It’s been quite a week here at Roger Williams University. We have been more than a little curious regarding the impact that Affordable Excellence would have on the retention of our current students, and on the enrollment of new students who will be entering this coming fall. Given the number of private colleges in the Northeast, coupled with a continuing decline in the number of high school graduates in New England, competition for new students in our region has never been more fierce.
A recent article in The Wall Street Journal (“Colleges Cut Prices by Providing More Financial Aid,” May 6, 2013) reports that the average discount rate (the amount of prospective tuition revenue that is returned to students as financial aid) rose to 45 percent for the 2012-13 academic year, the highest ever – and all indications are that the discount rate for the coming academic year will be even higher. When 45 percent of tuition dollars are used not for actual instruction, but simply to lure people through the front door, colleges are hard pressed to offer a quality educational experience. They try to stay ahead of their competitors by significantly raising the sticker prices for tuition each year, in order to generate new dollars that can be given as aid. Of course, their competitors do exactly the same thing. The consequence is that the published prices make college seem increasingly unaffordable.
A lot of my posts to date – perhaps, for some of you, too many – have been rants about what is wrong with higher education today, in terms of costs, debt and the job readiness of graduates. Lest you think that I spend every waking moment gnashing my teeth in anger and frustration, let me tell you something of the joys of being president of Roger Williams University.
I’ll focus on one day: Wednesday, April 10, 2013.
After the weekly Wednesday morning session of the President’s Cabinet and a short meeting with an alumnus who has established an endowed scholarship in the memory of his now-deceased college roommate, I set off for Newport, and a conference at Touro Synagogue, the oldest synagogue in North America (a product of the doctrine of separation of church and state first advocated by our state’s founder – and our institution’s namesake – Roger Williams).
On the 16th of January, Moody’s Investors Service issued a report entitled “US Higher Education Outlook Negative in 2013.” Inside Higher Ed followed with an article on the findings in the report the next day. The report, and the article, were sobering reading for university administrators, and, in some quarters, more than a little frightening.
Moody’s, one of the three major credit rating agencies worldwide, has downgraded its outlook for the entire U.S. higher education sector from stable to negative. Based on a careful analysis of data over the past several years, Moody’s concludes that there is “mounting pressure on all key university revenue sources, requiring bolder actions by university leaders to reduce costs and increase operating efficiency.”
In my last post, I posed the dilemma of how a campus could freeze tuition (as Roger Williams University has chosen to do), thereby eliminating a logical source of new revenue, without somehow causing damage to the quality of the students’ educational outcomes. Isn’t it the case that “you get what you pay for” – and if you pay less, doesn’t that ensure that you will receive less?
Of course, most people recognize that the quoted statement is overly simplistic. A person can spend anywhere from about $15,000 to more than $200,000 for a new car, but most people don’t think that it is worth it to spend extravagantly on a car, if their primary goal is just to have reliable transportation. Similarly, one can purchase a perfectly respectable bottle of wine for $10 to $20, although it is also possible to spend more than $200 for a grand cru from Burgundy. Is that bottle worth 10 or 20 times the first bottle? As a practical matter, not to most people.