Friday, December 28, 2012
WASHINGTON — Savvy families shopping for college know that tuition typically rises faster than inflation. So Lauren Seely and her parents were startled to learn this year that an upper-tier private college on her short list had frozen its price.
Tuition and fees at Mount Holyoke — $41,456 in fall 2011 — would not rise one dollar in 2012. That helped clinch Seely’s decision last spring to enroll at the Massachusetts women’s college.
The freeze reflects a growing movement to hold the line on price in higher education’s private sector, a strategy often targeting those who qualify for little or no financial aid but who worry about how to pay for college in uncertain economic times. For many families, aware that sticker prices for private schools can be at least three times higher than for public ones, these concerns are intensifying as application deadlines approach early next month.
At least 24 private schools froze tuition this year and eight cut it, according to the National Association of Independent Colleges and Universities, which said both totals were unprecedented. Other colleges advertise minimal price hikes. Catholic University in Washington raised tuition and fees 3 percent this year, to $36,520, its lowest increase in three decades. The average increase for private, nonprofit universities was 4.2 percent, according to the College Board.
“The recession that we’ve gotten through and the doldrums we’re in with the economy right now are affecting the ability of families to pay for school,” Catholic University President John H. Garvey said. “It’s something we have to be sensitive to.”
These can be risky moves for nonprofit institutions with high fixed expenses. Hiring a skilled faculty and keeping average class size small — two chief selling points for private colleges — is not cheap. Capping tuition or slowing its growth is especially challenging for schools without major endowments. Skeptics also wonder how such schools can afford to maintain aid for students in need.
One payoff for the schools is prominence in a competitive and turbulent market. Mount Holyoke doubled down on its bet in November, taking the extremely unusual step of freezing tuition for a second straight year. Seely was thrilled.
“They’re making it easier for us to graduate without having tons and tons of student loans and difficulty starting real life and real jobs,” the 18-year-old said.
Seely’s mother is a fundraiser for a nonprofit organization, and her father works for the federal government. She has no siblings. The Seelys had saved for her college expenses, and their daughter did not qualify for financial aid. But they were still very price-conscious. “The freeze made a big difference,” said her mother, Kelli Seely.
Many factors drive prices in a multilayered market with about 4,500 degree-granting institutions nationwide — public and private, nonprofit and for-profit, two-year and four-year, online and brick-and-mortar — all jostling for the attention of millions of prospective students.
In public colleges and universities, which serve more than 70 percent of postsecondary students, sharp cuts in state funding have driven steep tuition increases in recent years. The fast-growing for-profit sector sets prices to generate returns for shareholders.
The private, nonprofit sector — from the Ivy League to small Bible colleges — wrestles continuously with how much to charge in tuition and how much to discount that price for individual students.
Demand seems limitless for seats in the most elite private colleges and universities, which experts say skews prices.
“Instinctively, people understand that where you go to college matters almost as much as whether you go to college,” said Ronald G. Ehrenberg, director of the Cornell Higher Education Research Institute. He said many schools spend huge sums to build high-end campuses and lure top faculty, which also drives up prices.
Over the past decade, tuition and fees at private, nonprofit four-year colleges and universities rose 2.4 percent beyond inflation, according to the College Board. Those prices don’t include charges for room, board and books. But at the same time, schools are providing significantly more grant aid for those with financial need — and in some cases, for those who are not in need.
This practice, known as discounting, means that the net price students pay can vary sharply from the sticker price. In a 2011 survey, the National Association of College and University Business Officers found that 86 percent of first-time freshmen at private colleges received a grant from those schools, with the average grant cutting their tuition and fees in half.
The complexity of college pricing and mounting student debt have fueled popular anger. President Barack Obama seized on that unrest in his 2012 State of the Union address.
“Let me put colleges and universities on notice,” Obama said. “If you can’t stop tuition from going up, the funding you get from taxpayers will go down.”
So far Obama has not carried out that threat. But educators are mindful of the growing debate over college affordability.
Two years ago, a well-known private college made a splashy price cut.
Sewanee: The University of the South, in Tennessee, cut its tuition 10 percent in 2010 and guaranteed the price would remain fixed while a student pursued a four-year bachelor’s degree. First-year Sewanee students now pay $34,714 in tuition and fees.
“Families are paying more attention to the relationship of cost, price and value than they did before,” Sewanee Vice-Chancellor John M. McCardell Jr. said. “Eventually every institution is going to have to deal with it.” He said applications to the school rose after the price cut. So did the size of the entering class.
Mount Holyoke President Lynn Pasquerella said her school’s price freeze enables students to get through college with less debt.
“We don’t want to be so expensive that we truly are going to create a system where there’s economic segregation in higher education,” Pasquerella said.
Many college presidents are skeptical.
“Anybody who freezes tuition, your first question ought to be how are you making up for the forgone revenue?” said Vassar College President Catharine Hill. Tuition and fees at the New York school rose 3.5 percent this year, to $46,270. Hill contends that the winners under a freeze are students whose families have the means to pay the full freight, while the losers, potentially, are the economically disadvantaged. “Focusing on tuition,” Hill said, “can actually lead to policies that make access worse.”
At Johns Hopkins University in Baltimore, where tuition and fees are $44,430, up 3.9 percent, President Ronald J. Daniels said he is uninterested in price freezes. Instead, he wants to move the university toward need-blind admissions.
“It’s a driving priority for me,” Daniels said. That means letting the sticker price rise somewhat as the university bolsters aid to families in need.
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These days, parents and students have far more information about financial aid than ever before. But sticker prices still play a powerful role in shaping perceptions as students shop for schools.
Cinda Debbink has a son, Tyson Glover, who is a senior at Walter Johnson High School in Bethesda, Md., and is applying to various public and private colleges. Her son Christopher Glover is a junior at Virginia Tech.
Debbink and her husband, who own a graphic design business, are watching the bottom line. So is Tyson. She said he is shying away from the most expensive schools and has “kind of a mental $50,000 cutoff mark” — his annual limit for total price in tuition, fees, room and board. That scratched Boston College from his list, she said, even though Tyson and some of his friends were interested in that school.
“We’ve been saving through the Maryland college savings plan for years and years,” Debbink said. “We said to Ty, ‘Here’s this much money. What can you do with it for four years?’ So the price does matter.”