Cutting Tuition Is Not a Gimmick

Look at the numbers, writes Robert Massa. A tuition reset can be real.

November 13, 2017
Drew University

“College Costs Continue to Edge Higher” (The Wall Street Journal, Oct. 24, 2017) reported on the release of the annual “Trends in College Pricing” study by the College Board. Not unexpectedly, the amount that private colleges charged for tuition in 2017-18 rose 1.3 percent (1.9 percent at public institutions) from the year before. But financial aid, which has historically tempered the effect of the rise in published prices, failed to keep pace with price increases, so that the average net price families paid after grants and scholarships rose by 4.6 percent at private colleges and 3.2 percent for in-state public colleges. More so than the published price, net price is what actually determines access and affordability, and this is what families (and institutions) need to focus on.

My institution, Drew University, the only national private liberal arts college in New Jersey, was cited in this short report as one of several colleges to announce a tuition price decrease for the 2018-19 academic year. Rather than the published price increasing by the “normal” 3 percent, Drew is decreasing its price by 20 percent. Here’s exactly what The Wall Street Journal had to say:

Moody’s Investors Service warned in a note last month that recent cuts to published tuition rates by schools including Sweet Briar College in Virginia, Drew University in New Jersey and Birmingham-Southern College in Alabama may be little more than a gimmick, since few students at those schools pay sticker price to begin with.

At Drew, staff from the finance, enrollment, communications and institutional research areas spent the better part of six months studying, modeling and testing options. We looked at data from a larger market position study conducted on our behalf, and we paid attention to a national study by Ruffalo Noel Levitz that found half of all families exclude colleges from consideration based on published price alone. When combined with the fact that Drew, at 1,560 undergraduates, is about 250 students shy of its optimal size and that only 75 of our students paid the full price charged, it became abundantly clear that our published price was too high for our prospective students and that lowering it could capture the attention of some who otherwise would write us off as too expensive.

“Gimmick”? Only if we positioned this as a $10,000 price reduction for all. But we didn’t. In her open letter on the Drew website, President MaryAnn Baenninger clearly stated:

Effective for academic year 2018-19, Drew’s tuition will be lowered by 20 percent -- about $10,000 -- narrowing the gap between the actual tuition charge and the amount many families pay. This move will make Drew’s true tuition, and our true value, more clear to more families.

Narrowing the gap between the actual tuition charge and the amount many families pay -- after financial aid. When the published price was $48,336, the average Drew family paid just under $20,000 in tuition after scholarships and grants (room and board is an additional charge, and loans and outside grants help to defray that expense). With a tuition charge of $38,668, families will still pay just under $20,000 with scholarships and grants that are proportionately reduced. Only now, two things are different -- first, they will all be protected from the average 3 percent tuition increase next year (a savings of $1,450), and second, more families will consider Drew as a college of choice since the published price and the price they actually pay will be closer -- not the same, but closer. This will help us to attract more students who will benefit from a Drew education at a price that they can afford after aid, but who never would have looked at Drew before because the list price was just too high.

And one other very important point: with a tuition reset at Drew, we’re not lowering how much it costs us to educate a student. We are certainly finding efficiencies to lower some of our expenses, but if we significantly cut our cost, we would impact our quality. So, primarily, we’re not cutting costs, we’re cutting the price that we charge.

Far from a gimmick, this move will increase access because more students will consider Drew a financial possibility. A gimmick, as reported in the Journal, because so few students pay the published price. You don’t go on a diet if you are thin. You don’t take a statin if your cholesterol is normal. You don’t wear glasses if you can see quite clearly. And you don’t lower tuition unless very few students are paying it, and charging more makes it seem that you are out of reach for the average student. Gimmick? It's time to fetch my glasses so I can find my Lipitor and eat my salad!


Robert J. Massa is senior vice president for enrollment and institutional planning at Drew University.


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