Shrinking Tuitions: Game and Response

I consider higher education strategies involving reduction of tuition and fees to be environmentally inspired. Like many times before, once an idea becomes environmental it spreads not by its own merit, but because original ideas are scarce. This is true in business, music, arts, design and any other facet of human work. Consider the following blog as a perfect example of environmental idea propagation. The wording may be designed to be funny, but the message is powerful.

http://yourlogoisnothardcore.tumblr.com/

Healthy educational institutions should keep a close eye on this process because, not only all mid-size struggling institutions will follow this trend blindly (regardless of its merit), but also because it will expose a larger gap between the cost of struggling and thriving educational institutions. Struggling institutions can reduce the sticker price while cutting financial aid and trying to maintain a net 0 income difference, but healthy institutions will be left out of the game. Healthy educational institutions already support a low discount rate and their sticker price accurately describes their cost. While there is no doubt healthy institutions are operationally better off, they have no room to play the “race to the bottom” game.

It seems that every time I open my inbox, I receive another update on the topic of tuition reduction and fiscal realignment at an institution. This morning, I read about schools in South Dakota, Iowa, Ohio, and Pennsylvania.

As a strategy for, say, admissions or marketing, the articles succeed in bringing the name of the institution into the circle of those joining in this trend. But I question whether or not the strategy will provide beneficial results to the bottom line and financial health of the institution.

The way I see it is that if you have a quality product, why discount it just because others are flocking to be next in line and become recognized for reducing perceived value? Of course, I would have to see the figures upon which justifications were made, but I believe that these types of moves are only a perceived reduction in cost. Have these schools weighed out the negative implications that may result from such a reduction?

For example, when looking at the consumer products market, one doesn't see Apple reducing the cost of the iPad just because Google and Samsung have created tablet offerings. Instead, Apple attempts to innovate and create a product that differentiates itself from its competitors. Why isn't that the aim in higher education?

Now, do I think education should be free? Yes, to an extent. I believe that knowledge is there for those with the desire and capacity to learn. However, I am realistic in that I have seen the expenses related to running an institution of higher learning, and as such know that these costs consist of so many other factors (including living arrangements, dining, access to events, technology, maintenance, administrative overheads, salaries, etc.) But by simply removing the sticker price, what will happen to the quality of education and the overall level of service that students and parents pay to receive? I believe institutions need to take a harder look at their long-term financial strategies before wading into the pool of tuition reduction.

Update, January 8th, 2014

Below are a few of the articles that we've found supporting this notion. Feel free to review the material, too.

Trends Worth Watching in 2014
Huff Post College
Dr. Scott D Miller, President of Bethany College
Dec 16, 2013

Colleges in Bondage
Providence Journal
Dec 17, 2013

Seeing Enrollment Slide, Penn State Halves In-State Law School Tuition
Pittsburgh Post-Gazette
Nov 26, 2013

This is What It Looks Like when a Law School Actually Cuts Tuition
Above the Law
Dec 5, 2013

Strayer University Announces Tuition Reduction, Builds on "Graduation Fund' to Increase College Affordability and Promote Graduation
Business Wire
Nov 22, 2013

Regents Approve Reducing U of I's Law School Tuition
Des Moines Register
Dec 5, 2013

World-Herald Editorial: College Costs Pose a Challenge
Omaha World-Herald
Dec 15, 2013

Students, Officials Praise Plan to Freeze Tuition
SF Gate
Dec 17, 2013

MU Explores Ways to Up Enrollment
Herald-Dispatch
Dec 15, 2013

Why 6 colleges are cutting tuition
Education Dive
Jan 8, 2014