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As enrollment falls and skepticism grows, some colleges are cutting prices

The cost of college has stopped rising faster than inflation for the first time since the 1980s

Colby-Sawyer College in New London, N.H., has announced that it will lower its price next year by 62 percent. (Vanessa Leroy for The Hechinger Report)

NEW LONDON, N.H. — Bright fall hues and neatly manicured lawns frame redbrick buildings and a white wooden church steeple on a peaceful New England main street with a view of the White Mountains in the distance.

It’s an unlikely setting for a high-stakes gamble that could help drive dramatic change to a contentious issue: how, and how much, Americans pay to get a higher education.

Colby-Sawyer College, a nearly 200-year-old institution that inhabits a campus in the heart of this bucolic town, has announced that it will lower its tuition next year for undergraduates by 62 percent, from $46,364 to $17,500.

Already, as enrollment erodes and public skepticism mounts about the need for a degree, the pace of annual increases in tuition and fees — which for years rose three times faster than the cost of everything else — has for the first time since the early 1980s slowed to a rate that’s well below inflation.

Now some higher education institutions are starting to lower their prices.

“There was a time when colleges and universities could price with impunity, when there was always sufficient demand that they could raise what they charged and be sure that people were going to find a way to pay,” said Will Doyle, a professor of higher education at Vanderbilt University’s Peabody College of Education and Human Development. “But that time appears to be over.”

College is still expensive. Taken together, tuition, room, board, books and other expenses this year average $57,570 at private, nonprofit colleges, according to the College Board. At public universities, the average comes to $45,240 for out-of-state students and $27,940 for in-state students.

And annual increases in the cost of college long surpassed inflation. In the 10 years through 2016, college tuition and fees increased three times as much as all the other products and services measured by the government, the Bureau of Labor Statistics reports.

But as enrollment has eroded, these price hikes have slowed. Tuition and fees rose less than 1 percent from September 2019 to July 2021, a period during which inflation was more than 7 percent. This fall, the increase in tuition and fees at public universities and colleges reached a “historically low” level, according to the College Board, and actually declined when adjusted for inflation.

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Though most institutions won’t announce their tuition for next year until spring, experts are projecting more of the same.

As many as 100 colleges may lower their prices, said Jim Hundrieser, vice president of the consulting arm of the National Association of College and University Business Officers (NACUBO).

Like Colby-Sawyer, for example, Lasell University in Massachusetts has announced a hefty tuition cut — in its case, of about a third.

Other institutions are guaranteeing that students will pay the same tuition for their entire time in college, without annual increases. Still more are expanding their financial aid, so no students have to take out loans for tuition if their families earn below a certain cutoff.

Families’ ability to pay is no longer the only factor in deliberations over price, Hundrieser said. For the first time, colleges are worried about people’s willingness to pay. Fewer than 1 in 3 Americans surveyed by the Strada Education Network now think a degree is worth the cost.

Consumers are also increasingly frustrated by the confusing way that colleges and universities explain their prices, advertising a figure few if any families actually pay and making it hard to tell how much financial aid is in the form of scholarships and how much requires taking out loans.

Fewer than 1 in 5 families understand that the “sticker price” colleges put on their websites is almost certainly more than they will ultimately face, and 6 in 10 say it’s made them walk away without even bothering to apply, a survey by the college loan company Sallie Mae found.

That’s the main thing Colby-Sawyer is trying to address, said its president, Susan D. Stuebner.

“The question was, how many families are we missing? How many families are we not having conversations with because they get scared off?” Stuebner said.

After discounts and financial aid — what higher education insiders call the discount rate — most Colby-Sawyer students were already paying the new lower price. So the college decided to be honest about it, Stuebner said. “It was just time to get off this high-price, high-discount roller coaster.”

The next inflation-driven worry: Rising college tuition

Nationwide, last year’s discount rate was a record 55 percent for incoming students, according to NACUBO. At 154 colleges and universities across the country, including Colby-Sawyer, not a single student pays the list price, a Hechinger Report analysis of federal data found.

“A lot of it has to do with psychology,” Stuebner said. “The fact that my kid got a $30,000 scholarship to go to this school — they must really like my kid.”

That’s one reason colleges have seldom previously risked lowering their prices. Among the few that have, some experienced the paradoxical result of getting fewer applications, at least after an initial bump.

Tuition resets of the past “have proven to have a short-term gain, which lasts typically two-ish admission cycles, and those institutions then struggled,” Hundrieser said. “I’m sure there are some places where it’s worked, but I don’t know of a school where they didn’t come back a few years later and raise the price again.”

It’s akin to when retailer J.C. Penney in 2012 lowered its prices instead of having periodic sales, a move it ended up reversing after hundreds of millions of dollars in losses.

Another worry is that families will be suspicious of a college that’s significantly cheaper than its competition. “There’s this perverse belief that high price equals higher quality, and it really does surprise me how strong that psychology is,” Stuebner said.

Colby-Sawyer itself is trying to preempt another hazard: speculation that it’s lowering its price because it’s in financial peril. “Is the college in trouble?” reads the most surprising of the frequently asked questions about the price cut announcement on its website.

The answer, Stuebner said, is no. Since running a deficit in 2017, the college has had balanced budgets, the most recent publicly available financial documents confirm, and its endowment has increased to $62.4 million. Demolition is underway on an old science building that will become the site of a $15 million building to house new graduate programs in high-demand health fields.

Still, undergraduate enrollment at the school has fallen steadily, from 1,414 in 2012, Department of Education figures show, to what a college spokesman says is 777 this fall. And Colby-Sawyer is the kind of small regional institution most at risk from a decline in the supply of students that’s worst in the Northeast and the Midwest.

Reaction among current students to the vastly lower tuition was mixed.

“People will think it’s not as prestigious. But it will also be more accessible to people,” said Megan Stackhouse, a sophomore.

Thaddeus Marks, also a sophomore, agreed that the higher price he saw when he first considered Colby-Sawyer was a signal of prestige. “I thought I must be paying for something good,” he said.

None of the students said they could understand the strategy behind colleges listing one price while charging most students a much lower one. When he was considering Colby-Sawyer, said junior Jeremy Reardon, the hockey coach “assured me, ‘You’re never going to pay close to that.’” Reardon shook his head. “It’s crazy.”

Other colleges and universities are also starting to make tuition more affordable, and their prices more transparent.

Colgate University in Hamilton, N.Y., is expanding its financial aid to give all students from families with annual incomes of up to $175,000 institutional grants so they don’t have to take out loans.

Metropolitan State University in Denver, where enrollment is down from more than 19,000 in 2017 to less than 16,000 this fall, has announced that it will hold tuition flat for students once they enroll.

“We were already pretty darned affordable. But people don’t know it,” President Janine Davidson said. “So making a big splashy announcement is about getting the word out there, to get people’s attention.”

Hope College in Michigan, too, is holding tuition steady for students once they are admitted.

“It’s not just a question of do [prospective applicants] understand it or not,” President Matthew Scogin said. “A lot of them just can’t afford it.”

That’s been the conclusion not only of American families, but of high-level policy commissions for more than 30 years.

The cost of college “is a problem that frightens many citizens,” a report by the State Higher Education Executive Officers warned in 1988. The federal Commission on the Future of Higher Education found in 2006 that Americans were already forgoing college because of the cost.

Both warnings, with their implicit calls for reform, “were a few decades off,” Doyle noted, wryly. “But we seem to have finally gotten to that point.”

This story about college cost was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Additional data analysis by Fazil Khan. Use its Tuition Tracker and OfferLetterDECODER to understand what you’ll pay for college. Sign up for our higher education newsletter.

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