Colleges Are Lowering Tuition Prices. But Most Students Won't Save a Penny
When Seattle Pacific University announced it would be lowering tuition for fall 2021, slashing it by 25%, Aimee Sides and her husband were excited. They figured it would help their bottom line.
But their first-year daughter attends the small private college on a large merit scholarship, and immediately after the announcement, the Sideses learned their out-of-pocket costs wouldn’t actually change.
Seattle Pacific is one of a number of small private colleges that are planning 'tuition resets' ahead of the 2021 academic year. Some say now is the right time due to the global pandemic’s effect on family finances, while others have been considering a reset for years. In fact, the trend of resets has been growing since 2012, with a high in 2018 as some private colleges buck the luxury pricing model.
A reset is a tuition reduction, sometimes more than 50%, that sets a college’s sticker price at a new lower rate. Albright College, which reset tuition for 2019-20, calls it “right-sizing.” Resetting doesn’t freeze costs. Most colleges still increase tuition annually (typically 3%-4%), but with a reset, that annual increase equals a smaller dollar amount each year, says Trent Gilbert, vice president for enrollment management at Birmingham-Southern College, which implemented a reset in 2018. A reset also usually doesn’t reduce mandatory fees or room and board.
And importantly for families, it doesn't always lower your bill, as the Sides family learned. Students attending on scholarship or institutional need-based aid typically still owe the same amount since they’re already getting a discount on tuition.
Why Private Colleges Reset Tuition
Colleges reset tuition for myriad reasons, but administrators cite cost transparency as a top goal. Families often don’t understand that many high-cost private colleges offer significant tuition discounts to eligible students, Gilbert says.
That was the case in Sides' family. Her husband suffered sticker shock with Seattle Pacific’s prices, but Sides had researched its merit scholarships and suggested her daughter apply anyway. The scholarship Seattle Pacific awarded put the college’s price close to that of an Oregon public university.
Tuition discounts reached a record high in 2019. Yet, more often than not, a conversation to explain available financial aid and scholarships never happens because many lower and middle-income families walk away before understanding their specific cost, says Stephen Thorsett, president of Willamette University in Oregon.
Willamette is reducing tuition by 20% starting next fall, part of the university’s new vision as it shifts its identity to a national liberal arts university. The reset should make costs easier to compare with public universities, Thorsett says.
“Removing those barriers for people who don’t understand how tuition and financial aid work is really the most important piece of this,” he says of Willamette’s reset. He hopes it leads to greater diversity and inclusion. Plus, Willamette is merging with two other schools, and the need for continuity of pricing in its more complex and growing college system nudged Willamette to finally implement the reset after a 10-year discussion.
In 2018, Birmingham-Southern made the decision to cut tuition and mandatory fees by more than 50%, to $17,650, to be transparent about costs and to put it closer to neighboring Alabama public university prices in hopes of attracting new applicants. Boosting enrollment is often a key goal of a reset, particularly for private colleges competing with nearby public universities, Gilbert says.
Most often, colleges that implement resets are small, with enrollment under 5,000, and not widely known, says Shannon Vasconcelos, director of college finance at Bright Horizons College Coach. In other words, they aren’t brand-name elite liberal arts colleges.
“These small, less well-known colleges have to work harder to recruit students,” she says.
So far, Birmingham-Southern hasn’t seen increased enrollment, but its average net price did go down slightly for students in 2018.
Colleges Lowering Tuition for 2021
Across the country from Seattle Pacific University, New York’s Houghton College is slashing tuition to $15,900, a 53% reduction in response to the pandemic. That marks the college’s lowest tuition rate in 20 years. Arkansas’ Hendrix College will reset tuition to approximately $33,000 from $49,140, a 32% drop.
Spring Hill College in Alabama plans to reduce tuition by 50% to $21,100, plus cut room and board by almost $3,200. Other colleges announcing 2021 resets include Gordon College (33% reduction), Rider University (22%), Fairleigh Dickinson University (up to 25%), and Goldey-Beacom College (50%).
If tuition still sounds high, remember that eligible students may still qualify for scholarships or need-based aid on top of the reduction. Of course, that doesn’t mean paying for college at the reset prices isn’t still difficult for many.
What Families Need to Understand About Tuition Resets
Most often, colleges resetting tuition also scale their grant aid and scholarships to the new price, meaning the actual price you pay won’t decline by those 25% to 50% margins. In fact, with lower tuition, more students applying will pay full price.
Willamette won’t change its very top talent scholarships, Thorsett says, but most are scaled to the new tuition rate. That’s why it’s important to compare the net price of each school (the full cost minus grants and scholarships), instead of the award amounts, Gilbert says. If a $60,000 college offers a $20,000 scholarship, that school still costs more than a $35,000 college offering $10,000.
Families also shouldn’t assume a private college with a higher price tag will cost more than a college that has reset tuition — or a public university, Vasconcelos says. She dispels this myth with families every day. Some of those expensive private colleges will still award significant grants and scholarships. To get a more useful idea of college costs, run the colleges’ net price calculators. Also, talk to financial aid offices about the likelihood of scholarships or need aid for your student’s academic and financial profile.
With tuition resets, continuing students receiving scholarships or financial aid likely won’t see much, if any, change to their cost. Generally, students shouldn’t be hurt by the change, Vasconcelos says, though if room and board costs rise, they could see a slight increase.
College mileage will vary, of course. Hendrix College’s current students will continue on their same scholarship model. But Gordon College’s students can opt in to the new price, with most expected to save $1,000 next year. Seattle Pacific guarantees a $0 increase in 2021 for continuing students and lists the scaled 2021 scholarships on its website.
There is one group of students who will always pay less after a tuition reset: full-pay students. But those are small populations at the types of colleges likely to reset tuition. At these small colleges, the majority of students qualify for some kind of discount, unlike students attending elite liberal arts colleges like Williams or Swarthmore. At Willamette, full-pay students often comprise no more than two handfuls, Thorsett says.