College tuition tends to go in one direction—up. But on Wednesday, the University of the South took the unusual step of cutting its price for the coming year.
Sewanee, as the university is known, will cut its tuition, fees, and room and board by 10 percent, or about $4,600, for the 2011-12 year.
“I’m confident it’s the right thing to do,” said John M. McCardell Jr., the university’s new vice chancellor and president, who took office in July. And, he said, Sewanee is responding to how families view college in light of the weak economy. “It is based upon a belief that the public now is looking for the best possible education at the best possible value.”
While the outcome of its price cut is uncertain, the university hopes it will increase the size and quality of its applicant pool, its selectivity, and its yield, or percentage of admitted students who enroll, he said.
Sewanee, which is in Tennessee, about 50 miles west of Chattanooga, loses good prospective students to public institutions, particularly the University of Georgia, Mr. McCardell said. And the price reduction will bring Sewanee’s cost down to about $41,500, closer to Georgia’s average tuition, fees, and room and board for out-of-state students, which was about $35,400 this year.
Mr. McCardell also sees the move as stopping the cycle of ever-increasing tuition and aid, which many higher-education leaders have said is nearing a breaking point.
Sewanee “is already known and respected nationally for its academic standing,” said Tony Pals, director of communications for the National Association of Independent Colleges and Universities, in an e-mail. “This move will make it even more competitive in the marketplace. When an institution of Sewanee’s profile makes a move like this, it is bound to have national reverberations.”
Altering the pricing model is something colleges must consider in light of the economic climate, Mr. McCardell said. For years, he said, conventional wisdom at selective colleges has been to charge what the market will bear and provide financial assistance to those who can’t afford to pay it. Sewanee’s discount rate—the amount of tuition covered by institutional aid, on average—is about 44 percent. That’s lower than the rate at some peer institutions, Mr. McCardell said, but still unsustainable.
While the university has not announced a change in how it will distribute aid—which it awards based on both merit and financial need—the tuition cut will make a difference. “Every single student gets a $4,600 merit scholarship next year,” Mr. McCardell said. That means that Sewanee’s students should have less financial need next year, and more of them will be able to pay full freight. And the university hopes the buzz from lowering its price will lessen the amount of merit aid needed to attract top students.
Still, lowering its price will mean Sewanee is leaving money on the table. “We can afford to do that because, first of all, this is a strategic investment,” Mr. McCardell said. And, he added, the decision might inspire donors as well as applicants.
Private colleges have cut tuition before: A number of colleges lowered their prices in the mid-1990s and early 2000s, with mixed results. But Sewanee is more nationally prominent than most, if not all, of those colleges.
“There’s no way of knowing how this will turn out,” Mr. McCardell said, “because no one has ever done it.”
