a) Discounts--Until relatively recently, discounts weren't discussed much publicly by colleges. However, discounts were discussed in articles and presentations intended for college admissions and financial-aid personnel. Simply put, a discount is a reduction in the costs--usually, tuition and fees--a student will be charged by a college or university. Consider an automobile analogy: the old adage was "Never pay the sticker price for a new car." Well, with many schools, particularly small, private colleges, the same holds true today. The college will often reduce its costs to enroll your student--depending on how desirable a prospective student the school considers them.
To read Kim Clark's article "Private Colleges Adopt Car Lot Strategy," posted online at U.S. News & World Report on 9/15/10, click this link:
Why is this done? So colleges can enroll the most able students it can. Of course, the most selective universities don't have to discount their tuition and fees because they have more highly-qualified applicants than they can admit already--many of whom are willing to pay "full fare." But less-selective and less well-endowed schools, in competition with other colleges like themselves, use discounting to enroll the students they covet most.
Each college has its own "look-fors" when considering applicants, but most want those with high GPAs in a rigorous high school curriculum as well as high ACT or SAT scores. Some seek high school valedictorians or National Merit Scholars. And for these top students, colleges may be willing to discount their costs significantly.
Why don't schools just reduce tuition "up front," by simply cutting their "sticker price"? Because then applicants who lack high GPAs and test scores but who desire to enroll--and can pay "full fare"--may be admitted to enhance revenue. Sound like a business? Maybe that's why many colleges now call their "Office of Admissions" by the more modern--and, perhaps, more accurate--label of "Enrollment Management."
b) Grants--Grants are reductions in college costs based on the financial need of an applicant--as indicated by their Expected Family Contribution (EFC), derived from their parents' responses on the FAFSA. The best grants are the Federal Pell and state grants based on an applicant's EFC. The lower a student's EFC, the higher their grant can be. In 2009, the maximum Pell Grant awarded was $5,350 per year to a student whose EFC was less than $100. To use the Ohio College Opportunity Grant (OCOG) as an example of a state grant, its maximum in 2009 was approximately $1,008 per year. When you add these two grants together (= $6,358), a student could finance much of his or her tuition and fees at some states' public institutions--if they commuted and did not have to pay the $7,000-$8,000 per year for room and board. The problem with the Pell Grant is it doesn't now cover room and board charges at most public universities and doesn't even come close to paying for tuition and fees--let alone room and board--at nearly all private schools.
c) Scholarships--Scholarships are cuts in college costs based on merit--usually defined as high GPA and ACT or SAT scores. But, you say, that sounds like a discount, which we've already discussed. Ah, you're getting the idea. Many of those "scholarships" students receive from colleges and universities are, in fact, discounts--that is, reductions in costs rather than money going from the school to the student. (Notice here that we're not talking about the scholarships awarded by local organizations or community groups, which are money going to the students--and then to the college.) Many colleges have established a whole hierarchy of scholarships: President's, Deans', and department awards are common examples. Some scholarships are actually funded by interest from contributions to the college's endowment (i.e., investment principal) made by the people whose name they commemorate. But many university scholarships--particularly those to, say, "cheerleaders," "class presidents," etc.--are simply cuts in college costs--not "money" the student will receive.
Well, that's "gift aid" in a nutshell. If it sounds "nutty," I can't help it: college financial aid today sometimes does seem crazy!
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