Muskingum College, a small, private school in the hills of rural eastern Ohio, has a radical plan for recruiting students: slash tuition.

The liberal arts school is dropping tuition for the 1996-97 school year by $4,000 - 29 percent - for students enrolling for the first time, from $13,850 to $9,850."I have not heard of anything like that," said David Merkowitz, spokesman for the American Council on Education, a group representing the nation's colleges and universities. "It is indicative of the degree of competition we are seeing in higher education based on price."

"Finally. We've been saying for years and years and years: We're pricing people out of higher education," said Laura McClintock, legislative director for the New York-based U.S. Student Association, a nationwide group of college students.

The school in New Concord, 75 miles east of Columbus, made its decision after extensive economic analysis and a Gallup Poll it commissioned convinced administrators that the school could bring in more money by charging less, said college President Samuel W. Speck.

After reaching a peak enrollment of 1,122 in the 1993-94 school year, enrollment at Muskingum dipped to 1,104 in 1994-95 and to 1,091 this year. It can accommodate 1,200, Speck said.

Muskingum wants to attract more of the students whose families cannot afford the higher rate but make too much money to qualify for financial aid.

"Families who may have felt they could not afford it will look at Muskingum," Speck said.

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Muskingum, founded in 1837, is affiliated with the Presbyterian Church (U.S.A). Distinguished graduates include U.S. Sen. John Glenn, D-Ohio, and the late actress Agnes Moorehead.

Nationwide this year, tuition increased by an average of 6 percent - less than the double-digit increases of the early 1990s but still twice the inflation rate.

Annual tuition at Muskingum has risen 4.5 percent to 4.7 percent each of the past three years, said Janice Tucker, a college spokeswoman.

Current Muskingum students will not benefit from the full tuition cut. Graduating seniors will see no discount, but students returning next fall could receive a "transitional" grant of up to $2,000, depending on the amount of financial aid they get.

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