Anatomy of a Significant Tuition Increase

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John W. Dysart
President
The Dysart Group, Inc.

Colleges and universities generally raise the price of tuition every year. While there are the rare exceptions, most institutions raise prices to deal with planned improvements, annual increases levied on their own budgets by various vendors and the need to address salary adjustments and increases in benefit costs. 

Sometimes, leaders need to consider approaches to pricing that are more aggressive than typical. I worked with one Southern college that made the difficult decision to implement a significant increase in tuition in 2005.

The college leadership had held tuition increases to modest levels for a number of years. It was hoped that a tuition price consistently lower than most private colleges in the region might positively influence new student enrolments and retention. The commitment to hold tuition increases to a minimum did not result in increased new student enrolments or improved retention. It did create pressure on the budget over the years, particularly as the college still found it necessary to discount tuition by continually higher percentages, despite the modest tuition levels. The minimal tuition increases also changed the market position of the college in relation to other private institutions in the geographic region based upon price. The college found itself to be one of the low tier colleges both in “sticker price” and average net tuition. 

Acknowledging that good decision-making with regard to pricing begins in the budget process, institutional representatives reviewed recent budgets. They established desired improvements for the college in accordance with the institutional strategic plan. Rather than establishing price level first and conforming the budget to the proposed price, they intentionally calculated the costs of initiatives designed to improve the educational product and proposed a price level that made long-term and short-term improvements achievable. The calculation reflected that, to make meaningful progress toward strategic goals, the college would need to increase tuition by 19% in one year. 

Communication with institutional constituency groups was of paramount importance. Meetings with a variety of campus administrators, students, faculty representatives and Board of Trustee members were designed to explain the increase. Anticipating questions prior to the meetings and having conducted the appropriate research in advance made these encounters productive. 

While communication was important, campus administrators were careful not to over-state the impact of the tuition increase. Campus constituents were informed of the change along with reference to the improvements the increase would fund—focusing on strategic plan goals. Campus leaders did not discuss percentage increases and did not tout the historical nature of the increase. This approach enabled campus administrators to avoid over-reaction on the part of constituent groups. 

The tuition increase had significant implications for financial aid. This was recognized and the institutional financial aid award policy was adjusted to ensure that the increase would not negatively impact access or retention. This did not mean that the college increased financial aid for returning students to offset the tuition increase. Rather, all professional staff members in the Financial Aid Office were available throughout the cycle to meet individually with returning students if necessary and make case-by-case financial aid adjustments where warranted. The Financial Aid Office tracked returning student appeals, recording fewer than one dozen. Regarding new students, the college fine-tuned its strategy of meeting most need, by enforcing consistent guidelines which included a hierarchy of merit aid, external grants and loans. 

Careful planning and communication contributed to the fact that the highest tuition increase in the history of this small, private, liberal arts college coincided with the largest number of new students in its history, the largest number of residential students in history, improved academic quality and the largest overall enrolment in the history of the college.


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