Colby-Sawyer College, a small private school tucked away in New Hampshire, is making the surprising choice to lower its undergraduate tuition by about 62 percent. That means that undergraduate students who start next fall will have to pay $17,500 in tuition each year, instead of the previous $46,000. On its face, that seems like a pretty big deal, since among private four-year institutions, tuition is on average about $37,641 annually. But lest you think that this announcement is a genuine effort to bring about financial relief to those suffering from the student debt crisis, realize that this is mainly a savvy marketing ploy.
As Kevin Miller, associate director of higher education at the Bipartisan Policy Center, told me, Colby-Sawyer’s decision is likely more about transparency than it is about any loftier aims to address the student debt crisis. That’s because most colleges and universities advertise a tuition price that most enrolled students already don’t actually pay—most are given grants and scholarships that lower that advertised price pretty significantly. Colby-Sawyer noted this in its announcement, saying, “In fact, 100 percent of our currently enrolled students receive financial assistance.”
So Colby-Sawyer is now just advertising the lower tuition rate that most students were already paying. The college doesn’t expect much to change as a result: Colby-Sawyer subtly acknowledged that the college was “stronger financially than we have been in recent history” and that its donors have provided record levels of giving, including doubling the school’s endowment. In other words, the school can “afford” to lower its tuition without suffering any loss—not only because of its bigger endowment, which generates some cushion, but also because most of its students were probably already paying well below its previous $46,000 rate.
To understand the current relationship between advertised tuition rates and financial aid, consider the argument made by Kevin Carey recently in Slate: He implored readers to realize that aid packages are often already doing the work of marketing, convincing a student to pick a college based on the size of the aid package, which is less significant once you realize that most people aren’t paying sticker price anyway. The current lack of transparency around this has caused tons of problems: “Many families make bad decisions based on the misleading vocabulary colleges use around financial aid, leading to broken futures and increasingly unaffordable student loans,” Carey wrote.
Financial aid is essentially determined not by need but by an algorithm that decides how much money a student is willing to pay to attend college. What this announcement really shows is Colby-Sawyer’s admitting that that number is much lower than what its tuition currently suggests. There are costs to this false advertising: “Our high listed price means we often don’t get the chance to tell prospective students about our financial aid programs, much less help them become students who find their voices, develop their passions and become active learners.” This move, to some degree, helps level the playing field, even if it doesn’t ultimately do much to change the cost of attendance.
Advertising a high tuition rate despite knowing that most students don’t actually pay that amount is its own kind of marketing, according to Miller. Many families equate a high sticker price with prestige and quality, which ultimately attracts more students to certain colleges and universities—a phenomenon known as the Chivas Regal effect. That’s why lowering tuition has long been considered a risk. But there are also plenty more families that base their child’s college decision on the opposite calculation, deciding that if an institution’s tuition is beyond a certain threshold, they can’t consider the school. The fact that lowering the price was decided to be the more strategic move indicates that we might be at a turning point for sky-high tuition rates.
COVID-19 also has a part to play, as thousands of students across the country realized they could still earn their college degree by attending classes online, without needing to set foot on a college campus, saving thousands of dollars in room and board fees and transportation costs. The appetite for an expensive college experience is shrinking. That leaves colleges scrambling for new ways to appeal to the masses.
Coincidentally, another private school in New Hampshire, Southern New Hampshire University, recently addressed those new pandemic-inspired concerns head on by lowering its tuition rate by over 50 percent and introducing tiered pricing. Starting in 2021, students have the option to choose a $10,000 or $15,000 annual tuition program. The higher-priced program leans heavier into traditional face-to-face instruction on campus, while the cheaper tuition rate is a hybrid of face-to-face instruction and online classes.
One last thing to consider is that it’s much easier for private schools to make these kinds of dramatic changes. These schools aren’t subject to the same level of regulation by state and federal agencies, giving them much more discretion to change their pricing models with little to no oversight. Public colleges and universities don’t have it as simple, as they rely on state funding, which has been on the decline over the past decade and has ultimately led to costs being pushed on to students—through, you guessed it, tuition increases.
All in all, marketing ploy or not, real discount or fake, the Colby-Sawyer news should be seen as a useful step forward. College enrollment in the U.S. has been on a historic decline that started in the fall of 2020. Collectively over the past two years, over 1 million fewer students enrolled in college, and the tuition price tag of a college degree has been the primary culprit. With fewer college graduates, the U.S. is creating a workforce with fewer skills, credentials and degrees necessary for critical jobs in medicine, engineering, and more. It also means there’s a growing number of Americans who have capped their earning potential, and things like buying a house or a car, even sending their own kids to college, have become even more out of reach.
Colby-Sawyer is one of a handful of higher-ed institutions making college more accessible through greater transparency. It’s in part an acknowledgment that the cost of college has become untenable, growing by about 7 percent annually and creating a student debt disaster in the process. It’s gotten so bad that it finally convinced President Joe Biden to do something about it—he recently issued broad debt forgiveness for federal student loan borrowers, notwithstanding some pushback.
The solution to declining attendance and high debt could be as simple as being honest: Don’t ask for a price you know nobody wants to pay.