Colleges and universities are considering various marketing strategies to attract and retain students. One strategy that has not received much attention is a price differential strategy. A tuition price differential allows schools or departments within a university to charge a different (higher) tuition rate as opposed to a flat rate tuition charge. Primary concerns for not adopting such a strategy is the fear of losing students to competitive institutions or sustaining criticism from various constituencies. Such a strategy however, may be effective if communicated to students and others. A price differential may serve as a legitimate signal of quality. The benefits, however, from the price increase must be evident in tangible terms for the student.

This paper presents a review of literature on the role of tuition and college attendance, the use of tuition differentials by higher education institutions, a report on the findings of a study of current students' attitudes and perceptions about degrees and the costs of attending college and the implications for college administrators.