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Education The Almighty Buck

The Answer To the High Cost of College: 42% Cut In Tuition 143

Posted by samzenpus from the charge-less-make-more dept.
McGruber writes: Utica College, a small, private university in upstate NY, announced it is cutting its annual tuition by 42 percent. According to College President Todd Hutton, the change will reduce the sticker shock that many parents and students have when seeing the tuition price. Hutton says there are fewer than a dozen students who pay the full price. Currently, 61 percent of the tuition revenue coming from freshman is grants and subsidies directly from the college's pockets. Under the new tuition rate this number, called the "discount rate," would go down to 29 percent. Essentially, Utica College would spend less of its own money to pay the tuition of students who can't afford the full price. It expects to make up the lost revenue through increased enrollment, which would come as a result of the college appearing to be more affordable. Even though some of it sounds like a shell game, students will all make out better in the end, Hutton said. The least a student will save is $1,000. The most is more than $5,000, Hutton said.
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The Answer To the High Cost of College: 42% Cut In Tuition More

The Answer To the High Cost of College: 42% Cut In Tuition

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  • Utica College's Tuition Reset (Score:5, Informative)

    by McGruber ( 1417641 ) on Wednesday September 16, 2015 @09:03PM (#50537899)
    There are more details posted on the college's website: A Bold Move For Tomorrow - Utica College Resets Tuition to a Better Price, Improving Our Affordability [utica.edu]

    On the FAQ page they explain:

    Q. Why is Utica College doing this?

    A. Colleges and universities all across America are dealing with affordability issues. Even though colleges like Utica provide high quality and great results to make the investment worth it, the pricing models used by most private colleges can result in published prices that give students and their families “sticker shock.” America’s colleges and universities are reaching a point where they can no longer keep raising their already high tuition amount year after year – at some point it starts to seem just too high, and not every family knows that the sticker price will most likely be discounted for them with scholarships, grants, and other financial aid. The overall result is that too many students and families are not even considering a private college as a realistic possibility.

    So we are doing this because it needs to be done. And we are the right college to do it. Many private institutions are in the same position as Utica, with the ability to reset their tuition to a better price. But Utica is one of the few colleges in the nation – and the first among those we compete with for students – that has been bold enough to actually do it. There’s a reason UC’s brand signature is “Never stand still.” It captures the entire forward-moving spirit of Utica College. Ever since our post-WWII founding to serve area veterans on through to our early adoption of online learning and our development of cutting-edge programs like economic crime and cybersecurity, UC has remained flexible and innovative, growing and thriving specifically because we are always committed to meeting marketplace needs.

  • It turns out that Utica College is where Andy Rubin [wikipedia.org] got his BS in Computer Science.

  • Law of Diminishing Marginal Utility (Score:1)

    by Anonymous Coward

    While I like that colleges are becoming more open to the idea of reducing tuition, this ever-increasing push to send every man, woman, and houseplant on a quest for higher education may have unintended consequences. Let's say that 99.9% of the population earned a four year degree after high school because of tuition reductions, government intervention, et cetera. How does one stand out among the masses to a potential employer? More schooling, of course. More cost. More time. So instead of getting out into t

    • Consider an arms race. Think of a degree as being like the atom bomb. If you've got one you're ahead. If the other guy's got one, he's ahead. If you've both got one it's the same as if neither of you has. Well, except for what you spent getting it.

      The H bomb is a Master's, and so on. It's like the Red Queen from AiW.

    • While I like that colleges are becoming more open to the idea of reducing tuition, this ever-increasing push to send every man, woman, and houseplant on a quest for higher education may have unintended consequences.

      Yes. But that's the only way to hide for a few more years that you can't send people into manual labor or other jobs with lower qualification requirements, as they either become outsourced or automated. Sending them on the fruitless "quest for higher education" may be desperate, but slightly better than increasingly sending them into unemployment and welfare.

      Sad, but true.

    • That's a feature, not a bug.

      Good for education institutions... more business
      Good for a more a educated population.
      Good for banks via loans/debt
      Good for corporations with plenty of workers to choose from.

      Keeping you in debt and struggling for a career your whole life? That's a feature, not a bug in the system.

  • How it works? (Score:5, Interesting)

    by Michael Woodhams ( 112247 ) on Wednesday September 16, 2015 @09:18PM (#50537943) Journal

    The explanation wasn't very clear, but I think this is how it works.
    Student in 2015: "We charge you $34k tutition, but you are eligible for $20k grant, so you pay us $14k."
    Same student in 2016: "We charge you $20k tuition, but you are eligible for $6k grant, so you pay us $14k"
    (NOTE: $14k is just an example, number made up from top of my head.)
    For that student, there is no financial impact on the university for the cut in tuition. There will be some loss because of students who were paying over $20k after grants, who will now be paying only $20k, but they say there are very few of these students. They anticipate getting more students because $34k tuition was scaring people off from applying, even those who in the end would only have been paying $14k (or whatever) after grants. This extra volume will supposedly offset their losses.

