Current Issues

Tuition increase or not?

Posted on January 26, 2010

So we have a complex question on our hands and I thought I might use my blog to provide people with a window into the deliberations. 

We must, in the next few days (in order to get financial aid offers out in a timely manner), make a decision regarding Undergraduate Day tuition for next year.  We typically raise tuition anywhere between 4% and 7%.  As you well know, this year we saw a shortfall in enrollments and it’s safe to say heightened price sensitivity among families and students.

Here is what we think we know with reasonable certainty:

1. Private colleges that made their enrollment numbers this year spent a lot more to do it.  Families are clearly looking hard at cost of attendance.

2. We yielded most poorly with those who received low total aid offers from us, again speaking to the price sensitivity.

3. We were not nearly as on top of our admissions game as we are this year — some portion of our shortfall can be attributed to not having in place the level of analysis, marketing, programming that we now have in place.

4. Numbers for next fall are well ahead of where they were last year at this time, though it is too early to predict anything with certainty.

5. We remain among the best bargains in our peer group and among private institutions in terms of cost and aid support.

6. However, students are moving from privates to publics in very large numbers and many analysts see our sector (non-selective, not inexpensive compared to publics) as most vulnerable.

7. The economic situation does not appear to be improving very quickly and uneployment remains high.

8. We offer a better “product” than ever: expanded programs, new buildings, and more aid.

Okay, so now the less clear analysis starts:

A. If we raise our tuition (some argue for 0%, others an amount equal to COLA – say 2.5%, others something closer to 5%), will we have another shortfall and subsequent cuts?  That’s one reasonable vantage point. 

B. If we do not raise our tuition, expenses will surely go up (we all want salaries to keep pace; new buildings require more expense; medical will go up….), so we’d have to re-engineer our budgets and make cuts.  That is also a reasonable perspective.

C.  Is positioning SNHU as the most affordable of privates good enough (one option on the table)?  Does it send the wrong message: cheapest=worse?  Is trying to compete on price inherently ill-fated if we think we are competing with the publics (we’ll never beat the publics on this score), so let’s concentrate on making our value proposition? 

D. Is this a place for half-measures: raise tuition at the rate of inflation which A) dials back our rate of increases and rationalizes it in some way and B) still provides some budget growth? 

I could write pages on every one of the above items  (and have in some cases), so what is presented is shorthand in many ways, but it gets at the essentials.

We are this week looking at expense projections, how much growth we expect in COCE, and other data.  There is much we cannot control in the process (outside economic factors, for example), much that we can’t easily predict (how yield rates will differ with income bands in our app pool, for example), and the lag time is frustratingly long (we won’t really know the impact of this decision for months and even then we won’t ever be sure what dynamics result in our eventual enrollment number).  Once decided, it is almost impossible to shift course.

Pricing is to my mind a combination of art and science.  With all the data analysis and comparative information we have, there is still at some level a gut sense of things based on our biases, read of external events, predictions, and anecdotal experiences.  So as with many complex problem-solving exercises, having more perspectives at the table is better than fewer.  I’ve invited trustee thinking on the topic and welcome any thoughts my three readers might have.  They should feel welcome to weigh in with their best thinking, suggestions, or at least questions they think we should consider.

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