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Tuition cuts don't always mean savings for students

By
Amy R. Connolly
Two private liberal arts colleges are bucking the trend of annual tuition increases, dropping tuition by more than 40 percen .Photo by Areipa.lt/Shutterstock
Two private liberal arts colleges are bucking the trend of annual tuition increases, dropping tuition by more than 40 percen .Photo by Areipa.lt/Shutterstock

WASHINGTON, Oct. 13 (UPI) -- Two private liberal arts colleges are bucking the trend of annual tuition increases, instead dropping tuition costs by more than 40 percent but not necessarily saving students much money.

Utica College in New York and Rosemont College in Pennsylvania each announced a "tuition reset," joining a small number of private colleges doing the same. Beginning in fall 2016, Utica is cutting tuition from about $34,000 this year to about $20,000. Rosemont is dropping its tuition from the current $33,000 to $18,500 next year. The goal is to attract students who might otherwise bypass a college based on tuition alone.

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Experts say the tuition cuts sound good, but, in reality, they don't reflect much of a savings after financial aid -- grants, scholarships and other discounts -- are applied. The sticker prices at most colleges are far higher than the net costs, the cost students actually pay after the discounts. Some schools including Rosemont, readily admit the "lower" tuition costs will result in fewer financial aid opportunities. At the same time, most schools that reset tuition count on higher enrollment to make up for lost tuition revenue.

"I think that these types of reforms, if you want to call them that, are not going to get us very far unless colleges also find ways to contain their costs," said Andrew Kelly, director of the Center on Higher Education Reform at the American Enterprise Institute, a conservative think tank. "Maybe you have a big, thick, administrative layer, maybe you've invested a lot in student services and amenities, so long as those things continue to be expensive, it's not clear to me that this is a sustainable solution to the college cost problem."

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Between the 2002–2003 and 2012–2013 school years, costs for undergraduate tuition, room and board at public institutions went up 39 percent, and prices at private nonprofit institutions increased 27 percent, after adjustments for inflation, according to the Department of Education's Institute of Education Sciences. That has translated into massive outstanding student loan debt nationwide, with some 43 million people, most under age 40, owing an estimated $1.2 trillion. The average balance is about $30,000.

In 2013, the average Utica College student left the school with $42,528 in outstanding student loans. Utica College President Todd Hutton said 93 percent of students will save about $1,500 a year with the reset tuition. The remaining 7 percent will save $5,000 or more a year, he said. It is not clear what affect this will have on overall student loan debt.

Sharon Latchaw Hirsh, Rosemont College's president, said tuitions continue to rise at most colleges to cover annual increases in tuition discounts, rather than to account for inflation. The average tuition at a private, four-year college is $31,320. On average, the published price is discounted 48 percent -- 90 percent for first-year students -- as a result of grants and scholarships.

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"This "high price, high discount" model does not, for the most part, involve real money. The tuition sticker price keeps climbing — but primarily to allow colleges to increase the discounts they can offer to coveted students," Hirsch said. "The result is an ever-escalating and eventually unsustainable cycle.

Hirsch said the move to a "low price, low discount" model means there will be fewer grants and scholarships offered. "Financial aid will still be available to students who qualify, but many will find that they won't need as much to "close the gap" to $18,500 than they did when tuition was over $32,000," she said.

In the 2013-2014 school year, Concordia University in Minnesota cut tuition by 33 percent. Since then, Concordia has seen a 49 percent growth in the student body, said Kristin Vogel, Concordia University's associate vice president. "It tells us that it was really what the market was looking for. Immediately, we saw an increase in applications and campus visits," she said.

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