St. Paul Pioneer Press
September 12, 2012

By Mila Koumpilova

St. Paul’s Concordia University is slashing undergraduate tuition by a whopping third next fall.

But there’s a catch: Financial aid packages will shrink, too, so the actual savings for students will be considerably more modest than the $10,000 tuition cut the Lutheran university was expected to announce Wednesday, Sept. 12.

Still, all new and returning undergraduates will see a smaller bill after years of relentless increases here and at campuses across Minnesota.

In the past couple of years, a small but growing number of private nonprofit colleges have made eye-popping cuts to their sticker prices nationally. Like Concordia, many of them are breaking with a high-price, high-financial-aid model that has led more recession-weary families to pass them up in sticker shock.

“We’re trying to get away from this shell game of having high tuition and high discounts,” said Eric LaMott, Concordia’s senior vice president and chief operating officer. “It’s not a sustainable financial model for any institution in our situation.”

The university’s new published tuition of $19,700 a year will come across as a bargain among private colleges on the highly competitive Twin Cities and state market. Statewide average private college and university tuition stood at more than $33,000 this year, with $13,500 for resident students on the University of Minnesota’s Twin Cities campus.

Concordia will freeze its room and board price at $7,750.

On the flipside, the school will trim its merit, need-based and athletics scholarships. On balance, students from low-income families can expect several hundred dollars less in out-of-pocket costs; higher-income students could see bills shrink by as much as $1,500.

Tuition at Concordia last came in under $20,000 in 2004. At that time, undergraduate enrollment was at 900 students; this fall, Concordia enrolled 1,200 undergrads — a record, but shy of the university’s target of 1,500.

University officials said the reset will help Concordia keep up its enrollment momentum.

Recent years have brought much attention to the difference between the published sticker cost of tuition and the net price — what families owe after factoring in financial aid, state and federal grants. Last year, the federal government required colleges to post so-called net price calculators on their websites.

The Minnesota Private Colleges Council says the net tuition price at member institutions is on average less than half the posted cost and has stayed flat at about $14,000 even as sticker prices have climbed.

Yet, said Washington, D.C.-based educational consultant and author Steven R. Goodman, “Not everybody is as savvy a consumer when it comes to the difference between sticker and net price as you would think.”

As the sticker cost of tuition at Concordia has spiked, more families write it off before looking into financial aid opportunities it offers, LaMott said.

Based on a study that Denver-based consulting firm Noel-Levitz did as Concordia considered the move, the university expects to handily land the 20 extra freshmen it would take to break even next fall.

According to Tony Pals at the National Association of Independent Colleges and Universities, a small but unprecedented number of private colleges have cut tuition — roughly a dozen schools with double-digit decreases in the past two years alone.

Other schools have frozen tuition, guaranteed freshmen no increases for four years or rolled out cost-saving three-year programs. Annual private college tuition went up 4.5 percent on average in the past three years, down from a 6-percent average each year in the previous decade.

“The colleges cutting tuition are sending a dramatic statement that the long-term trajectory of tuition increases in U.S. higher education needs to be reconsidered,” Pals said.

At some, though not all schools, the cuts have come hand-in-hand with more modest financial aid offers. Some campuses see these changes as a way to attract middle-class families with incomes too high to qualify for much need-based aid but not high enough to shell out full price.

Then, there’s the push to rein in sticker shock on a competitive higher education market, Goodman said: “The planners at the university are betting these changes will increase the number of potential students who will consider the institution.”

Amal Younis, a Concordia freshman from Blaine, expects the reset will lower her out-of-pocket costs by only a few hundred dollars. That’s still exciting news for the English major, who was bracing for a tuition increase. Younis receives two merit scholarships, need-based aid from the university and a state grant. Still, she took out more than $5,000 in loans this year and works on campus to help with college costs.

“This tuition reset gives me more of an incentive to stay here and finish my education at Concordia,” she said.

Scott Bodfish, the vice president for market research at Noel-Levitz, said Concordia had to weigh the risk of sending the wrong message with the reset — that it’s cheaper for a reason.

Concordia officials stress they are not scaling back academic offerings to reflect the lower cost.

Bodfish said it’s tough to say if the university’s move might inspire some of its competitors to follow suit. One reason Concordia is able to pull off the shift is growing revenue from its graduate and adult-completion programs, which already embrace a lower-tuition, lower-aid model.

Still, said Bodfish, “It would be surprising if other schools on the market wouldn’t at least consider it.”

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