Colleges Slashing Prices
A very interesting article was published by the Washington Post yesterday. In a time of rising college costs, it is encouraging to know that some schools are choosing to slash prices instead of raise them.
Take a look at the article here :
January 21 at 5:53 PM
As soaring tuition scares off many families, a growing number of private colleges have embraced a marketing tactic associated more with selling airline tickets or flat-screen televisions than higher education: a price cut.
St. John’s College slashed tuition from $52,734 in this school year to $35,000 in the next.
The liberal arts school, with campuses in Maryland and New Mexico, joined more than 20 others nationwide that have reduced prices in the past three years.
The movement exposes a reality of higher education long hidden in plain sight: The difference between sticker prices and what the average student actually pays is often vast.
St. John’s started pondering a shift in 2017, as its total charge for tuition, fees and room and board neared $70,000 a year. Few would ever pay that much at the school, which provides financial aid or merit scholarships to almost all of its students. Still, the college worried about the optics of a $70,000 sticker price.
“Is that tenable? Is that right? Is that who we are?” asked Panayiotis Kanelos, president of the campus in Annapolis, Md. “Is it right for us to expect families to bear that burden?”
The answer, he said, was no. The new price, counting fees and room and board, will be about $49,300. The average financial-aid award would reduce the bill to less than $25,000.
Twenty-three private institutions have reduced tuition since 2016, according to the National Association of Independent Colleges and Universities. “The trend is beginning to pick up,” said David L. Warren, the association’s president. These schools view cuts as “an important tool,” he said, to help them stand out in a crowded market.
Their reasons vary. Some need to bolster recruiting in the face of major financial challenges. Others want to escape a pricing formula that assumes prospective students view high tuition as a mark of educational quality even though they simultaneously seek significant discounts or financial aid.
The average sticker price for private colleges is about $48,500 for tuition, fees and room and board, according to the College Board, a nonprofit organization representing thousands of educational institutions. However, sticker prices above $60,000 a year have become commonplace, and a growing number top $70,000.
The most prestigious schools enroll large numbers of students willing and able to pay full price. Federal data show the share of full-paying undergraduates in 2016-2017 — those who received no grants — was 42 percent at Princeton University, 50 percent at Bowdoin College in Brunswick, Maine, and 57 percent at Wesleyan University in Middletown, Conn. A similar pattern held at numerous other colleges.
Revenue from such students, plus philanthropy and endowment payouts, helps schools recruit from a broad spectrum of economic backgrounds and award adequate aid to those in need.
But many schools have few full-pay students. The Washington Post found more than 310 colleges and universities in 2016-2017 where at least 95 percent of undergraduates received grants or scholarships. (For St. John’s, the share was 97 percent on its Annapolis campus, 99 percent in Santa Fe, N.M.)
At such schools, sticker price may be more of an aspirational statement than a revenue generator.
Even so, sticker prices usually go up faster than inflation. Knowing this, students and bill-paying parents hope the increases remain manageable. Their best-case scenario would be an occasional price freeze.
Debate over tuition at public colleges and universities is perennial. Political pressure has grown in recent years to limit increases or even make public college free.
Now, price cuts among private colleges could be signaling a pivot point in that sector.
Sweet Briar College in Virginia, which nearly closed in 2015 amid financial difficulties, cut its price 32 percent for the current school year, to $34,000 for tuition, fees and room and board. The women’s college, which had 337 students in the fall, aims to boost enrollment and compete with public universities. “We are very serious about being excellent, relevant and affordable at the same time,” Sweet Briar President Meredith Woo said.
Elizabethtown College in Pennsylvania will cut tuition 32 percent in the coming year, to $32,000 (not counting fees and room and board). The echo on 32 is not accidental. Carl J. Strikwerda, president of the 1,700-student college, said he wants to grab the attention of middle-class families.
“What we’ve found with them is, more and more, that higher tuition is just a turnoff.” Those families might know in theory that the sticker price is just a starting point, he said, but “they just can’t believe that colleges give enough financial aid to make it work.”
Colleges are required to post calculators online to enable families to get a quick estimate of potential financial aid. But it’s not clear how much help these “net-price calculators” provide to families with modest resources and little experience in college finance.
Price cuts are risky. If they are not deep enough, they won’t get noticed. If they are too deep, colleges could lose substantial revenue. “This is not for the faint of heart,” Strikwerda said. To succeed, he said, a college must convince prospective students of the quality of the education it offers regardless of price.
Colleen Hanycz, president of La Salle University, said the 5,700-student school in Philadelphia has thrived since cutting tuition 29 percent in 2017. “We had a sticker price at that time, close to $41,000, that almost nobody was paying,” she said. Hanycz said transparency matters to consumers fed up with the vagaries of college pricing.
Too often, she said, families must endure “Wizard of Oz nonsense” as they seek to learn the bottom line. Hanycz described the mixed messages they hear: “Well, there’s that price, but if you knock on Door No. 3 you might get a discount.”
Parents of first-generation college students “don’t even know how the game is played,” Hanycz said. “I really couldn’t stand the inequity in that.”
Under the new pricing, the university’s net revenue per student has risen, Hanycz said, but she declined to say how much.
At St. John’s, with about 900 students in Annapolis and Santa Fe, the price cut coincides with a fundraising campaign to support what the college calls “an honest education at an honest price.” The rollback pegged tuition to a level not seen for more than a decade.
“Every time you raise the tuition, the screw gets tighter and tighter on families in the middle,” said Panayiotis Kanelos, president of St. John’s College in Annapolis, Md. (Michael Robinson Chavez/The Washington Post)
The college’s distinctive model, based on close reading and discussion of great works of Western civilization, is labor-intensive and expensive.
There are no lecture courses, no adjunct faculty and no majors. The Johnnies, as students are known, excel in croquet and have a rivalry in that pastime with their Annapolis neighbors at the U.S. Naval Academy. They address each other and tutors (the faculty) during class by the honorifics Mr. and Ms. (Some prefer the gender-neutral M. or Mx.)
They read a common list of great books over four years, starting with Homer’s “Iliad” and ending with Simone de Beauvoir’s “The Second Sex” and works by the philosophers Ludwig Wittgenstein, Martin Heidegger and Plato. Each semester, tutors meet in groups with individual students to evaluate their performance orally in a ritual called a “don rag.”
Now, its recruiters have another talking point — an eye-catching sticker price.
“We are out there pushing this in every way we can,” said Benjamin Baum, vice president of enrollment. “We are talking about cost in the same breath that we are talking about Jane Austen.”
St. John’s would like to grow a bit in Santa Fe but is not seeking to expand in Annapolis. Officials say finances are in solid shape. The price cut, they contend, will simply remove a perceived barrier for families otherwise drawn to a one-of-a-kind liberal arts experience.
“Every time you raise the tuition, the screw gets tighter and tighter on families in the middle,” Kanelos said. “Something is broken in tuition pricing. We want to fix it now.”
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