A college lowered its tuition by 42%—and the experiment's paying off

Families didn't understand how discounts worked before

Utica College grew enrollment from a typical freshman class of about 470 students to a record incoming 775 this fall by lowering tuition sticker price and moving away from discounts. 

When the small, private college announced last year it would lower tuition by 42% to $19,996 for the 2016-2017 academic year, many higher education experts called it a marketing gimmick. But transfer applications are up 65% and freshmen applications ticked up 10%. Average household income also grew 25%.

"We talked about families that have the ability to pay, but they may not have been willing to pay the higher price. They didn't understand tuition discounts or how that worked," says Jeffrey Gates, VP of student affairs and enrollment management at Utica. "Now the price seems much more reasonable."

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Tuition decreases are most successful at pulling in higher application numbers when colleges target a larger audience, according to researchers.

Limiting discounts

A recent survey conducted by the National Association of College and University Business Officers (NACUBO) found tuition discount rates in the United States hit another record high for first-time, full-time freshmen: 48.6%.

In the past two academic years, 88% of first-time, full-time freshmen received tuition discounts, according to the survey. And the average grant equaled about 56% of fees and tuition.

This academic year, freshmen net tuition revenue grew only 1.2%—compared with 2.1% last year. But that growth was lower than inflation, so adjusted net tuition revenue actually declined slightly.

To increase enrollment, look beyond tuition discounting

The discounts are not sustainable, NACUBO analysts say. In light of this, some colleges are reconsidering their commitment to discount rates.

In addition to Utica, Converse College, Ashland University, and Rosemont College have all moved away from the high tuition, large discount model.

What it means for students

The lower sticker prices hover around the previous net price for students. While Utica used to award a merit scholarship of about $21,000, that scholarship now tops out at around $6,000—yet what the students pay hasn't changed much. 

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Gates says the net price actually grew from about $14,000 to $15,000 because more families were able to pay. However, housing costs and fees dropped, so most returning students are saving approximately $1,000.

"Not only are new students saving coming in, their savings over time is going to be much greater than our current students because tuition increases are going to be from a smaller base," Gates says (Douglas-Gabriel, "Grade Point," Washington Post, 5/17; UTICA College site, accessed 3/27/2017). 

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