A Primer for the 2014 College Board Forum
Strategic Insights Blog | October 24, 2014
As a firm, we have been committed to a few core ideas consistently over the years. You have might have read on this very blog — numerous times — that institutions must cultivate differentiated programs to compete in the marketplace. You might also have read from us that there is no one-size-fits-all solution to pricing and tuition, and that successful pricing strategies often depend on a thorough understanding of an individual institution’s market position and value proposition. And although we have made the following point less often, we continually urge institutions to provide easily accessible and simple information on cost and financial aid to prospective students, especially those from low-income backgrounds.
We’ll be participating in three separate sessions at the upcoming College Board National Forum in Las Vegas October 27-29, 2014, on these very topics. We continually emphasize these principles because they remain prescient despite the current popularity of ideas proposed as “solutions” to the enrollment and net revenue challenges faced by an increasing number of institutions. In fact, some recent developments in the news demonstrate the continuing relevance of these core principles:
1. No panacea for pricing
There’s no better example of the idiosyncratic nature of pricing than two recent contrasting results for schools that had reduced or froze their tuition. In one case, Roger Williams University in Rhode Island froze its tuition and locked the price for four years, resulting in a seven percent increase in enrollment. Lesley University went several steps further by cutting its tuition by 25 percent and slashing the discount rate. The result was an eight percent decline of enrollment and a four percent decline of operating revenue over the past fiscal year.
These wildly divergent results confirm our extensive research in price and aid, and serve as a warning to institutions looking to jump on the bandwagon of price cuts in response to ongoing media backlash.
Our session at the College Board on October 28 will incorporate the expertise of several administrators at major institutions (Pace, Miami of Ohio) to discuss a wide variety of pricing strategies, with the focus on the idea that no one solution is the answer for every institution.
2. Importance of positioning
Positioning is a less-covered subject in higher education news than tuition, but mainstream publications are beginning to notice the advantages that institutions with distinctive missions have over their competitors. The New York Times recently reported the findings of a study that revealed that beyond the most reputable institutions, schools with a particular curricular, religious, or cultural focus rank higher in student choice than than undifferentiated liberal arts or public schools. These findings were echoed in a more indirect matter in an article from The Washington Post on the top 25 colleges with the highest average number of miles traveled by enrolled students to the institution. Colleges with distinctive programs like West Point, Rhode Island School of Design, Colorado College, Massachusetts Institute of Technology, all ranked in the top ten.
Speaking of Colorado College, we interviewed President Jill Tiefenthaler on the effectiveness of the Block Plan in differentiating the school from other liberal arts competitors. All the above articles provide the necessary background info for one of our sessions at the College Board, where we will participate in a discussion with administrators from Columbia College and Hobart & William Smith Colleges on how substantive initiatives in the areas of curriculum, student life, learning modes, and experiential and international opportunities can have a much greater impact on enrollment than changes in price and financial aid.
3. Accessibility of information
Recently, Vox published an article detailing the frustration that former Education Department official Bob Shireman experienced trying to help his niece choose a loan repayment plan. A major architect of the current student loan structure, Shireman was befuddled by the complicated and redundant presentation of information. Shireman’s frustration is a feeling that many students and parents have about the financial aid process, and our last session at the College Board will analyze how students and their families utilize available information when making application and enrollment decisions. This session will incorporate the expertise of student aid specialists from Bowdoin College and a number of other institutions, and will focus on how more information actually confuses students, and what steps institutions can take to simplify the process.