Tuition Pricing for the Fall

June 12, 2020

? Thank you to everyone who pre-ordered my forthcoming book with the goodies offered in the last newsletter. That deal is still valid, and since many of you asked—yes, you can forward it to friends and family.

In the coming weeks, I’ll be sharing excerpts and tips from the book…plus the signed bookplate (designed by someone close to me) that you’ll receive for your pre-order.

In the meantime, Publishers Weekly is out with the first review of Who Gets In & Why.

The reporting for the book took me from admissions offices in Washington state to high-school hallways in Pennsylvania. It also took me to a small high-rise in Evanston, Illinois, not far from Northwestern University. That’s where I met Brian Zucker, who heads up Human Capital Research.

Zucker is a character in the book who helps describe “financial-aid leveraging.”

• Financial-aid leveraging—in its simplest terms—is the combination of data mining and modeling that helps colleges figure out who to give a tuition discount to and how much to give them.
• Dozens of companies occupy this industry in higher ed. Human Capital Research has some 70 clients, including University of Dayton and DePaul University.

Moneyball meets higher ed: The models these companies offer to colleges have grown increasingly sophisticated in the last decade thanks to better data, technology, and an army of experts in mathematics, computer science, and psychology.

• The models, however, are often based on past performance and norms established over many years. The question now is whether these models will still work in a Covid-19 world.

The big picture: The rush back to campus this fall by many colleges and universities is driven in part by the fear that students won’t pay on-campus tuition for another remote experience.

• “Even if we could get them back for a few weeks and then had to send them home again, I think we can justify charging regular tuition for the semester,” a CFO of a private college in the Midwest told me last week.

Behind the scenes: When I talked with Zucker in January he shared a “pricing wheel” with me that he uses with clients. It illustrated 11 different pricing alternatives that colleges could use, including a “tuition reset” and an “earn up,” a strategy I wrote about in a previous newsletter.

A few weeks ago, when I called Zucker to factcheck the book, I asked him if he updated the pricing wheel. He added two new potential pricing approaches:

• Remuneration. That's where students get a rebate or a free semester on the back end (i.e. second semester senior year). It encourages students to stay enrolled and allows colleges to amortize the cost.
• À la carte. That's where students pay for core instruction and then for services they want.
• The big issue with the à la carte model is that many colleges don’t know how much many of those individual services actually cost to deliver. Plus, without spreading the costs across the entire student body, the cost of delivering that service increases for those who want it.

Final thought: Zucker told me that once colleges' plans for the fall become clear later this summer some campuses are considering a “pandemic rebate.” But rather than give that discount this fall, the rebate would take an idea from his pricing wheel—it would be given the final semester before graduation.

Such a strategy, he said, “doesn’t set in motion long-term price differentials” and “staggers the financial impact over time.”

Go deeper, with this 2005 feature story in The Atlantic on financial-aid leveraging that featured Zucker.

Higher ed’s reckoning on race

The conversations about racial justice and equality going on in every corner of society is not skipping over college campuses because students aren’t there. As one president told me this week, with Zoom, campus protests don’t stop over the summer. “Students are demanding change,” he said.

One big issue: The faculty.

• Students want a faculty that reflects their lived experiences.
• While a quarter of the students are basically new to a four-year campus each year, the faculty and staff turn over at a much slower rate
• The result is a growing gap between the racial and ethnic composition of the student body and that of the faculty and staff, especially as the number of white high-school graduates nationwide is falling.

What else to watch for: What happens to legacy admissions at selective colleges.

• Some colleges admit legacies (the children of alumni) at a much greater rate than non-legacies. Given the historic underrepresentation of students of color on campuses, legacies are much more likely to be white.
• At Harvard, a lawsuit against the university’s admissions practices found that in a recent year legacies were five times more likely to get in than non-legacy applicants.
• Legacies account for more than 36 percent of Harvard’s Class of 2022.

Also, watch out for: The admissions advantage given to athletes.

• College sports are dominated by white, wealthier students.
• 61 percent of student athletes in 2018 were white (compared with 52 percent of undergraduates overall), according to the National Collegiate Athletic Association.
• The most popular sports on campuses by participation numbers skew white: 60 percent of the men and women’s track teams; 66 percent of the soccer teams; and 85 percent of lacrosse teams.

Bottom line: Legacies and admissions preferences for athletes are never going away, people in higher ed keep telling me. But remember, just in the last week, Republicans on Capitol Hill started talking about police reform and NASCAR banned Confederate flags.

SUPPLEMENTS

The class of 2021 is missing spring grades, ACT and SAT scores and the chance to take campus tours. I asked experts what to do.

A D.C. charter network’s bulk-order list for the first three months of school includes 188 gallons of soap, 2,000 gallons of disinfectant spray and 10,000 reusable masks. Now imagine what a college campus needs.

A visualization that track universities and their plans for opening in the fall semester.

Stay safe and stay strong — Jeff

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