    Problem: "We're losing money on every student, but we make up for it with volume". Unless that $14k after-grants payment is actually enough to cover the university's costs for that student, getting more of them won't help.

    • Re: (Score:1)

      by Anonymous Coward

      The real issue is the guaranteed loan. The battle for debt is now between the government and the student. The colleges get to jack up their tuition every year knowing state loans are guaranteed. Cut the guaranteed subsidies, and the schools will have to lower their tuition or they won't fill seats.

    • But they (the college) was the one providing most of the grants. So, basically, instead of paying themselves to have students come, they are lowering the price upfront and saving some paperwork.

    • Problem: "We're losing money on every student, but we make up for it with volume". Unless that $14k after-grants payment is actually enough to cover the university's costs for that student, getting more of them won't help.

      Indeed. I don't see how this works unless they increase the student-to-faculty ratio. Basically add more students but don't add more resources.

      • Lecture theaters are probably lying unused for a time etc. There are ways to gain profits even after hiring the relative number of staff for the increase in students....
      • Actually, they do NOT need to increase the student-to-faculty ratio. They need to increase the student-to-staff (in particular administrators) ratio. The problem at many schools is that they have too high of a ratio of administrators-to-students. Increased faculty-to-student ratios add value to students (there is probably a point at which the added cost greatly exceeds the added value, but few colleges or universities, if any, have gone past that point). Increased faculty-to-student ratios never decrease va
    • I didn't take it to mean they are losing money, but the opposite. They are in a position to be able to cut tuition and grants without taking losses. They think this will attract more students, allowing them to grow.

    • Re: (Score:2)

      by pz ( 113803 )

      Less virtual money changing hands (grants that go to pay an inflated tuition) means fewer administrators to manage those programs. That would mean staffing cuts and overall savings for the institution.

      This is a good thing. Modern universities are far, far too administration heavy.

    • The explanation wasn't very clear, but I think this is how it works. Student in 2015: "We charge you $34k tutition, but you are eligible for $20k grant, so you pay us $14k." Same student in 2016: "We charge you $20k tuition, but you are eligible for $6k grant, so you pay us $14k"

      The article says students will save somewhere between $1,000 to $5,000 a year, so the last line of your hypothetical example probably should be:

      "2016: We charge you $20k tuition, but you are eligible for grants ranging between $7k-$11k, so you will only pay us somewhere between $9k and $13k" [Students in 2015 paid $14k]

      Charging its students $1k to $5k less per year will cause Utica College "to lose $2 million in the first year, but it expects to more than make up the difference in the years to come" from increased enrollment.

      • Re: (Score:1)

        by Anonymous Coward

        The real story is that Utica is running below it's enrollment capacity. They likely polled people who applied and were accepted but didn't attend. Those people probably cited many reasons, but the cost of the college was one they could control.

        Of course, if it came down to getting that student to attend, the cost probably could have been offset by a grant or scholarship. Except that the student didn't bother to go through the rest of the process because of the perception that the student might not receiv

    • Re:How it works? (Score:4, Interesting)

      by AthanasiusKircher ( 1333179 ) on Thursday September 17, 2015 @08:58AM (#50540281)

      The explanation wasn't very clear, but I think this is how it works.
      Student in 2015: "We charge you $34k tutition, but you are eligible for $20k grant, so you pay us $14k."
      Same student in 2016: "We charge you $20k tuition, but you are eligible for $6k grant, so you pay us $14k"

      Yes, that's the gist of it. But there's a lot of stuff that goes into that word "grant." College budgets are very complex, and there's a lot of reasons why those "grants" can be useful to move money around.

      For one example, rich colleges with big endowments (over a billion dollars) generally pay at least 1/3 of that tuition "grant" money with endowment money.

      Why would they do this? Sometimes because they have to. Endowment management often involves weird operations akin to money-laundering. Donors often give money that's earmarked for particular things, and for the college to actually make use of that money in their general budget, they need to find a way to funnel the money out of the endowment.

      Tuition is an important factor for many richer colleges here. Let's say that you have a couple who has a decent amount of money that they want to give to the school. They're not rich enough to pay for a building or anything like that, but they'd like something smaller that they can put their name on.

