02/23/2012 05:55 pm ET Updated Apr 24, 2012

Colleges Seeking Good Students and Willing to Make Deals

In January and February, a number of colleges send e-mail to counselors with headings such as "Scholarships still available at - University" and "We've extended our deadline." I just received another with the subject line "Deadline Schmeadline." It went on to say -- Our Regular Decision application deadline came and went on January 15. After we sorted through the applications and supporting documents that have come in since then, we find ourselves in the position of being able to consider more applications to our college of liberal arts and sciences.

The schools generating these notices are great places, often ones our students have attended over the years. It's not that they can't fill seats. They're hoping to attract well-qualified applicants who may have gotten a late start on the application process or been disappointed in the early fall rounds.

There are more than 2,000 four-year colleges in the United States. Most admit the majority of their applicants. And although a few are now charging close to $60,000 a year, the fierce competition among them does exert pressure on prices.

The name recognition and deep pockets of the most expensive institutions insulate them, to some degree, from market forces. They were there first and enjoy a monopoly of sorts. Outside this relative handful, however, colleges actively vie with each other for the better students in the pool, independent of their ability to pay.

The hundreds of private colleges scattered across the country have an appealing product to sell. Predominantly and often exclusively undergraduate institutions, their classes are smaller and usually taught by professors rather than graduate students or adjuncts. The absence of advanced-degree programs creates opportunities for undergraduates to work with their professors more closely. Students with a variety of extracurricular interests often find room to pursue them without the expectation that they be standouts in each area.

Many of these colleges offer so-called merit aid to applicants who have taken challenging courses in high school, earned strong grades, and scored well on the SATs or ACTs. These tuition discounts can range from a small fraction of the total to $20,000 a year or more. Their purpose is to increase the likelihood that the recipients will enroll.

Responding to the attractions of the small-college model, public universities have created "honors colleges." They attempt to provide the best of both worlds -- the resources of a big university and the personal touch of a smaller one. Some honors programs consist primarily of a set of courses open only to eligible students. Others come with all the bells and whistles -- early class registration privileges, separate dormitories, designated faculty advisers, special academic and social programs, and even funded travel.

Some private colleges use both discounting and special programs to woo students. Since state universities already charge significantly less, at least for in-state attendees, than their private counterparts, they are much less likely to discount the prices further.

After the 2008 financial crisis, many larger state universities experienced a spike in applications. In quite a few cases, those universities saw even larger increases in their honors-college pools. Stronger students who had been focusing on private institutions were seeking more affordable options.

Competition is alive and well in higher education. Excellent alternatives to the most expensive colleges and universities are available at about half the cost, sometimes less. They're still not cheap by any means, but they are at least within range of a larger segment of the middle class.