University Business - October 2011 - (Page 38)

Tuition Setting Rationale behind determining price in a time of limited budgets By Howard and Matthew Greene “W e believe it is time for someone to change the college pricing game.” so says John mcCardell, recently appointed vice chancellor and president of Sewanee: The University of the South (tenn.) in a video presentation about the institution’s historic move to lower tuition and fees by 10 percent across the board. “the days of high fees and high discount rates are over.” thus declares the university’s website since the february 2011 announcement, noting further that: “other institutions might wish to consider whether they, too, might cease the high fee/high discount/bidding war approach to enrolling a freshman class and instead bring the price of the education they offer more in line with a family’s ability to pay.” How will families react? that remains to be seen. As many college officials and enrollment management administrators are well aware, there is a debate between those who believe lower prices will attract cost-conscious families, particularly in difficult economic times such as these, and those who argue for the “Chivas regal” effect, where an increase in the cost of a college signifies luxury quality for the buyer (aka the student). from our vantage point counseling many types of families over the years, it is apparent that neither scenario captures the concerns of parents and students. We believe that colleges dramatically underestimate the level of confusion and lack of knowledge about college costs and financial aid among families. Data also show that many families likely to qualify for need-based aid fail to apply for it. it would be hard to count the number of students who don’t apply to a college, particularly private institutions, due to the deterrent effect of a high sticker price, not understanding that the vast majority of students do not pay full freight. Sticker Price Confusion Just last week, we sat in the office with a middle-income family beginning the college search process with their daughter, the eldest of 38 | October 2011 five girls. the father, an independent business owner, frankly exclaimed that though he knew the ins and outs of his business, budgeting, financial planning, capital investment, and so on, he had no clue where and how to start understanding how to pay for college. He wanted his daughter to have access to a strong education, and was willing to pay what he could. At the same time, he didn’t want to negatively affect the options of his younger children or take on, or have his daughter take on, an excessive amount of debt. in such circumstances, we find ourselves going back to basic first principles in educating both parents and students about how to pay for college, how to apply to a diverse list of institutions offering needand merit-based financial assistance, and how to access the many free resources available to help them understand and apply for aid. in this case, the family was definitely considering sticker price as they began the college search. Yet it was apparent, as it often is, that a $5,000 to $10,000 difference (sewanee’s 10 percent) was not going to be the issue if the student was accepted to a good college for her interests and goals. the biggest issue was going to be the difference between public institutions on the one hand and private colleges and universities on the other. from there, the total Cost of Attendance would be the final variable they would need to consider, all of which will come as little surprise to most financial aid officers. universitybusiness.com http://www.universitybusiness.com

Table of Contents for the Digital Edition of University Business - October 2011

University Business - October 2011
Contents
Editor's Note
College Index
Ad Index
Behind the News
Sense of Place
Viewpoint
Human Resources
Cloud Email
Tuition Setting
Campus CFO
Independent Outlook
End Note

University Business - October 2011