      So, they fund the "Jimmie and Maggie Stewart Scholarship in Basketweaving Studies," which can pay out $10,000 per year to some lucky undergraduate basketweaver (or perhaps a few of them, divvied up).

      Jimmie and Maggie get a lot of "bang for their buck" here -- they get to feel good about funding undergraduate education, and often colleges will ask students who receive scholarships to write a letter of thanks or at least information to the donors periodically and/or host some "donor cocktail hours" or whatever where the donors get to mingle with the happy undergraduates and see where their money is going.

      But now the college needs to get that money into its general funds to use it. So it has an incentive to "award the scholarship." On the other hand, the college can "double-dip" here by increasing tuition at the same time. Before the student paid $20k or whatever with no grant, but now the tuition can be $30k with a $10k scholarship, so the student gets a "scholarship" and is happy because they think they are getting a "deal" (and something to put on a resume), the donors are happy because they think they are helping students succeed in this era of high tuition, and the college actually increased its effective annual revenue by 50% for this student.

      Most of the situations with endowments aren't that direct -- donors give money that's not earmarked for individual scholarships, but perhaps it's meant to go toward "undergraduate education" or whatever. (And many alumni often tend to feel the best about their undergrad experience, so they might donate toward that.)

      Again, the school could try to use that money for direct expenses, like building a new gym or whatever, but then they have to justify it to endowment managers as directly relevant to "undergraduate education" -- is the new gym really necessary? Maybe... maybe not. But "tuition" really is considered "necessary" for undergraduate education, so if you give that money as a "grant" to a student to lower tuition, then the money flows directly from the endowment and back to the general college funds... where it can used to pay for the new climbing gym or another administrator's salary or whatever.

      And that's just one type of "shell game" that goes on... but it's an important one for richer schools. Tuition hikes at smaller schools may have other pools of money or grants or whatever involved that having a "higher tuition" allows them to use more freely. Meanwhile, schools obviously have incentives to charge higher "official" tuition, since they can squeeze that money out of richer families and thus actually increase income.

      What's going on in this case is a smaller schoo

  • If your going to college:
    1) Find a collage that is cheap, move out of state if necessary, if you get in state tuition in another state it could save you tens of thousands and offset the cost of flights you might have to take home
    2) Pick your major before you start, then can get exactly the classes you need
    3) Learn the system - know more than the school councilors do and pick your own classes, do the research. It will save you time and money. Know all dates of when you can add\drop classes.
    4) Get decent grad

    • If your going to college:
      1) Find a collage that is cheap
      (etc.)

      9) Before you go, develop some grammar and spelling skills.

      • Re: (Score:1)

        by Anonymous Coward

        If your going to college:
        1) Find a collage that is cheap
        (etc.)

        9) Before you go, develop some grammar and spelling skills.

        I was confused about how a treasure hunt for a bargain price collection of pictures stuck together in an artistic arrangement would help. I wouldn't think that would be a significant or necessary college expense.

      • I'm an engineer, I will never have good grammer and or spelling skils

  • ... that I have to get my lazy ass moving and see to it that I finally enroll in one of the countless tution-free universities in the rhine-ruhr area [wikipedia.org] to ooph my education and academic rank for zero personal costs . I've been dragging this out for months now since I left the local GED evening high-school with a neat score.

    Curiously, my indecisiveness is partially actually due to the abundance of choices available. I'm still not 100% sure which field to study in. ... First world luxury problems I guess.

    BTW:

    • Although i can detect sarcasm in your post, I don't understand quite what you're attempting to say. Would you mind explaining it for me?

      thanks

  • "fewer than a dozen students who pay the full price"

    There are now fewer than a dozen students who are feeling pretty stupid right now...

  • just deny all government grant to institutions charging more than $X (e.g. $25k) for tuition and board or do not contribute 50% into existing education debt repayment by former students.

    He will never do it.

    • When I went to college, not that long ago, grants were a small part of overall aid. Your idea would result in students just taking out larger loans.

  • 1) Demand a high price but offer major discounts to most:

    Advantages: Get more money from the few truly wealthy people, appear to be more 'elite', fool the poorer people into thinking you are more generous with discounts than other people.

    Disadvantages: Appear to be for wealthy people only, attracting students who are easily fooled,

    2) Use an 'everyday low prices' strategy: Advantages: Make it clear to all that they can attend, being seen right off the bat as a 'bargain', reducing paperwork and bureauc

  • (Numbers for my local public university.)

    Tuition: $1700/year.

    Total costs (fees/housing/food/tuition): $26,000/year.

    They can offer "free tuition!!!!1!" and it would still cost more than most new graduates make per year on their first jobs.

    Not impressed.

    (And, yes, those are in-state numbers.)

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