Understanding tuition and streamlining higher education

The Legislature’s reduction in higher education tuition was one of the big stories to emerge from the 2015 legislative session. You remember, 

For years, Washington college students have been arguing that the best form of financial aid is low tuition. This year, Washington legislators agreed with them.

In its 2015-17 budget, the Legislature cut four-year college tuition costs by 15 to 20 percent by 2016 — making Washington the only state in the country to lower tuition for public universities and colleges next year. Community-college tuition will drop by 5 percent.

Taking nothing from that historic decision, it’s important nonetheless to understand that in much of higher education, tuition is like that sticker price nobody pays

Private institutions of higher education continue to significantly reduce tuition and fees for the majority of undergraduates who enroll, results of The 2014 NACUBO Tuition Discounting Study show.

Among the 411 private, nonprofit four-year colleges and universities surveyed, average discount rates for both first-time, full-time freshmen and all undergraduates reached all-time highs in the 2014-15 academic year. The average discount rate-defined as institutional grant dollars as a percentage of gross tuition and fee revenue-is estimated to have reached 48 percent for freshmen and 41.6 percent for all undergraduates, up from 46.4 percent and 39.8 percent, respectively, in 2013-14. 

And yet,

… while tuition discounting is often used as a recruitment tool, enrollment at nearly half the colleges and universities surveyed decreased between 2013 and 2014. Chief business officers at those institutions were most likely to attribute the loss to price sensitivity.

Although the survey dealt only with private, nonprofits, it tells us something important about the marketplace. Besides, even with the tuition relief, student debt continues to mount

The Washington Post reports

Last year, the abrupt announcement that Sweet Briar College would close offered a grim warning of the risks of tuition discounting to many college officials; the private college’s then-president and board said declining enrollment and too-generous discounts to students had crippled the school financially. Alumnae and other supporters fought to keep the school open and this year, as students return, their grants remain in place.

While school financial officials are concerned about revenue and a business model that some warn is unsustainable, students keep worrying about the sheer cost.

It’s a reasonable concern for the students. And, as University of Colorado President Bruce D. Benson writes in the Wall Street Journal, higher education leaders need to be concerned with more than revenues. He prescribes a more comprehensive approach. 

Nearly 50 years in business, beginning in oil and gas exploration, taught me that tough economic times force measures you should be taking anyway. The recession’s silver lining was the opportunity to introduce a more fiscally responsible institutional mind-set. We took a three-pronged approach: find efficiencies, build collaboration and generate new revenue.

It’s a good read. Lawmakers here made great progress this session in funding education and resetting tuition. In the dynamic world of postsecondary education, there will always be more to consider.