The Lone Star College System, for example, has begun charging variable prices across all of its programs based on the cost of course delivery, said system officials Tuesday at the annual meeting of the American Association of Community Colleges. And in a particularly novel step, they said the system plans to soon include financial incentives for students to make completion progress, such as through fixed prices for degree programs or stipends for students based on milestones they hit on their path to credentials.
The new pricing strategy is possible because Lone Star can track the per-student cost of all courses across its six colleges and nine centers in greater Houston, which enroll a total headcount of 90,000 students, said Richard Carpenter, Lone Star's chancellor. And this year the system was able to begin charging tuition rates that better represent the cost of instruction -- even factoring in per-course expenditures on buildings and classrooms.
Differential tuition is common at four-year institutions, and even the norm at flagship publics. At community colleges, however, the often controversial approach is typically limited to more obviously expensive and high-demand course offerings, like nursing. But Lone Star goes much farther.
"A student taking six different courses can pay six different prices,” said Carpenter.
Students still don’t cover the bulk of what Lone Star spends, he said, with tuition revenue on average paying for about 25 percent of educational expenditures. But it’s a better representation now, thanks to more-detailed financial tracking that monitors costs, even for students who drop out.
So this year, standard tuition at the system is $200 for a three-credit course, but students pay $212 to study dental hygiene and $206 for computer science, according to a differential fee chart .
Lone Star is in the first of three years of steady ratcheting up of differential tuition, meaning that if a course costs 30 percent more than the baseline, students now pay 10 percent more for that course, with 10 percent hikes coming in each of the next two years.
Carpenter said there has been resistance to the plan, but that the system had no choice but to get more aggressive about efficiencies because of the state’s budget crunch. Lone Star is one of the nation’s fastest-growing colleges, with an enrollment jump of 28 percent, or 16,000 students, between 2009 and 2011. And state funding has not kept pace with the system’s growth.
“I sense more and more willingness to try some bold experiments,” Carpenter said. And while the system may be pushing the envelope on its financing, “we haven’t laid anybody off.”
Perks for Students
Differential tuition pricing, even approaches as aggressive as Lone Star’s, differ in a key way from Santa Monica’s failed proposal in that they don’t charge different prices for students who are enrolled in the same courses. For example, if Lone Star had a capacity issue in its nursing program, students would not be able to pay more to get into an overbooked section.
And Santa Monica -- a two-year college in California, where there are particularly strong feelings  about student access and equity -- touched a live wire by trying to charge some students four times as much as others for the same, general education courses. Even some proponents of creative pricing said the plan went too far.
Lone Star plans to soon charge students different amounts within the same degree programs, albeit in a more nuanced form than the attempt by Santa Monica. The Texas system will include rewards for students, some of them financial, which system officials said could make the cost of a degree or credential less expensive.
Following the lead of some private colleges, as well as for-profits, Lone Star is considering “total cost of degree" offers that would lock in tuition costs when a student commits to a degree program, tacking on no new fees or tuition hikes as the student works toward the degree or certificate. “We are toying with the idea,” Carpenter said.
And next year Lone Star will begin granting “success stipends” for students who stay on their path to a credential.
For example, students could qualify for stipends when they complete gateway courses or their first 15 credit hours, said Amy Welch, State Director of Texas Completion by Design, a Bill and Melinda Gates Foundation-funded program that seeks to increase completion rates at community colleges.
Those stipends will include financial perks like tuition reimbursement, waived course registration fees and discounts at the bookstore or on parking, Welch said. And when Lone Star asked students what sorts of incentives would work, some suggested non-monetary benefits like priority enrollment status -- when students are bumped up on the list to register for courses -- so those benefits will also be included, Welch said.
Students who change their course of study will go back to paying full freight, according to the current plan, said the panelists.
At some point down the road, Carpenter said the system would like to begin factoring in the value of a degree in the job market when setting tuition levels -- charging more to those expected to earn more. But Lone Star is at least two years away from attempting that, he said.
Differential pricing isn’t an easy sell for everybody, including faculty members who may be nervous about their programs' stability. And some people told Lone Star officials that enrollment would dip if they began setting different price levels. That hasn’t happened so far at the fast-growing system.
Carpenter said the college was planning to adjust its approach as it gathers more data. But for now, they’re going ahead with what he described as a more viable approach to pricing and budgeting.
“We’re trying to track all of this back to what we’re spending,” he said.