Three CIC presidents and a student financial aid management consultant told a packed room of more than 120 presidents about their experiences with diverse approaches to setting tuition and determining financial aid policies.
    “There is no one right answer in tuition pricing and discounting for every college,” said Kathy Kurz, vice president with the Rochester, NY firm of Scannell and Kurz. She advised that “a correct strategy is very dependent upon your market position and whether or not you’re already at maximum capacity.” Kurz said there are four key questions presidents should ask when considering setting tuition: Are you perceived as worth the price you’re charging? Have you convinced students that you’re affordable? Are you spending your dollars efficiently? And are you investing the right level of institutional resources in financial aid to meet your enrollment needs?
    The presidents described the situations at their colleges and explained how they have been turned around through different, yet aggressive and strategic approaches to tuition pricing and discounting.
    When Jerry Cain was appointed president of Judson College (IL) in 1998, he inherited a strategic plan for marketing the institution that was not succeeding in attracting teenagers from Chicago’s 8.6 million population. Soon after he arrived, the college established a new approach that guaranteed 40 percent of financial aid need from any and all sources to its traditional student registrants. “The plan has been working well in attracting students,” Cain says. In addition, modifications to strategies adopted at Judson at that time have since decreased Judson’s net tuition discount from 41.35 percent to 33.69 percent in 2002. This reduction “opened a $1 million amount for spending on other college needs,” Cain noted.
    David Pollick, president of Lebanon Valley College (PA), identified a former president, the late John Synodinos, as mastermind of the college’s recovery in the 1990s when enrollment was less than half of the 1,550 it is today and when 90 percent of its students relied on financial aid. According to Pollick, Synodinos initiated a widely-publicized strategy in 1992 that promised a merit-based scholarship of a 50 percent tuition grant to any applicant who graduated in the top 10 percent of her or his high school class, no questions asked. This led to a steady and consistent climb in enrollment at Lebanon Valley in the number of first-year students (from 288 in 1992, to 412 in 1996), said Pollick, noting that SAT quality indicators also have grown from averages in the mid-900s to the 1100s.
    “We held our discount rate level throughout this period,” Pollick notes. “We also turned our early income gains back immediately into the aesthetics of the physical plant. We wanted everyone to see a competitive campus that was worthy of our promises. We also paid close attention to our net dollars.”
    Anne Steele, president of Muskingum College (OH), brought the participants up to date with what has transpired since Muskingum cut $4,000 from its tuition in the fall of 1996, well before she arrived. “One of the primary reasons we lowered tuition from $13,850 to $9,850,” Steele says, “was to increase the numbers in our applicant pool.” This action received widespread national publicity and skeptics have since questioned whether the move would ultimately improve or diminish the character of the institution.
    Steele related that in 1996 Muskingum had a stable enrollment of approximately 300 freshmen and a discount rate of 31 percent. It enrolled about 1,000 students, yet suffered from excess capacity while boasting a 12-to-one student-to-faculty ratio and underused residences (only 68 percent of residences housed students). Shortage of revenue was also preventing long-delayed maintenance. “The first fall, we increased applications by 450 and our first-year class enrollment by 100 students—without diminishing our average ACT scores,” she said. “This ACT level has held steady—as has our discount rate of 31 percent.” Muskingum is now in Phase II of its aggressive approach. This phase demands that the college upgrade its capacity to keep up with demand. Steele explained particulars of the growing pains and how Muskingum has confronted those needs. “We’re now at 99 percent capacity, and this past year we also had our first waiting list of applicants in school history.” The only downside, she warns, is that student retention levels are erratic. She blames the disruption of building new facilities as well as the growing population of Muskingum (enrollment is up to 1,610) for some changes that students dislike. Steele is quick to add, “It was not the price reduction that brought Muskingum more students. It was the quality of the college that brought more students. Our reducing of the price got more students to look at us.”
    Kurz concluded that these three different approaches show the effectiveness of using pricing and student aid strategically.

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Last updated: March 2003
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