It may have been one of the biggest back-to-school sales ever: a 36 percent drop in the advertised cost of a college education.
That’s what awaited students this fall at Mills College, one of a growing number of higher-education institutions that have started freezing or dropping their prices in the face of a years-long enrollment decline and heightened price sensitivity.
The 1,300-student private college in Oakland, California, which like many private colleges has been having trouble attracting students, dropped its sticker price from $45,000 to $29,000 a year.
It’s an increasingly common example of market forces finally coming to bear on college costs, which have consistently grown much faster than prices for other goods and services thanks to a steady supply of students. In the 10 years ending in 2016, college tuition and fees rose 63 percent, or three times the rate of everything else tracked by the Consumer Price Index, the U.S. Bureau of Labor Statistics report
Today, however, because of a decline in the number of 18- to 24-year-olds and an improving economy that is sucking people straight into the workforce, colleges have 2.9 million fewer customers than they did at the last peak, in 2011, according to the National Student Clearinghouse, which tracks this.
Meanwhile, almost seven in 10 parents said in a survey that they had eliminated colleges from consideration for their children because of the cost. In another survey, only 44 percent of Americans said private, nonprofit universities and colleges are worth what they charge.
More colleges are realizing there’s no point having high sticker prices if they’re discouraging prospective applicants and few students are actually paying them, said Sandy Baum, an independent higher-education consultant and retired economics professor.
“It’s very much a strategic decision,” Baum said. “They’re looking at, will we get more applicants if we lower our sticker price? It works for some of them and it really doesn’t work out for others.”
More and more are giving it a try.
Drew University, Sweet Briar College, Birmingham-Southern College, Benedict College and the University of Sioux Falls all reduced their advertised tuition starting this year. Old Dominion University is lowering the price of undergraduate tuition for active-duty military service members. Champlain College cut tuition in half for students in its online program, part of a strategy to increase enrollment.
Concerned about Illinois high school graduates leaving for colleges in other states, the University of Illinois system is in the fourth year of a tuition freeze. The University of Colorado has cut fees. Five South Dakota universities are offering lower in-state tuition this fall to freshmen and transfer students from Nebraska; the University of Nebraska at Kearney will extend the deal next year to residents of Colorado and Kansas. The University of Missouri-Kansas City, meanwhile, is offering lower resident tuition to students from Kansas and other midwestern states.
Some of the seeming price drops are sleight of hand. Most students don’t pay the advertised price for college, but, after receiving discounts and financial aid, end up owing a lower “net price.” At private colleges, that comes to about half as much, said Lucie Lapovsky, a pricing consultant. And as the stream of students has dried up, those discounts have been getting deeper.
Colleges like Mills are simply changing their advertised prices to something closer to the average of what students actually pay, though Mills says most students will still see their costs decline.