While taking more low-income students, Hampshire was also offering more “merit” aid to academically strong upper-income students to lure them from competitors. “Parents would say, ‘I’ve got an awfully nice offer from Bard. Is there anything you can do?’ ” says Matheson. “If you are potentially going to get a student who might be able to contribute $50,000 a year in tuition, that student is worth a lot. If you can get that student for $35,000, that’s still a very good deal for the college.”

The combination of merit and financial aid cost Hampshire. In 2013, the college’s average first-year student was paying 56 percent of the listed tuition price. By 2018, that was down to 40 percent.

"...how college pricing works. Like airline passengers, every student at a given college pays a...

While taking more low-income students, Hampshire was also offering more “merit” aid to academically strong upper-income students to lure them from competitors. “Parents would say, ‘I’ve got an awfully nice offer from Bard. Is there anything you can do?’ ” says Matheson. “If you are potentially going to get a student who might be able to contribute $50,000 a year in tuition, that student is worth a lot. If you can get that student for $35,000, that’s still a very good deal for the college.”

The combination of merit and financial aid cost Hampshire. In 2013, the college’s average first-year student was paying 56 percent of the listed tuition price. By 2018, that was down to 40 percent.

"...how college pricing works. Like airline passengers, every student at a given college pays a different price. Colleges list high tuition prices hoping that enough students pay the top price to compensate for those who can pay little or nothing. Depending on the state, needier students will usually pay less at a liberal arts college than they would at a state flagship. It sounds counterintuitive, but choosing a public school to save money is actually a privilege for the affluent. And since the 2008 recession, more well-to-do parents are choosing those schools. To compete, private colleges are then forced to offer merit aid to top students who don’t need the money. Admissions professionals call the tension between giving grants to entice affluent students and using the money to increase diversity with need-based aid the “iron triangle.” ...

source: https://www.washingtonpost.com/magazine/2019/10/21/downfall-hampshire-college-broken-business-model-american-higher-education/?arc404=true