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Effective strategy or 'shell game'? Experts debate tuition resets

On December 5, 2017

BY PHYLISHA DRAYTON

VN CO-EDITOR

 

While Detroit Mercy’s tuition reset sounds simple, education experts say it’s a complex strategy whose effectiveness is still open to debate.  

Proponents say the move can raise revenue and enrollment, allowing smaller schools to compete with larger public universities by easing the sticker shock a $40,000 tuition price tag often brings. Critics argue resets are nothing more than marketing schemes that are unsustainable long-term. 

Regardless, the move has become more popular in recent years. A recent article published on online news site Inside Higher Ed said that, between Sept. 5 and
Sept. 15, at least eight colleges and universities
announced price cuts for next fall.

The intended result of the tuition reset is that it will increase freshmen enrolment and more accurately reflect what students actually pay to attend college.

 That’s often the case.

A 2015 study by Lucie Lapovsky — an economist who addresses issues related to higher education through speaking, writing and consulting — found that among eight colleges that reset their tuition between 1996 and 2014, all but one saw freshman enrollment increase
the year they initiated it. The increases ranged from
1 percent to 50 percent.

Detroit Mercy President Antoine Garibaldi told The Varsity News that he expects freshman enrollment will jump by about 50 students next year, which would represent a 9 percent increase over the current freshman class of 554.

But many tuition reset critics, however, argue that the gains stop after the first year.

P. Jesse Rine, an assistant provost at Grove City College in Pennsylvania, wrote a white paper that called tuition resets a “shell game.”

Alex Bloom, a consultant in the strategic research division at EAB, a research provider for educational institutions, said that resets are “appealing, but ineffective.”

According to an EAB analysis of 27 schools, only 27% managed to sustain gains of even 5 percentage points of first-time, full-time enrollment through five years after resetting tuition.

“In short,” Bloom wrote, “the resets did not consistently grow enrollment.”

In Lapovsky’s study, half of the eight institutions she looked at sustained long-term high freshman enrollment after the reset.

Deborah Stieffel, Detroit Mercy’s vice president of enrollment management and student affairs, admits as much.

“It doesn’t give you a bump every single year,” she said. “In the first or second year, you’ll see the increase. And that number just becomes the benchmark.”

So why try it?

It is most common among private universities, as many of them run on systems of high tuition that is balanced by high aid — meaning that what is listed on the sticker price is almost never what is paid by a student.

In this way, by lowering the sticker price (as well as financial aid), the hope is that prospective students and their parents will not disregard the university at first glance, and consider it competitively with other universities — especially public ones with lower costs. What the university would lose in revenue from the
minuscule amount of students that do pay at or near full price, they would make up in the higher numbers the reset could bring.

Only three colleges that Lapovsky’s study looked at increased net tuition revenue – and by small amounts, from 0.5 percent to 4.3 percent.

Garibaldi told The VN he expects the move to be “revenue neutral.”

Many third-party experts argue that resets often fail when there’s not a coherent strategy around it. Detroit Mercy believes it has one.

It involves initiatives like its fundraising campaign, which it recently announced was nearing its goal of $100 million. And also efforts at aiding renovation in the neighborhoods near the McNichols campus on the city’s up-and-coming northwest side.

“Schools that reset their tuition just to reset their tuition might not be successful; you have to do it in a bigger context,” Stieffel said in an interview. “We’re trying to reposition our university, as a whole, in the city of Detroit. As Detroit moves forward, we want to be a part of that.

“It’s a bigger strategy than just a reset.”

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