Smaller US colleges try big fee cuts to tempt students back

Some US colleges have announced deep cuts in tuition fees as institutions bid to boost enrolments as the school-leaver population shrinks and international students are deterred by Trump-era hostilities and improving options abroad.

Many of the most attention-grabbing cuts so far appeared to be at smaller colleges with religious affiliations, reflecting long-term struggles at some of these campuses.

Houghton College, a private Christian liberal arts college in New York, has slashed its sticker price to $15,900 (£11,500) for this autumn, down 53 per cent. Other institutions offering significant savings include Gordon College, down 33 per cent; Hendrix College, 32 per cent; and Seattle Pacific University and Fairleigh Dickinson University, each cutting 25 per cent.

These kinds of reductions might win the institutions involved more students, said Michael Nietzel, a former president of Missouri State University. But they also ran the risk, he said, of shrinking their income while alienating current students and signalling desperation to prospective applicants.

If possible, Dr Nietzel said, a better strategy for both institutional budgets and outside messaging was seen in the example of St John’s College, a liberal arts institution with campuses in Maryland and New Mexico, which in 2018 paired a deep cut in tuition fees – from $52,000 to $35,000 – with the announcement of a $300 million fundraising campaign.

Regardless of whether the fundraising goal was realistic, the announcement appears to have helped St John’s rebuild enrolment by putting a positive spin on the tuition cut, Dr Nietzel said.

“They had the best of both worlds,” he said.

Yet however it is presented, said Emily Wadhwani, the head of higher education at the credit rating agency Fitch, a major fee cut such as those announced by Houghton and the others was clearly a risky move. “A reduction of that magnitude would absolutely raise a red flag” to outsiders about institutional viability, she said.

Those big fee cuts, though, are likely to be balanced with corresponding reductions in so-called merit aid, which are discounts routinely given to large numbers of students. As such, she and other experts said, the actual shift in net price should be far more modest.

While overall US college enrolment has been predicted to rise this autumn, Ms Wadhwani said, troubles persisted for large numbers of smaller private institutions and those in parts of the country experiencing chronic population declines.

“Those conditions existed prior to pandemic; those conditions will exist after the pandemic,” she said. As such, she said, the quality of the recovery in US higher education was “very variable”.

Daniel Nelson, head data officer at Bethel University, said net prices have been declining at most US institutions since the Great Recession of 2007-09.

Mr Nelson conducts an annual member survey for the Council for Christian Colleges and Universities, and he saw financial anxieties as commonplace now in US higher education outside the 150 to 200 most elite institutions.

Those exceptions include some leading members of the University of California system. There, the state is so flush with cash and campuses are so confident of enrolment in an environment of strong population growth that they are cutting their shares of out-of-state students.

But many colleges have not figured out a sustainable price for online delivery, Ms Wadhwani said. “That’s a big point of discussion happening right now among faculty and in boardrooms across higher ed institutions,” she said.

paul.basken@timeshighereducation.com