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Concordia to chop tuition
Concordia University is pairing two words that do not often come in contact -- "tuition" and "cut."
The St. Paul school will announce Wednesday that it is lowering its undergraduate tuition and costs by $10,000, or 33.7 percent, to $19,700 for the following school year. It'll get to be the first college in Minnesota to slash its sticker price. However it joins several others across the country who've taken care of immediately growing concern about the rising cost of college with a similar dramatic move.
Only a handful of Concordia undergrads now spend the money for full $29,700 in tuition and fees. But Concordia hopes to draw in families who're being nervous about the published price.
"It's been a bigger and bigger challenge for all of us to get those individuals to even consider us," said Prof. Eric LaMott, Concordia's senior vice president and chief operating officer. "The high discount isn't fixing the problem, because they do not even look."
Concordia believes it's creating a bold move toward greater affordability and transparency in a marketplace that's demanding both. However, many experts believe such markdowns are gimmicks that lead to little lasting change.
"It's partly a publicity stunt," said Mark Kantrowitz, a university finance expert who tracks tuition cuts and freezes. "Everybody loves a good deal."
The majority of the a lot more than two dozen colleges that have at some point slashed their sticker prices also retracted on their grants, he explained, so that the cut made a lesser difference in many families' bills. The important thing is going to be tracking Concordia's "net price,[link widoczny dla zalogowanych]," or the price students actually pay after scholarships and grants are subtracted, Kantrowitz said.
The nonprofit,[link widoczny dla zalogowanych], private university will reduce, but not eliminate, grants and scholarships. The low sticker price will also affect returning students, and officials promise that the coming year, all students find yourself paying less. Room and board of $7,750 won't increase.
Concordia's current total charges for tuition, fees, room and board are third lowest among the 17 members of the Minnesota Private College Council,[link widoczny dla zalogowanych], which have an average sticker price of $42,295. But due to "generous institutional educational funding packages," the typical amount students actually pay is a lot lower, and it has grown at a slower rate, the council said.
Concordia's new price will better reflect what students actually pay, LaMott said. "We're getting off the wagon and going to something more transparent."
The university's "discount rate," or even the amount it gave in institutional grants, in contrast to gross tuition revenue, was 48 percent this past year, said Kristin Vogel, director of undergraduate admission. Federal data reveal that 99 % of Concordia students who were only available in 2010-11 got scholarships or grants in the college. The average amount: $12,654.
"Tuition is going up, discounts are going up and net revenues are going down,[link widoczny dla zalogowanych]," LaMott said. "That isn't a sustainable business design."
A recent report by the National Association of College and University Business Officers carried a similar message. To attract students and meet families' growing financial need, colleges have deepened their discounts, especially because the recession. The average "discount rate" for first-time students rose from 37.7 percent in 2001 to 42.8 percent this year, according to the April report.
Combined with sagging enrollment, the information "suggest that this technique is no longer working effectively at a large number of universites and colleges,[link widoczny dla zalogowanych]," the report says.
Concordia officials state that enrollment with this fall,[link widoczny dla zalogowanych], which will be finalized Friday, is "strong" which the college is expecting "modest" growth next fall.
Without any enrollment growth the coming year, the university would need to absorb $400,000 to $700,[link widoczny dla zalogowanych],000 in lost revenue in the tuition change, LaMott said. But he believes the university includes a sufficiently strong balance sheet, partly from growing graduate programs, to do this. The Christian liberal arts university enrolls about 1,[link widoczny dla zalogowanych],100 graduated pupils.
Concordia has spent three years planning for a tuition reduction. "Nothing is going to be cut or eliminated from the Concordia educational experience, in or from the classroom, to support the tuition reset," a school statement says.
The danger is always that the public will believe "that the tuition cut is along with a decrease in . quality," Kantrowitz argued on his website.
For decades, high price was associated with high quality, he explained by phone. However, "colleges can't distinguish themselves by charging more, because they all charge a lot. There's not lots of advantage in charging more if you're able to manage to charge less."
In 1995, Muskingum University in Ohio announced that it would slash tuition by 29 percent. The college hoped the resulting publicity would bring the undergraduate population from 1,000 to 1,200 over five years,[link widoczny dla zalogowanych], said Jeff Zellers, vice president of enrollment. It took only one. Eventually, enrollment reached 1,550.
"We ran from residence halls and classrooms," Zellers said.
Muskingum was one of the first to make this type of move,[link widoczny dla zalogowanych], therefore it attracted national attention. Since that time, the school has grown its tuition by 4 or 5 percent annually, Zellers said. It did and still does give students big discounts.
"It wasn't an attempt to buy people from other institutions," Zellers said. "For most students, we weren't that much cheaper than i was before.
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