December 23, 2020
As colleges continue to scramble to attract students during the pandemic, the idea of a tuition reset is being discussed on many campuses.
In many cases, this is occurring at institutions that are sensing they might have priced themselves out of reach for their target markets.
As you might remember, a tuition reset is a one-time reduction in a college’s tuition rate. Usually this is accompanied by a cut in financial aid. Once the reset is in place, the college’s tuition typically follows a normal pattern of yearly increases.
The goal of a tuition reset is typically more than financial. As part of the reset, many colleges hope to garner favorable attention in the press and thereby increase both exposure and student interest.
In late 2019, Mark Kantrowitz noted that colleges that opted to reset tuition often shared a number of common characteristics:
The results of a tuition reset are mixed. According to RNL, of 71 private not-for-profit institutions that reset their tuition between 1996 and 2018. Half the institutions saw no increase in enrollment. Half the institutions also saw net revenue from first-year students decline by four percent. Lost revenue from current full-pay or near-full-pay students can be significant.2
Lucie Lapovsky noted that the data are “positive although not overwhelmingly so” for colleges that are using a reset in the hopes of building larger enrollments both from freshmen and transfer students.3
Some questions to ask when considering a tuition reset
My intention here is not to scare you away from a tuition reset. Rather, my objective is to open your eyes to some of critical issues that must be addressed before and during a reset.
Of particular importance is the need for solid pricing research a priori and the need to invest in a comprehensive marketing plan both before launching the reset and during the reset itself.
Please let us know if you are considering a reset. Our pricing elasticity studies are the most sophisticated and accurate in the marketplace and we would be glad to help you clarify how a reset will impact enrollment, revenue, and your brand.
Want to learn more? Schedule a free consultation with Becky Morehouse today.
Read next: Building Credibility
4 There is considerable data that suggest that students of higher ability will shy away from colleges that are less expensive because they often equate cost with quality. At one time this trend was called the Chivas Regal effect.