Tired of the tuition pricing game? This Missouri university says no more

If you’ve sent a kid to college, you’ve probably played the college tuition game. It works like this:

Colleges inflate their tuition to sky-high levels, in part as a marketing tool to show they offer a quality education. If it’s expensive, it must be good, right?

But those prices are much higher than what it actually costs to educate a student. So colleges can then offer students hefty scholarships. The average discount on tuition at private schools is about 50 percent.

Imagine a boutique putting a $100 price tag on a pair of $50 jeans, then dangling a 50 percent discount in front of the customer. Hey, who wouldn’t want such a deal?

“Over the years universities have used inflated prices and high scholarship offers to entice a student to the university as a tool,” said Darren Roubinek, a spokesman at Avila University in Kansas City.

Avila and some other colleges around the country have decided they will no longer play the game.

Instead, Avila is slashing its tuition price tag by about 33 percent. Last year Utica College in New York chopped 42 percent from its tuition.

“When I heard that Avila was cutting its tuition by 33 percent I was super excited, because that meant that I was going to be able to save money,” said Becca Tensing, a 20-year-old transfer student from St. Louis.

Under what higher education officials call the high price/high discount model that Avila used before now, tuition, books and fees for this fall amounted to at $28,820.

With the 33 percent tuition cut, which begins in the 2018 fall semester, that will drop to $19,900.

Even under the high tuition model, $19,900 was actually about what most undergraduates ended up paying anyway — after applying hefty scholarships to the sticker price.

Tensing, who along with other students who return next fall to Avila, will see about a $200 savings on tuition.

She wouldn’t say how much she is paying now to attend Avila, but the junior education major said she has been getting several healthy scholarships to help her afford the nearly $29,000 a year tuition.

Inside Higher Education, an online publication that tracks trends in higher education, reported that so far in September alone about 9 private colleges have announced they are cutting tuition.

The trend has sparked debate among education financial administrators over which pricing method is the best practice.

“The ‘high price/high discount’ model of pricing college is not very transparent,” Roubinek said. “Parents and students never really know the actual cost of the education they’re getting.”

And, Roubinek said, the high price model assumes most students will have a variety of scholarship and aid options available. Not all do. Families with less money often never even consider the high-priced private school, assuming the cost would be out of reach, not knowing that the price they see is a sticker price.

Ron Slepitza, president of Avila, recalls a story about three friends who were considering going to Avila.

But two looked at the sticker price and concluded there was no way they could afford it, so they didn’t even apply.

By lowering the tuition, Slepitza said, “what we are trying to do is be more true to what our tuition really is.”

Public colleges and universities get into the high tuition, big scholarship game too, but the game is played at its highest intensity at the private schools.

Over the years, Roubinek said, the sticker price on college kept jumping up. The higher the sticker price went, the bigger the annual dollar and cents increase even if the percentage increase stayed about the same. Eventually, he said, the price-tag-to-cost comparison was just out of whack.

That’s where the big scholarships come in.

“The higher sticker price then allows universities to offer higher and higher scholarships,” Roubinek said. “Scholarships in the traditional, high price/high discount model are an arms race.”

It’s why Avila and other small private schools including Rosemont College and La Salle University, both in the Philadelphia area, are bowing out of the tuition game.

“La Salle’s President, Colleen M. Hanycz — a thought leader in college affordability and accessibility — decided it was time for La Salle University to be part of the solution, and not part of the problem,” said Jaine Lucas, the chief marketing and communication officer at La Salle.

“Building on a tuition freeze the year before, La Salle took another bold step forward” and this fall La Salle, a Catholic school, reset its tuition back to 2008 levels — a reduction of almost 30 percent. It saw one of the largest incoming freshman classes in more than 25 years.

Utica College in New York, Stillman College in Tuscaloosa, Ala., along with several in the state of Washington also opted to reset their tuition prices.

“We say the current model of high education pricing is broken and has to be changed, and we want to be leading on that,” Slepitza said.

But remember, when tuition is cut, so goes those mammoth scholarship awards.

At Avila, under the high tuition model, the top scholarship award was $17,000. With a lower tuition the top award is $10,000.

That’s been a sticking point for some scholarship recipients who, Roubinek said, enjoy the lower tuition but don’t want to give up their big scholarship.

He explains it this way:

“We have a bottom line tuition we need in order to keep running,” Roubinek said. “We can’t bring tuition down and keep scholarships high, or else we go out of business.”

Avila officials are banking that their tuition cutting, paired with guaranteeing students a four-year education, an internship or research in their study area, and up to $1,000 to put toward study-travel experience, will attract more students.

Justin Draeger, president and CEO of the National Association of Student Financial Aide Administrators, argues the high tuition/high discount model is good business. It helps colleges and universities “craft a diverse student body” by using scholarships to adjust price according to ability to pay.

“What colleges are trying to do is fill seats at the lowest cost available,” Draeger said. “It’s not nefarious. Colleges are not ripping students off. They are trying to stay open.”

He said if colleges just promoted a flat rate on tuition, “they would price out the lower and middle income students and families.”

Regardless of the model, at most colleges the wealthiest students pay the full sticker price without the help of federal student aid — but they are the minority.

The schools don’t expect most families to pay that list price, said Skidmore College economics professor Sandy Baum, who also is an economist and senior fellow in the Education Policy Program at the Urban Institute.

Some experts have gone so far as calling the high pricing model a gimmick, “a strategy to get people to enroll,” Baum says.

Baum says the high price/discount model has worked for colleges, in part “because people always want to feel like they are getting a deal and people think that high price means high quality.”

It would be more transparent, Baum said, to say to parents and students, “This is the price.”

This story was originally published September 29, 2017 at 10:17 AM with the headline "Tired of the tuition pricing game? This Missouri university says no more."