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Cutting Tuition -- and Thriving

March 6, 2008

Is a college that lowers tuition a college on its last legs? In some cases, maybe. But officials at Lourdes College, a small liberal arts institution in Ohio, say the campus is in fine shape after making the unorthodox move four years ago.

Enrollment numbers support their case: Lourdes's head count went from 1,249 in fall 2003 to roughly 1,500 the next year, when full-time students saw a 41 percent tuition decrease. That trend has continued. As of last fall, more than 2,000 students were enrolled.

Increasing enrollment is something of a trend among liberal arts colleges. Several institutions have experimented with tuition cuts. But the perception that high price is equivalent to quality often deters leaders from contemplating the latter move, even amid escalating concern about college access and affordability.

It's hard to know exactly how to view the Lourdes scenario. The college is unique among its peers for its large population of part-time and older students. And the circumstances surrounding the cost cuts were unusual, as well.

To hear Robert Turek, Lourdes's vice president for student services, tell it, his college went through an identity crisis around the turn of the millennium. Enrollment had fallen over a five-year span, and college leaders were looking for a boost.

Long a nonresidential campus, administrators talked about adding dorms -- and, perhaps, participating in the National Collegiate Athletic Association. Those changes, some thought, would add to Lourdes's prestige, and help them compete with regional liberal arts and public colleges. The idea was to go after more first-time, full-time students who had long made up a minority of its students.

Tuition rose from $3,384 in 2000-1 (per semester for a student taking 12 credit hours) to $6,100 the next year. By 2003-4, the sticker price was $7,200 per semester. The college discounted heavily, including an increase of merit aid, and went to a pricing model predicated on greater full-time tuition.

But instead, in that year of almost doubling tuition, Lourdes lost 80 students. By fall 2003, enrollment had dipped to 1,249.

“We’re a very price-sensitive market in Northwest Ohio, an area that's fallen on tough economic times," Turek said. "People couldn't afford us at that inflated price -- they looked at overall tuition and fees and didn't take into account discounts. It's difficult to sell that, especially in a part of the country where there's a relatively low college-going rate."

Market research showed that the college's main competitors were the University of Toledo and a local community college, not other private institutions, according to Turek.

Under new college leadership, the decision was made in early 2004 to go with the 41 percent tuition reduction, and to no longer charge a different rate for full-time attendance. Lourdes officials said had the college not moved back to the per-credit-hour pricing structure, full-time annual tuition for 2004-5 would have been $15,528, an 8 percent increase over the previous year. (Since that year, tuition has risen between 3 and 5 percent annually.)

Turek said that prior to the change, students who were taking six or nine credit hours a semester had little financial motivation to take a full load. The new system credits students who reach the 12-hour mark. It also relies much less heavily on merit aid.

And in the end, neither the dorms nor the NCAA idea ever came to fruition.

“We didn’t have the operating budget to support a residential population or intercollegiate sports," Turek said. “I don’t think anything was wrong with the vision of opening up new markets for recruitment, or attracting more full-time students. But we couldn’t attract students, even with discounting."

In the year after tuition fell, the number of graduate and professional students more than doubled -- from 47 to 96. That number is now more than 200, in part due to more programs. The transfer student population -- long a well-represented group on campus -- also rose. So did the number of nontraditional (25 or older) students, and those straight out of high school (though the latter group still represents only about 5 percent of the student body.)

Lourdes has a liberal but not open admissions policy, and the college hasn't lowered admissions standards since the tuition drop, Turek said.

The tuition move, considered risky by some at the college, has put the institution on more solid financial ground, he added.

Tony Pals, a spokesman for the National Association of Independent Colleges and Universities, said tuition cuts at private colleges over the past decade have had mixed results. The biggest obstacle, campuses often tell the group, is overcoming public perception that dropping tuition is an act of desperation.

"They raise the question, how can you cut price without cutting quality?" Pals said. "You have to be able to tell your story and be able to sell your value."

Pals added that the recent affordability initiatives at the highly competitive colleges will make an institutional tuition cut an easier sell to the market place. The pitch: "We have picked a different, yet bold, approach."

 

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