Concordia University Saint Paul will reduce the sticker price of its tuition and fees by $10,000, or about 33 percent, for the 2013-14 academic year, the Minnesota university plans to announce on Wednesday. Tuition and fees for all new and returning students in the traditional undergraduate program will drop to $19,700 next year from $29,700 this year, while the price of room and board will not change.
The university spent years working toward this announcement, and administrators are excited. “For us,” says the Rev. Thomas K. Ries, the president, “it represents one of these once-in-a-generation decisions.”
With this move, Concordia joins a small group of institutions that have lowered their prices in recent years, including the University of the South, known as Sewanee, and Seton Hall University. And in some ways, tuition cuts make sense: They respond to the chorus of warnings that higher education’s high-price, high-aid model is broken, and to families’ concerns about college affordability.
Still, experts often regard tuition cuts skeptically. Sometimes a cut is more about marketing than real change, they say. A college can reduce its price and its aid at the same time and not substantially change the net price, the actual amount each student pays after grant aid.
But Concordia’s leaders say they are doing something different. Next year, they expect, all students will pay a lower net price than they would have without the tuition cut. And most of them will pay less than they did the year before, according to university officials.
That’s not to say the move has nothing to do with marketing. After all, Concordia, a Lutheran institution, wants to be considered by more potential students who may be worried about affordability and turned off by the university’s current price. “Many people aren’t pursuing private because private owns the word ‘expensive,’” says John T. Lawlor, whose marketing firm, the Lawlor Group, is working with Concordia to promote the price change.
‘Overwhelmingly Good’
A lot of that communication, however, will be with the university’s existing community. Concordia is making a big push to let its current students know what the “tuition reset” means for them. “We want to be very transparent and very real about our pricing,” says Kristin M. Vogel, director of undergraduate admissions.
This year’s freshmen, sophomores, and juniors will each receive a personal letter that shows what they are paying out of pocket right now, what they would have paid next year, and what they will most likely now owe, under the new pricing structure (the precise amount mightl change if students’ financial need does). Seniors will get a letter explaining that although the price cut won’t help them financially, administrators hope the attention Concordia gets for the move will heighten the value of its degrees.
Jay Weiler, for one, is happy with the change. “It’s overwhelmingly good,” says Mr. Weiler, one of three undergraduates who got an early look at the plan so they could serve as “student ambassadors” in explaining it to their peers.
Even though Mr. Weiler is now in his fourth year at Concordia, he stands to benefit from the price cut, as he’s taking more than four years to finish a double major in percussion performance and professional writing. But the difference for his bottom line wasn’t immediately clear. A tuition cut, he understands, is generally coupled with a decrease in aid. When he saw his letter, it estimated that Mr. Weiler would owe about $1,400 less next year than he would have with a normal 4-percent tuition increase. The projected total is about $1,300 less than he’s paying this year.
Even before the early look, Mr. Weiler had a sense that a change was coming. As a resident adviser, he sat in on a faculty meeting in which Concordia’s president discussed efforts to make the university more affordable. Mr. Weiler thought he might be hinting at a multiple-year tuition freeze.
Private-College Prices
In fact, Concordia had been moving toward a tuition cut even before Mr. Weiler was a student. Back in the 2005-6 academic year, the university asked the enrollment-management consulting firm Noel-Levitz to study its pricing. That research found a gap between what families in Concordia’s market expected a private-college education to cost and what the university was charging. At the time, though, administrators didn’t see a way to deal with that discrepancy.
Then, years later, Concordia had Noel-Levitz do another study, in more depth. The study, completed this past spring, found that the gap had grown. And there was a new element, says Scott E. Bodfish, vice president for market research at Noel-Levitz. The study examined the decision making not only of families whose children had been admitted to Concordia, but also of a broader pool of families who may not have considered private colleges.
The report—combined with research commissioned by the Minnesota Private College Council finding that some families in the state were ruling out a private higher education based on sticker prices—changed the equation for Concordia. Top administrators started to plan a substantial tuition cut.
When Mr. Ries took office, in 2011, he was excited about reducing tuition. Mr. Ries had worked at the university earlier in his career and knew the administrators who were advocating the change. After taking a little time to settle in, he approached the Board of Regents—whose members had heard of the idea but hadn’t seen a serious proposal—for their approval. The message, Mr. Ries says, was: “This is not a drill anymore. This is going to be real.” The board agreed to the cut.
Fairness and Retention
Now Mr. Ries is glad to be at the helm for the drop. Concordia officials hope the tuition cut will encourage families who would have dismissed the university out of hand based on sticker price to take a closer look.
Administrators felt it was equally important that the cut apply to all students, not just new ones. That conclusion was based on fairness, as well as concerns about retention among students who were struggling to pay. Officials expect to see an increase in retention, as well as growth in new students.
Concordia’s capacity to expand its undergraduate population—the university enrolls about 1,200 now and would like to go up to 1,500—is one reason the tuition cut seems viable. Colleges that cut their price typically expect to bring in less money per student, but make that up in higher enrollment. According to Concordia’s calculations, an additional 20 or so new students and 30 or so more upperclassmen retained would bring in enough tuition revenue to make up for the reduced price. Any more students would mean a financial gain. (In addition, the university hopes its move will resonate with donors.)
Concordia is a tightly run ship, officials there say, and the university has been carefully preparing for the pricing change for years. Officials think the university is well placed to make, and benefit from, the change. In future years, they plan very small tuition increases. And beyond the traditional undergraduate program, Concordia has already expanded its programs for graduate students and adults, which makes the move a bit less risky.
Still, measuring the effect of a tuition cut may not be as easy as it seems. Even if a college sees enrollment growth after a tuition cut, it doesn’t necessarily come from the new price, says David W. Strauss, principal with the Art & Science Group, a consulting firm. Such announcements draw attention, he says, and some students may be attracted just by the buzz.
Officials at Concordia and their consultants are convinced the cut is the right move for the university. Colleges of all stripes may struggle to attract the students they want, for many different reasons, says Mr. Bodfish, of Noel-Levitz. For Concordia, all the research suggested that sticker price was the real hurdle for families. That doesn’t mean every college should cut tuition, Mr. Bodfish says: “It’s not a one-size-fits-all solution.”
