WASHINGTON -- A lot of people at private colleges will be blue in the face come fall, inhaling and watching how well on-paper enrollment projections morph into in-person realities.
But, as anxious as people are about the coming fall, Kathy Kurz’s Monday morning message to Catholic college administrators was to prepare, too, for the falls after that.
“This year is probably not going to be the only year that we’re facing hard choices. In fact, one might be able to argue that 2009 will not be as tough as 2010 and 2011,” she said -- pointing out that many of this year's applicants identified their lists of choice colleges pre-economic meltdown.
Concerns that public colleges will increasingly predominate on those lists -- to the exclusion of private institutions with higher sticker prices -- lingered here at the Association of Catholic Colleges and Universities conference, where attendees by and large represented small, heavily tuition-dependent colleges with modest endowments. “The challenges of managing financial aid in this environment are particularly severe for the colleges here because part of your mission is to serve the underserved,” Kurz, vice president of Scannell & Kurz, Inc., a higher education consulting firm specializing in enrollment management, said during a panel on "Managing Financial Aid: High Aims, Hard Realities."
“Many Catholic colleges already have very high discount rates” -- the percentage of tuition and fee revenue covered by institutional aid. “Realistically, you may see some increases," Kurz said.
More broadly, “I think we’re going to be forced to think about how families recruit and enroll students, how families pay for colleges, in very, very different ways than we have heretofore,” said Nathan S. Mueller, a principal at Hardwick~Day, another consulting firm. “We're still fundamentally approaching paying for college the same way we did 20 to 25 years ago.... Their resources relative to your costs are much different than they were 20 to 25 years ago."
He took on the way colleges traditionally respond to student need. "Need is a number that’s not relevant for the neediest students and not relevant to the least needy students,” Mueller said. “For maybe a third of your incoming freshmen it has some relevance for the way aid is awarded to them.”
He explained: On the upper end of the income spectrum, families told they don’t have need don’t agree. A family with income of $137,000 facing a $40,000 total bill will be incredulous at a $40,000 expected family contribution figure: “By the logic of need, it’s true they really don’t have need, but they feel no ability whatsoever to contribute $40,000 a year for their cost of attendance,” said Mueller.
And on the other end of the income spectrum, when students have more need than can be met, they’re “gapped” -- the difference between their aid award and the cost of attendance -- by $5,000 to $7,000. That problem will probably only get worse, said Mueller, who presented an analysis of how it will be increasingly difficult for private colleges to support students without financial resources.
In the Hardwick~Day example presented below, tuition increases 5.5 percent annually, and, by 2013-14, the discount rate rises by 8 percentage points -- from 53 to 61 percent. And the unmet need of that student still rises by nearly $2,600. (This assumes stable federal and state aid.)
|Academic Year, 2008-9||Academic Year, 2013-14|
(assuming 5.5% annual increase)
|Expected Family Contribution||$0||$0|
|Federal and State Grants||$10,125||$10,125|
|Need Not Met By Gift||$9,600||$12,192|
While Catholic colleges shouldn’t abandon the financially needy students they’ve traditionally served, moving forward, Mueller said, “A larger share of students you enroll has to be from families of significant means if you are to continue growing revenue."
The consultants also talked about strategies for stressing the affordability message to students who might not look at private colleges because of high sticker prices (which of course are often heavily discounted). One audience member bristled at the suggestion that he should advertise his college by pledging that, for families below a certain income level, the cost of education would be comparable to that of the local public institution.
“Frankly, I think it’s better than [a local public institution] or I wouldn’t be there, so I don’t want to say that,” he said. “I am not going to apologize for the cost and I’m not going to say our No. 1 thing is to make this as cheap as possible for you…. I want to be careful in these discussions. This isn’t only about money; it’s really about value.”
The consultants agreed, to a point. A lot of colleges lead with, “We’re low cost, rather than we’re worth the price,” said Kurz.
“I don’t think it should be an either-or question,” said Mueller, adding that colleges are "truly swimming upstream" in trying to make the argument that they're better than flagship publics. In research Hardwick-Day has done, it has found that if you ask people "top of mind," what’s the best university in a state, in Illinois, it’s the University of Illinois, not the University of Chicago or Northwestern University. In other states, the situation is similar.
In his opening remarks to the panel, Anthony J. Aretz, president of the College of Mount St. Joseph, in Cincinnati, said that perhaps the independent college sector has hit a tipping point when it comes to pricing. Even in comparatively rosy times -- i.e., last year -- Mount St. Joseph enrollment numbers looked good until a summer “melt” of many would-be students, mainly to two nearby publics, the University of Cincinnati and Northern Kentucky University. Mount St. Joseph came in below its enrollment targets.
At the Catholic college conference, which adjourned Monday, Aretz said, “All I hear is a lot of anxiety about what’s going to happen in terms of enrollment for this fall."