Education

Pella's Central College seeks to shake up tuition strategy

New approach slashes rates to be closer to what students actually pay

By last week announcing plans to slash $20,000 from its annual sticker price next fall, Pella’s Central College is aspiring to “bring a new approach to tuition in Iowa” by infusing more clarity into the increasingly competitive college admissions game.

“There is a part of this where we’re looking to take a leadership role and redefine the conversation,” Central President Mark Putnam told The Gazette.

Although Central’s advertised tuition this fall remains $38,600 annually, it will plummet to $18,600 for fall 2020 — bringing its stated cost closer to what students and families actually pay with Central’s hefty financial aid offerings.

“Central simply is making it easier to understand the affordability, benefits and value of its education,” Putnam said, stressing that the lower price tag doesn’t reflect any changes in the value or quality of a Central education.

The private liberal arts college of about 1,100 students still offers a student-to-faculty ratio of 11-to-1. It still reports 97 percent of its students land a job or a slot in graduate school after earning a Central degree.

Whether more marketing tactic than material savings, Central’s shift represents a new approach in the competitive quest for students. It’s the opposite tact many other institutions such as the University of Iowa and Iowa State University are taking — turning up tuition rates, but also helping students get aid so they don’t have to pay them.

Putnam said his team decided to make the remarkable reduction after years of research revealed a vicious cycle of distorted prices.

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“Every time you increase tuition, you give it back in the form of aid in order to be competitive. That’s dysfunctional pricing,” Putnam said. “And families are not going to be able to consider this kind of a pricing structure much longer.”

Central, which reports one of the highest tuition-and-fees rates in Iowa, will continue offering scholarships once it enacts its lower price structure — though they’ll be more modest and directly tied to need and merit, Putnam said.

And although part of the idea is to shift the perception for prospective students and potentially increase its applicant pool and enrollment, Putnam said, Central doesn’t need more students to make the reduction viable.

Of course, Putnam said, should more students and families see the lower price and perceive it as an option they might not have considered before, “We would be thrilled with that.”

“But we didn’t develop a model that was dependent on that approach.”

Under Central’s previous model, 100 percent of its students received financial aid, bringing its average price to attend down to $22,558, according to the U.S. Department of Education.

With its new $18,600 base tuition rate, plus room and board costs adding $10,280, the total annual price next fall will be $28,880 — without any aid. Because many Central students already attend with the help of scholarships, officials are promising no students will pay more next year than they do this year.

In touting its new costs, Central reports the actual price to attend — when factoring in financial aid — is equal to the total cost to attend Iowa’s public universities, which this year ranges from $19,388 at the UI to $18,469 at ISU and $18,098 at the University of Northern Iowa, according to the Board of Regents’ fall rates.

Different approaches for different colleges

Until this point, Central — like other schools in the state — had consistently increased tuition annually, bumping up last year’s $37,295 price tag 3.5 percent this fall. Since the 2012-13 school year, Central’s rates have soared 30.7 percent.

Outside of Central, plenty of others have not soured on the appeal of increases.

Although UNI froze tuition for every student at every level this fall, its public school colleagues at the UI and ISU have promised tuition hikes for at least five years.

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Jonathan Brand, president of Cornell College in Mount Vernon — which reports a sticker price of $44,096 this fall but offers aid to nearly all its students — said every institution must determine the most appropriate method for meeting the evolving needs of its students.

Cornell has a board of trustees committee evaluating the future of tuition and pricing in the United States.

“We may change our pricing structure based on what we learn,” Brand said. But, he added, so far Cornell has found the most important factor for prospective families is net price — and his institution strives to be “very transparent about our costs from the beginning of the recruitment cycle.”

“All schools have net price calculators on their websites,” he said. “But in-person conversations fit our personalized approach and are the most helpful way to work with families.”

Similarly at Cedar Rapids’ Coe College, President David McInally said he doesn’t anticipate a change at this time, “since we are fully enrolled and our average cost for students is already lower than Central’s.”

Coe’s sticker price this fall is second highest in the state among privates at $45,580 — behind only Grinnell College. But its average cost to attend is $20,767, according to the federal government.

If Central’s shift ends up actually saving students money, McInally said, he commends the college for addressing the issue of the rising cost of a higher education.

If it doesn’t, he said, “this tactic may still be helpful to Central in terms of public relations, since their published price will correspond more closely to the actual cost.”

‘Conventional wisdom is The enemy of change’

Putnam said he believes all institutions are going to have to respond to what he calls the “six pack of change” converging on higher education.

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In broad terms, the landscape is facing changes in economics, demographics, society, technology, public policy and the work force.

“Finding mission and purpose in relationship to the six pack of change is something every institution is going to have to reckon with,” he said.

Any argument that reducing prices won’t cut it in today’s landscape — because it didn’t work before — undersells the ever-novel aspect of every new crop of customers in the form of prospective students.

“Conventional wisdom is the enemy of change here,” Putnam said.

Still, he said, Central’s price cut is not a promise to never raise rates again. But any increases will be tied to the rising cost of providing a high-quality education.

“We are going to try to be careful about it because we don’t want to get on that wheel again.”

Comments: (319) 339-3158; vanessa.miller@thegazette.com

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