American students who once chose a university or college for its academic reputation have started shopping for the best price and the most beneficial financial aid package.

And universities and colleges, especially those competing for the brightest students, increasingly are being forced to strike a bargain.

John Hoy, president of the New England Board of Higher Education, which represents many of the nation's top schools, said: "There's a lot of musical chairs going on out there. Parents and students, especially those who are well-qualified, know it is a buyer's market, and they are negotiating."

Some universities and colleges are offering financial incentives, and even guarantees, to students who now pay up to $30,000 a year for four-year courses at private colleges - up 234 per cent since 1980, or nearly three times the rate of median household income.

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About 66 per cent of 200 private colleges and universities surveyed by the National Association of College and 51¹ú²úÊÓƵ Business Officers reported giving students discounts averaging one-third of the published price.

Other institutions are also trying to soften the financial blow. Kent State 51¹ú²úÊÓƵ in Ohio lets students and their parents spread their tuition payments over 36 installments. Top-scoring scholars at the 51¹ú²úÊÓƵ of Texas get a 10 percent discount on room and board. And at Lehigh 51¹ú²úÊÓƵ in Pennsylvania and Clark 51¹ú²úÊÓƵ in Massachusetts, undergraduates earning top grades get a year of graduate study free, worth about $20,000.

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Many students are applying to more schools in the hope of finding the best combination of discounts and financial aid, despite an average $50-per-institution application fee. A new common application form that has been adopted by most private and some public colleges has made it easier for students to apply to several schools at once.

Once they have been accepted, many students and their parents now hold out for the highest possible amount of scholarship money and financial aid, pitting one school against another.

David Merkowitz, spokesman for the American Council on Education, an association of colleges and universities, said: "There's no question that there is more of that kind of thing going on, with parents and students saying, 'Gee, I got offered $12,000 by the 51¹ú²úÊÓƵ of Pennsylvania, so why can't Brown [51¹ú²úÊÓƵ] offer me just as much?'" But this trend may be short-lived, thanks to demographics. An expected increase in the number of prospective college and university students will soon shift higher education from a buyer's to a seller's market.

"It's a problem that may solve itself over time," said Mr Merkowitz. "The number of high school graduates is going to be increasing again over the next decade, so a lot of schools are going to be in a better position to withstand what I would guess a lot of financial aid officers might regard as extortion."

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