Test Prep
Victoria, our College Coach, shared a story with me the other day.
One of our clients got into her first choice college and knew that was where she wanted to go. The parent received the financial aid award letter that offered about $12,000 in renewable scholarships. Pretty awesome, except that this university has an estimated cost of attendance of about $90,000 per year.
It’s what I sometimes refer to as the “Macy’s coupon” of college admissions. The college admissions world refers to it as the “discount rate.” It’s the average percentage schools offer as “scholarships” to incentivize students to attend their school.
About Discount Rates
It’s important to understand that for these scholarships, colleges don’t just have a vault of money or an account set aside to fund them. They have calculated how much they are willing or able to discount the tuition and still stay solvent. This is why it’s a Macy’s coupon. Everyone gets something. The colleges adjust their costs to allow them to then discount it. The school offers the scholarship for the exact same reason Macy’s sends out the coupon–to get you in the door.
Approximately half of that school’s $90,000 cost of attendance was tuition. Costs of tuition are completely untethered to anything anchored in reality. They just float out there on their own and no one can really explain why a particular school decided on a particular cost per hour for classes other than that was what they charged last year and they needed to adjust for inflation.
$90,000 is approximately the cost of a new Tesla S model. If you’re paying full price, you’re purchasing a new Tesla each year for 4 years. But then they discount it, $12,000, or about 15%. A little over 25% if you take it only off of tuition. What an offer?
For context, the average discount rate in 2023 for private universities was about 50% for undergraduate degrees, a record high. Public universities have less flexibility, but many incentivize out-of-state students by offering automatic merit scholarships based on GPA and SAT or ACT scores.
No Harm in Asking
Like I said earlier, universities don’t have a pot of money they’re pulling from to fund these scholarships. It’s just a calculation they’ve made. So when the parent mentioned the award to Victoria, Victoria asked if they had asked about getting more. The parent didn’t even know that was a possibility. (Pro tip: It’s always a possibility.)
Victoria and the student sat down and worked out who to contact and what to say. The student wrote a letter asking for the award to be reevaluated and a few days later she found out the college and magically found another $20,000 scholarship to offer her on top of the $12,000 they already offered. $32,000 in scholarships for the first year, all renewable.
Return on Investment
Stories like this make me love what we do. For a $4000 College Coaching program, the parents received a $20,000 scholarship. That’s the simple calculation. 5X return in just 1 year. The possibility of $80,000 over the course of 4 years. Plus another $48,000 from the initial offer. $128,000 saved. The down payment on a house.
Schedule a Free Consultation
It all starts with our free consultation. Schedule a meeting and sit down with a college admissions expert to create your student’s college prep plans. Have your student attend so they hear the plan as well. It’s an amazing 45-minute meeting that clears up so much of what your student needs to do to be ready.
