Time to Reset Tuition?

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Published by Inside Higher Ed

Yet many remain unconvinced that tuition resets are viable for most institutions. A model with high sticker prices allows institutions to bring in more revenue from wealthy students and use some of that revenue to buy down the tuition of students from lower-income backgrounds -- or other students admissions officers find desirable who otherwise would choose to go elsewhere. In many cases, some strategists argue, that's a better way for colleges and universities to build the classes they want and maximize their revenue.

The wrong strategy at the wrong institution can hit applications, enrollment and net revenue. In a Sunday session, Craig Goebel, a principal at Art and Science Group, said his firm had tested a tuition reset for a private institution that had been discounting heavily. Cutting tuition and fees by 54 percent and not offering aid would lead to an enrollment drop of over 50 percent and a drop in applications of over 40 percent, he said.

“If you compound that together, it's a closing of the doors,” Goebel said. “I present this not in a sense to say, ‘Don't do it, we don't recommend it,’ but more as a cautionary tale.”

Art and Science has studied various institutions and found the best-case scenarios among them for a tuition reset are neutral impacts on net revenue. Goebel's session also explained that Providence College boosted its bottom line by increasing its tuition and aid in the years after the financial crisis.

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