At first glance, the increasing number of private colleges slashing sticker prices seems like a win for students. But students should know that the net price — the amount they actually pay in tuition and fees — might remain unchanged.
“The idea is that by lowering tuition, more families who are unable to afford the sticker price will consider the school and apply,” says Sabrina Manville, co-founder of Edmit, a Boston-based college admissions firm. “This is a business tactic that is not new but is certainly accelerating as colleges attempt to increase their applicant pools and seek to provide a message of affordability.”
Many private colleges use a business strategy called tuition discounting, in which they offset their sticker price with institutional grant aid to lure more students to enroll. For that reason, only wealthier students typically pay the sticker price.
Since sticker prices can be misleading, college admissions experts encourage families to instead look at net tuition, which is what many students and their families actually pay after colleges lower the sticker price by offering grants and scholarships.
Higher education experts say a “tuition reset,” in which an institution cuts its sticker price, may not mean a change in net price for most students. For instance, a student may end up with the same net price at a particular college regardless of whether the school practices a tuition discount model, a tuition reset or a mixture of both.
“The school is usually making a bet that the average net price will be similar across all students as it was before, but with more enrollments, meaning an increase in overall tuition revenue,” says Manville.
Decreasing enrollment is causing some colleges to make price reductions, experts say. According to the U.S. Department of Education’s data, the total fall enrollment among all degree-granting colleges and universities dropped nearly 6 percent from around 21 million in 2010 to 19.8 million in 2016.
Particularly among private liberal arts colleges with small endowments, a tuition reset may help bolster the number of applicants, increase enrollment and boost tuition revenue, Manville says.
“This trend has been largely at small private colleges, but we are seeing some public universities enter the arena as well,” she says. Under the NC Promise, for instance, Elizabeth City State University, the University of North Carolina–Pembroke and Western Carolina University reduced tuition to $500 per semester for North Carolina residents in 2018-2019.
Some colleges are slashing sticker prices because many families aren’t aware of the practice of tuition discounting, says John H. Pryor, a principal at Pryor Education Insights, a research firm that specializes in higher education.
“Most of them are doing this to right-size the ship. These schools, if not all of them, are mostly private institutions, with tuition and fees that have been creeping up for years, but also their discount rate has been increasing — the amount they discount with aid,” he says.
Recently, St. John’s College, which has campuses in Annapolis, Maryland, and Santa Fe, New Mexico, announced plans to drop tuition by more than 30 percent for the 2019-2020 school year. The school currently charges around $53,000 in tuition and fees; with the tuition reset, the new published price will be around $35,000.
Tuition increases have gotten out of hand, says Mark Roosevelt, president of St. John’s College, a National Liberal Arts College with around 800 students spread across its two campuses. St. John’s tuition reduction is unique, he says, since it’s being financed by a $300-million capital campaign to increase the institution’s endowment size.
“We really believe that this escalation in sticker prices is wrong, and we participated in it,” he says, especially given that many parents and students do not know that most students do not pay the full sticker price.
According to a 2017 report released by the Chronicle of Higher Education, nearly 3 percent of institutions — private and public — are currently in a tuition reset. Among the college leaders surveyed at more than 300 private colleges and universities, 20 percent responded that they would consider a tuition reset in the future.
Pryor says that one of the reasons tuition prices have been skyrocketing, in addition to schools seeking more revenue, is “the American public has an idea that price equates with quality. So if you have a higher-price institution, people will think that you’re a better institution.”
That idea deters some schools considering a tuition reset, he says.
Currently, 20 ranked private schools have lower tuition and fees in 2018-2019 compared with the published price in 2013-2014, U.S. News data show. Among these institutions, the average for tuition and fees is around $24,569. That’s about 31 percent less than the average sticker price — $35,767 — in 2018-2019 reported by all ranked private institutions that reported tuition and fees data in the most recent U.S. News annual survey.
The vast majority of these institutions are Regional Colleges and Regional Universities. There are four National Liberal Arts Colleges that have slashed their prices recently: Birmingham-Southern College and Stillman College in Alabama, Sweet Briar College in Virginia and Drew University in New Jersey.
U.S. News data show that more than half of these tuition-slashing institutions had a total enrollment of less than 1,500 students for the 2017-2018 school year.
See the map below to explore the ranked private colleges that have lowered their tuition in the last five years.
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Private Colleges That Have Lowered Tuition Prices Over the Last 5 Years originally appeared on usnews.com