Why the Tuition Cut?

UofCharleston

As most colleges across the country are increasing tuition, a few are bucking the trend. They’re not just resisting tuition hikes, they’re actually cutting it. How can they afford this strategy? How many more colleges can afford to do this?

The latest tuition cutter is the University of Charleston, a small (1300 students) private college in Charleston, West Virginia. According to an article by Amy Julia Harris in the Charleston Gazette:

Beginning in the fall 2012 semester, no undergraduate student at the University of Charleston will pay more than $19,500 in annual tuition and fees. That’s a 22 percent drop — or decrease of $5,500 — from this year’s cost of $25,000.

“We’re going to do this because for too long, college was out of reach for middle-class families,” UC President Edwin Welch said Wednesday. “We are taking bold steps to ensure that we continue to meet the needs of students.”

Or, perhaps more importantly, ensure that people will continue to apply to the college. The article also reports that this year there are 75 few students enrolled than the school expected.

It may have been the sticker price that pushed them away. There are, in fact, no students at the University of Charleston who actually pay $25,000 to attend the school. All students receive some form of financial aid.

This tuition cut is, no doubt, rather good for students, but what it really should indicate to all of us is that it seems a lot of colleges are just charging too much money. The school charged $25,000 and then found that students didn’t want to attend anymore. So now it will charge $19,500. Meanwhile, 6 hours away, the University of Richmond costs $43,170 a year. What does that extra $18,000 buy?

The fact that the University of Charleston can just remove more than $5,000 from every student’s annual fee with no apparent adverse impacts ought to be taken as pretty strong evidence that the price of tuition doesn’t really have much to do with the cost of running a university.

Former George Washington University President Stephen Joel Trachtenberg wrote in the Atlantic back in September that “tuitions rise because costs rise. As the payroll grows, tuition goes up. As the expense of goods and services used by the institution inflate, or become more extended and expanded, tuition goes up.”

This is true but it’s misleading. Obviously over time the cost of running a university increases but that doesn’t mean tuition rises only to address those increased costs. It doesn’t work like that. In fact the rising cost of running a university seems merely to allow colleges to hike tuition. The real price of tuition, as it exists officially, isn’t determined by the cost of running a college but, rather, is based mostly on what the market will allow.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer