Right up until the recession, Grace College and Seminary was on a good trajectory, with enrollment growing. But then, in 2009, the evangelical Christian college in Indiana suffered a setback: It enrolled 290 new students, down from 350 the year before.
In response, Grace created a three-year degree and started off-site programs for traditional-age students. It considered cutting tuition but decided against it.
The approach worked: Enrollment bounced back, then resumed growing. But challenges remained — Grace is a small private college with an enrollment base in a part of the country that’s been hard hit economically. In the spring of 2013, the college commissioned a new study to re-evaluate whether it should cut its price.
Later that year, the college’s new president, Bill Katip, presented a five-year enrollment plan to the board. Grace would expand its adult-education program, he suggested, but shrink its traditional-age population a bit. That wasn’t what the board wanted to do.
Mr. Katip knew there was a Plan B: The pricing study, which he had received just days before the board met, suggested a tuition cut might work. Grace eventually joined the small but growing list of colleges that have gotten creative with their pricing models.
The college came up with a program called “A Measure of Grace,” which featured three elements: a modest tuition cut, free textbook rentals, and a price that drops for returning students each year as they progress through college. The thinking, Mr. Katip says, was that “if we’re doing something, let’s do it different.”
Grace’s administration came up with its own ideas but was willing to test them through research — a winning combination, says Cam Wall, vice president for content at Hanover Research, the consulting firm the college used to investigate a price cut.
The college’s message for students, Mr. Wall says, is that “we’ve thought through all the ways we can make college more affordable without reducing quality.”
And Grace has done something else that’s unusual, Mr. Wall adds. It put the pricing plan front and center on its website, where the changes are explained by this video:
The program officially begins this fall, but here are a few things the college has already noticed:
An accelerated degree brings other benefits.
Three-year degrees mean colleges might lose out on a fourth year of tuition, but Grace’s program is set up to encourage accelerated students to go straight into one of its graduate programs. And there’s another financial benefit for the college: The accelerated degree has attracted more higher-income, well-prepared students. That suggests to Mr. Katip that Grace’s enrollment challenges are as much about willingness to pay as about ability to pay. Even if they can afford it, he says, “families are fed up with paying so much and having to borrow.”
A small tuition cut means fewer changes in aid.
At 9 percent, Grace’s tuition cut wasn’t as large as some other colleges’ have been. But the college was able to do it without changing its athletic or merit-aid awards, and while keeping need-based aid proportional. The college did nix one scholarship, the “Grace Award” — a $5,000 price break was given to students who didn’t meet the requirements for any of the others.
The Grace Award was designed to improve yield, the share of admitted students who enroll. But the college wanted to entice more students to apply in the first place and figured a price cut would work better on that front. Even so, families are conditioned to expect scholarships, so taking one away is always a risk.
Students like free books.
The piece of the program that current students latched on to was the textbook rentals, Mr. Katip says. Perhaps that’s because many students’ parents are paying tuition, while books come out of what they earn themselves.
Communication is key.
The college is running a little ahead on freshman deposits for this fall, suggesting that the pricing change is resonating with the group it was aimed at, Mr. Katip says. Transfer-student deposits are behind, though, possibly because community-college enrollment has fallen as the economy has improved.
Timing is a big challenge when starting such a program, Mr. Katip says. The college waited until last fall to talk about it to avoid confusing its rising sophomores during their admissions process, which meant it didn’t have long to make sure prospective students were up to speed. Another challenge: Offering students a benefit like tuition that decreases as they progress works only if they understand what normally happens, which many would-be freshmen probably don’t. It can take a while to explain a different approach to students and their families. With that in mind, Mr. Katip hopes to see stronger results next year.
Beckie Supiano writes about college affordability, the job market for new graduates, and professional schools, among other things. Follow her on Twitter @becksup, or drop her a line at beckie.supiano@chronicle.com.
