This week Utica College announced it is resetting its published price for Fall 2016, lowering the cost of tuition and fees by 42% to fall under $20,000.
Among the higher education commentariat, such tuition resets have their boosters and their detractors. Many dismiss tuition resets as a gimmick, calling them “a wash” because they are designed to result in no loss of net revenue for the institution. Not to mention, the track record among colleges and universities that have implemented a tuition reset is varied. The fact of the matter is, a tuition reset is simply not feasible for many colleges, as the Chronicle has pointed out.
Yet those institutions that are primed for genuine success via a tuition reset tend to have several things in common. They are operating from a position of institutional strength in terms of their enrollment numbers, financial stability, and revenue streams. They have an innovative campus culture and leadership that is responsive to the realities of the higher education marketplace and to the needs of the students they serve. And they offer an educational experience that provides real value by way of successful post-graduate outcomes.
But still, is it just a marketing ploy?
Looking at the resulting data from those institutions that have done it right, the answer is a resounding “No.” Because a select few tuition resets were part of a comprehensive strategic initiative, they’ve corrected several issues all at once:
- A pricing perception problem among many prospective students and families, since the institution’s published cost was out of alignment with its market position
- An access and affordability problem, since low-income students are no longer put off by the sticker price and receive maximum financial aid and many middle-class students have substantial cost savings
- The sustainability problem that came with the institution’s previous high-price/high-discount model
Now is a time when all eyes are on the return on investment in a college degree. The ideal ROI calculation for families is an inverse relationship between cost (low) and outcomes (high). Those institutions that are doing great on the latter just may have room to move down on the former—and be rewarded for it.
Utica’s Bold Move
Utica College created a microsite to convey the details of its tuition reset to under $20,000.
The new iteration of the Education Department’s college search tool may not rank, but it does sort.
NBC News reported that most college students don’t know how much they are paying or borrowing.
Done right, a tuition reset positively influences families’ assessment of the institution’s value proposition and clarifies the worth of the investment. Utica is the third college that The Lawlor Group has advised when it comes to implementing a tuition reset. Concordia University, St. Paul has just admitted its third incoming class to benefit from its tuition reset, and Converse College its second incoming class. Both are experiencing record enrollment numbers and successfully meeting their net revenue goals.
Frankly, tuition resets aren’t a viable solution for most colleges. Even when they are successful, they are not a stand-alone solution, but rather a companion strategic initiative that exists in an innovation incubator.
This goes to show that new ideas, distinctive opportunities, and viable solutions are a necessity in today’s higher education marketplace. Even families with the ability to pay are now inclined to have a price ceiling and look even more closely at the core ingredients of the higher education value proposition: quality + outcomes + price = investment value. If colleges can’t deliver on these variables, then willingness to pay becomes a factor.
No question, now is the time for intelligent solutions informed by market intelligence.