In February 2011, the board of regents at Sewanee: The University of the South made a bold decision to cut the “sticker price” for a year by 10 percent. Bold, and also simple, the policy did not require many paragraphs to describe or multiple readings for a family to determine if the change applied to them. It applied to every current student and to those who would enter in the fall.
The price for 2010–11 had been $46,100. In 2011–12 it dropped to $41,500. Financial-aid awards were adjusted accordingly. But as a result of the change, every family paid less—and some considerably less—than they had the year before.
We did not know how, beyond the enthusiastic reaction of our students and their parents, this change would be received. Indeed, we worried about speculation that the university might be in trouble or that the policy might be deemed a gimmick. Instead, the coverage turned out to be widespread and entirely positive. I have often remarked that this was one of those rare occasions when a university and its president were named on the front page of The Wall Street Journal in an article in which the word “indictment” was nowhere to be found.
The following year, Sewanee adopted a policy, which remains in place, that freezes the price charged entering students for the four years they are in residence. We thus now have a “tiered” system with four different fees, in which seniors pay the least, freshmen the most, and all know what the cost to them will be for a four-year period.
The university’s board of regents has been the administration’s partner in these decisions. Something as important as tuition demands a year-to-year evaluation, and we consider what is best for our students and their families while also considering the long-term financial health of the university. In recent years, the deliberation has centered on the continuing uncertainty of the economic climate. The board has agreed that it is in the best interest of incoming families that we provide them with a degree of certainty for the next four years.
The results, not only in terms of publicity, have been gratifying. Campus visits have increased each year by almost 10 percent. Applications have also shown an increase; in the current year, they are up more than 50 percent, from 3,000 to 4,500. Selectivity and yield have both improved. Retention from freshman to sophomore year has averaged 90 percent.
There are, of course, many reasons for these encouraging trends, but our pricing structure is undoubtedly a factor. Among other things, we are able to say to a prospective family that, unlike the other institutions they are considering, we can tell them what four years will cost. Moreover, in some cases, the accumulated difference will give a student four years at Sewanee for the price of three at a competitor.
At the same time, we have experienced an annual increase in net tuition revenue. Part of this increase can be attributed to growth in the size of the entering class, for which the university had underutilized capacity. In 2010, the entering class numbered 401. By 2014, it had grown to 467. We are now confidently in the midst of a strategic plan that envisions an eventual total enrollment of 1,750 undergraduates in 2020, assuming reasonable growth.
But growth is not the only explanation. All institutions look for that “sweet spot” where a discount rate can be controlled. Since our tuition decision, we have seen Sewanee’s discount rate go down by more than 5 percentage points to what we believe to be a sustainable level of slightly under 40 percent. We have, in other words, challenged the “high tuition/high discount” theory of pricing. We do not negotiate a financial offer once made (unless a family’s financial circumstances change). And we have suffered no harm (and have perhaps even done some good) in the admissions marketplace.
These changes have worked very well for us. In discussing the Sewanee experience, I always hasten to add that what is good for one institution is not necessarily the best thing for another. At the same time, I remain a bit bemused by the fact that so very few of our peers have chosen to adjust their tuitions downward or lock in a rate for four years. As an English major in college, I well remember Alexander Pope’s admonition to “be not the first by whom the new are tried.” But the other half of that couplet also rings true: “Nor yet the last to lay the old aside.”
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