cost and aid strategies: how to maximize results at your higher education institution

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Cost and Aid Strategies: How to Maximize Results for Your Institution

May 8th, 2013 2:00 EDT


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Introduction


During today’s webinar, we will cover the following topics: A discussion of tools such as tools such as tuition cost sensitivity, net

cost sensitivity, and tuition discounting benchmarking Presenter: Dr. Harry Hellenbrand, California State University- Northridge Presenter: Mr. Game Quan, Claremont School of Theology Q&A

Outline


Tuition elasticity Definition of tuition discounting The use of tuition discounting in higher education Advantages and disadvantages of tuition discounting Tools to use to develop a tuition discounting strategy

Introduction to Tuition Discounting and Other Aid Trends


Tuition Elasticity Formula

Higher education tuition is relatively inelastic Importance for higher education institutions to measure tuition

elasticity correctly

Tuition Elasticity


The Chronicle of Higher Education defines tuition discounting as: “The difference between what students are actually paying to attend an

institution and its sticker price.”

Definition of Tuition Discounting


Tuition freezes Tuition reduction Tuition elimination Fixed tuition guarantee Replacing loans with grants Public university price matching Fast-track degree programs Job guarantee Four year graduation guarantee

Common Aid Strategies in Practice


Allows private colleges to address student need Increases student diversity Increases enrollment

Advantages of Tuition Discounting


Reduces student accessibility and affordability Shifts funds from instructional and student services Increases financial risk exposure for smaller institutions

Consequences of Tuition Discounting


Some institutions are choosing to lower both the discount rate they provide to students and the “sticker price” for full tuition and fees.

Though the overall revenues should remain the same, the primary issue of concern in this scenario is whether an institution which lowers its tuition will be perceived as less prestigious or of lower quality by prospective students

Comparing Tuition Cutting to Tuition Discounting


Determining when to lower the sticker price The institution needs to be significantly under enrollment goals Will work best when most students are receiving institutional grant aid

at or in excess of the amount of the planned tuition discount When reducing aid for a specific sub-population, the subpopulation

should be a large group though your institution currently enrolls only a small “share” of that population

Determine price elasticity

Tools to Use to Develop a Tuition Discounting Strategy


Dr. Harry Hellenbrand, Provost and Vice President for Academic Affairs at California State University-Northridge

Presenter


Mr. Game Quan, Vice President For Business Affairs And Chief Financial Officer at Claremont School of Theology

Presenter


A Failed Proposal to Reduce Tuition Rates

Gamward C. Quan Vice President for Business Affairs

Chief Financial Officer Claremont School of Theology

May 2013


President Obama in the 2012 State of the Union Address Called Out the Crisis in Student Costs in Higher Education High Tuition Costs Rising Student Debt Economic Return (Jobs)

Shift of Federal Student Support to Undergraduate Education Total Student Debt Exceeds Total Credit Card Debt

Current National Situation


Emphasis on Full-Time, Bricks-and-Mortar Programs Tuition Rate Increases Have Outpaced the Growth of the Scholarship

Endowment High Tuition + High Discount (Scholarships) is not Manageable without a

Paying Student Population This is an Unsustainable Model

The CST Situation


Higher Levels of Undergraduate Student Debt Already in Default on Prior Undergraduate and Graduate Student Debt Students Borrow More Than Direct Education Cost to Cover Living

Expenses Bricks-and-Mortar Programs Require Relocation Full-Time Programs Limit Employment Opportunities

Crisis for Students


Eliminate the Artifice of Tuition Discounting Prospective Students Will Immediately Understand the Cost of

Attending CST (no waiting for scholarship offer to determine “real” cost) Reduces Student Borrowing Allows Scholarship Cash to Buy More Tuition Units Increases Transparency for the Student

(Failed) Proposal: Reduce the Gross Tuition Rate


Students Expect to Receive Scholarships Scholarships are Honors They Earn Expect Custom, Flexible Pricing Based on Individual Needs and

Requirements Donors Like to Give Scholarships Tuition Price is an Indicator of Quality The Few Schools that Did Attempt Gross Tuition Reduction Abandoned

Their Experiments within a Very Few Years due to Competition

The Reality


It is Evident that Tomorrow’s Students Will Need to Work While in School Support a Paying Student Population

More Part-Time Students More Distance Students More Online Students Non-Traditional Schedules

Communication with Fundraising Staff that Unrestricted Gifts are Preferred Over Scholarship Gifts Due to Our 35% Tuition Discounting Cap, Additional Scholarship Dollars

Cannot be Spent Without More Students Scholarships are Often Restricted, Limiting Their Availability and

Effectiveness in Forming the Incoming Class to Current Programs

Actions


Q&A

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Thank you for participating in this Hanover Research webinar. A link to the recording of this webinar will be emailed to you.