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Posted at 10:08 AM ET, 01/07/2013

‘The Big Freeze’: One small college’s tuition strategy

They call it “The Big Freeze.”

At the University of Evansville, a private institution in Indiana, tuition for students who enter next fall will be the same ($29,740) as it is now. And the price will be locked in for the four years those students are in school; the price also will be locked in for current students as they finish their bachelor’s degrees.

It also could be a big risk.

As I wrote the other day, market pressures related to the nation’s economic anxieties are starting to put a lid on sticker price at private schools. In 2012, an unprecedented number of private colleges cut or froze tuition — more than 30 in all, by one national count. Many more sharply limited their increases to rates below the norm. Typically, tuition rises at a rate well above inflation.


(AP Photo/Butch Dill)
Small private colleges without large endowments--which is to say, most of them — depend heavily on tuition increases to keep their schools afloat. They have high labor costs and fixed building costs, and they advertise small classes as their competitive edge over big public schools. One college president told me recently that major illnesses for a few of his staff members, and resulting health care expenses, drove up costs significantly at his school.

It’s also worth noting that the sticker price of tuition can vary wildly from the net price, which is what families pay after receiving grants and scholarships for financial need or academic accomplishment.

But Tom Kazee, president of U. of Evansville, said he is betting on “The Big Freeze” to stick out from the crowd. Without a freeze, he said, some families in his region (Indiana/Illinois/Kentucky) won’t even look at the school, even though it offers institutional grants to the vast majority of its 2,350 full-time undergraduate students.

“The sticker price frightens them away,” Kazee said. “They won’t apply. They’ll just conclude, ‘You’re not affordable.’”

He continued: “The Big Freeze is designed, in part, to get on the radar screen, for families that otherwise wouldn’t take a close look at us. This gets their attention.”

To be clear, the freeze doesn’t cover health, activity and technology fees of about $830 a year, or room and board charges of about $10,000 a year.

Critics of freezes—and there are many—say that freezing or cutting the sticker price reduces the revenue schools have to help students in financial need. I’ve heard several presidents deride tuition freezes as a stunt.

Kazee, though, said he is committed to maintaining need-based financial aid. He knows he can’t freeze the price forever. But he’s hoping that for at least a few years, he can raise consumer interest in his school and keep application and acceptance rates at a healthy level.

George Washington University, in the District, has taken a similar marketing approach since 2005. Unlike Evansville, GWU hasn’t frozen tuition. But GWU guarantees that tuition and financial aid will stay constant for incoming freshmen for up to five years after they enroll if they remain full-time students in good standing.

Tuition and financial aid are much on the minds of private college presidents these days. The Web site Inside Higher Ed has a good look today at a campaign by some colleges to limit “merit aid” and funnel more grants to need-based financial aid.

By  |  10:08 AM ET, 01/07/2013

 
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