Competition for College Students Intensifies

With college students and their families freshly paying their tuition bills and signing their student loans, among the perennial “back to school” media stories during this time of year are those about the burden of college costs. The release of a new book, Indebted: How Families Make College Work at Any Cost by scholar Caitlin Zaloom, has also contributed to the flurry, with articles in The New Yorker and The Atlantic proclaiming that “Student Debt Is Transforming the American Family” and explaining “Why College Has Become So Expensive” and what that means for middle-class families. On the airwaves, NPR stations broadcasted a 45-minute segment called “The Staggering Weight of Student Loan Debt” during the 1A program.

Now is also a time of year when colleges and universities announce major pricing initiatives. Several private colleges have instituted tuition resets for the coming academic year to make their published price more palatable to prospective students. (The reset price also aligns better with what the net tuition price is already, to aid transparency for families who are frustrated that finding out how much a college costs is harder than it looks.) And the free tuition push at public colleges and universities continues, with New Mexico being the latest state planning to make its two- and four-year institutions free to state residents—in this case, no matter what the student’s family income is.

Polling data from New America released this month show that 46% of Gen Z respondents believe private nonprofit four-year colleges and universities are not worth their cost, so discount rates in that sector continue to rise. Public flagship universities, too, are discounting with the use of merit aid—often to the detriment of low-income students, according to a study by the Institute for Higher Education Policy. The result is that price sensitivity across all higher education sectors is making student recruitment more competitive for colleges and universities regardless of their selectivity.

 

Cost Barriers

Only 36% of Gen Z respondents believe Americans can get a high-quality education after high school that is also affordable. (New America)

Flagships Unaffordable

High-income families can easily afford their state’s flagship university prices, but in only six states is that also the case for low- or middle-income families. (IHEP)

Goodbye, May 1?

U.S. Department of Justice tells NACAC to remove its ethics code provision about not recruiting students who have deposited elsewhere. (Chronicle)

 

Lawlor Recommends

Price sensitivity in the marketplace isn’t the only factor that is increasing competition among colleges and universities. The Justice Department’s anti-trust investigation of the National Association for College Admission Counseling’s code of ethics has determined that some of its provisions are unlawfully restraining competition. So theoretically, removing these provisions will increase competition. NACAC’s national conference is next week in Louisville, so undoubtedly there will be heightened discussion about this very subject, along with all of the other market conditions we mention here.

A coming population decline in high school graduates is also at play (thanks to a reduction in births during the Great Recession), which is part of why Bill Conley, vice president for enrollment management at Bucknell University, warns of “The Great Enrollment Crash” as the higher education industry tries to deal with a new structural reality.

The Great Recession began in December 2007, so the number of 18-year-olds will drop precipitously in 2026. To have a hope of maintaining overall enrollment that year, colleges will need to ensure full classes during the three years preceding 2026. That means colleges only have three more years (during the recruitment of 2020, 2021, and 2022 graduates) to experiment with and then adjust their recruitment practices to withstand all of the increased competition. Our recommendation? Start doing now!