiting students."

So far, the program has helped USD expand its ranks. Mr. Foster says several parents have even called in tears to thank him.

While university communities have met the cuts largely with enthusiasm, when Bethany College's tuition reduction was announced, some parents worried that it was the harbinger of declining standards. "There are those who would argue that price is seen as a reflection of quality, and, therefore, if you are not as expensive, you are not as distinguished," explains Smith.