Tuesday, December 12, 2006
In Twist on Tuition Game, Popularity Rises With Price
By JONATHAN D. GLATER and ALAN FINDER
Published: December 12, 2006
COLLEGEVILLE, Pa. — John Strassburger, the president of Ursinus College, a small liberal arts institution here in the eastern Pennsylvania countryside, vividly remembers the day that the chairman of the board of trustees told him the college was losing applicants because of its tuition.
It was too low.
So early in 2000 the board voted to raise tuition and fees 17.6 percent, to $23,460 (and to include a laptop for every incoming student to help soften the blow). Then it waited to see what would happen.
Ursinus received nearly 200 more applications than the year before. Within four years the size of the freshman class had risen 35 percent, to 454 students. Applicants had apparently concluded that if the college cost more, it must be better.
“It’s bizarre and it’s embarrassing, but it’s probably true,” Dr. Strassburger said.
Ursinus also did something more: it raised student aid by nearly 20 percent, to just under $12.9 million, meaning that a majority of its students paid less than half price.
Ursinus is not unique. With the race for rankings and choice students shaping college pricing, the University of Notre Dame, Bryn Mawr College, Rice University, the University of Richmond and Hendrix College, in Conway, Ark., are just a few that have sharply increased tuition to match colleges they consider their rivals, while also providing more financial assistance.
The recognition that families associate price with quality, and that a tuition rise, accompanied by discounts, can lure more applicants and revenue, has helped produce an economy in academe something like that in the health care system, with prices rising faster than inflation but with many consumers paying less than full price.
Average tuition at private, nonprofit four-year colleges — the price leaders — rose 81 percent from 1993 to 2004 , more than double the inflation rate, according to the College Board, while campus-based financial aid rose 135 percent.
The average cost of tuition, fees, room and board at those colleges is now $30,367. Many charge much more; at George Washington University, the sum is more than $49,000.
But aid is now so extensive that more than 73 percent of undergraduates attending private four-year institutions received it in the school year that ended in 2004, not even counting loans.
“We can cushion the sticker shock,” said Amy Gutmann, president of the University of Pennsylvania, which distributes aid on the basis of financial need. “We focus on both middle-income and low-income families.”
So net prices vary widely on a given campus. On some, as many as 90 percent of students receive support, primarily from the college itself or the federal government.
And financial need is not the only basis for it. Many colleges, competing for the students with high grades and standardized test scores that help a college rise in rankings guides, offer merit aid ranging from a few thousand dollars to a full scholarship.
But officials of private colleges and universities say they fear that unless other steps are taken, the middle and upper middle class could ultimately be squeezed out.
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