When campuses start matching each other’s prices to snatch students

Competition between campuses is naturally heating up as the many stresses pressing down on American higher ed increase.  A recent Wall Street Journal article by Melissa Korn explores one new developments: competitive tuition matching.

This plays out in several ways.  One involves private colleges and universities offering the tuition local public institutions charge.  (The published tuition for American private campuses is often higher than that of public universities.)  For example,

Oglethorpe University near Atlanta will match the tuition of any state flagship university for high-achieving students, and Robert Morris University in Pittsburgh said last week it will charge Pennsylvania residents the same price as local public universities, plus a $3,000 scholarship to boot.

Another sees public universities cutting tuition for out-of-state students to that charged to in-staters.  (“Public schools regularly charge two or three times as much—or more—for non-residents,” as Korn explains)

Public universities in Michigan, South Dakota and Nebraska now let students from other states pay as if they were locals. The University of Maine in Orono matches neighbors’ in-state rates.

There’s a Vermont version of this, as “[a]ny out-of-state student who lives in a county that abuts Vermont can now attend Castleton [University] at in-state rates.”  That’s aimed primarily at New York, I suspect, given that state’s recent free tuition program.

Korn observes that this tactic is a “price-match guarantee, a sales tactic borrowed from retailers…”  For example.

Why does this matter?

First, such cutthroat competition illustrates how seriously campus leaders take the ratcheting-up crises over demographics, enrollment declines, and general economic sustainability.  This kind of aggressive hunting for students and cutting revenue in its pursuit might not be the sign of a healthy nonprofit sector.

Second, as competition heats up between campuses collaboration will likely become more difficult.  i.e., the odds of reaching out to a peer institution for a joint venture being deemed “trading with the enemy” are rising.

Third, college price-matching can make tuition pricing even more opaque.  Previously I’ve compared American academia’s price transparency to that of American health care, which is to say not very clear at all.  Korn observes concisely that this tactic “adds to the confusion over how much college really costs, especially at private schools.”  Note the helpful graphic attached to the article, including its caption:

college prices 1990-2016_WSJ

And note this bit about Oglethorpe, whose “published tuition and fees are $39,830 this year, but scholarship programs mean students generally pay far less. The average net price for tuition and fees is $13,700.”

Fourth, recall the fond hope of some that states will somehow return to 1970s levels of public university funding aren’t being realized yet.  Until some state legislators approve of their state universities using price matching, and want to reward them, we aren’t seeing it.

(thanks to Jeff Benton for the link; neutron star pair photo from NASA Goddard Space Flight Center)

Liked it? Take a second to support Bryan Alexander on Patreon!
This entry was posted in economics. Bookmark the permalink.

3 Responses to When campuses start matching each other’s prices to snatch students

  1. Kenneth M Van Horn says:

    I get the sense that a shakeup is inevitable. Because of their rubric, online for-profit universities are graduating students who, if the students do the work assigned and participate in class, they will graduate. This method produces college graduates who may be marginally literate, incapable of independent and objective thinking, and incapable of being successful in a position they worked years to qualify to hold.
    I can see a college degree becoming meaningless in this kind of environment and corporate HR departments resorting to a test for the skills they need rather than assuming someone with a bachelors degree can do the job.
    Competitive pressure may be one of the few things that can correct this, but not without a lot of pain between now and then.

  2. Mark Ulett says:

    This could get rough. Will we see schools start using more and more aggressive sales techniques to close the deal? As this whole Peak Student issue plays out, the competition might demand it. More budget to advertising and recruiting

    “I hope you enjoyed the campus tour and got a chance to scale our climbing wall! Unfortunately, we only have a limited number of spots available at our 70% discount rate. Based on what you told me about your family finances I’d suggest you make your first tuition payment on this Friday, unless Thursday works better for you. Welcome to college.”

    Higher Ed’s new ABCs—Always Be Closing!

  3. Pingback: Oglethorpe in the news this week - The Source

Leave a Reply

Your email address will not be published. Required fields are marked *