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Affordability, Part 2: APU’s Proposed Tuition Sticker Price Reduction

One year ago, I wrote a piece on “Affordability and Quality at Alaska’s only Private Baccalaureate Liberal Arts University” for this blog and described how APU strives to provide value i.e., excellent educational outcomes at an affordable price.
Today, the number one issue in higher education is still affordability as evidenced by the media, parents, and students. President Obama challenged colleges and universities to lower tuition costs and proposed a College Scorecard to help students make informed college choices.

As part of APU’s continuing efforts to make private, quality education affordable for Alaskans  we are now considering a tuition reduction in 2014 from our current rate of $29,600 (the national average tuition for private universities) to $19,950, a 33% decrease. Our rationale is as follows.

Pricing

Affordability, by definition, measures pricing and one’s ability to pay.  It is important to understand the difference between a college’s Tuition Sticker Price (its published tuition) and its Net Tuition Price (Tuition Sticker Price minus the tuition discount = net tuition price) i.e., the actual net out of pocket cost paid by the student and/or parents.

For example:

College A: Sticker price: $40,000 discounted 50% –> net price: $20,000

College B: Sticker price: $20,000 –> net price: $20,000

College A represents a High sticker price/High tuition discount model whereas college B is a Low sticker price model. Consumer behavior indicates that parents/students often put more weight on the amount of the tuition discount offered rather that the actual net out of pocket cost and thus would chose College A.

APU, in rolling back its tuition, would shift from a High sticker price/High tuition discount model to a Low sticker price model such as College B above. We believe that many prospective students/parents-when they see our Sticker price- immediately see APU as “unaffordable” and thus do not submit an APU admissions application nor pursue the possibility of an affordable financial aid package with us.  We hypothesize that more students will apply to APU with a Sticker Price at $19,950 than at $29,600.

Interestingly, as public universities have experienced deep budget cuts over the past several years, they have been forced to raise tuition significantly to the point where a private university such as APU can now compete on price, thus tilting the value equation in our favor.

It costs APU $30,000 per year to educate each student.  In proposing a tuition sticker price reduction, APU is saying that we will grant a $10,500 tuition discount up front to everyone.  APU’s tuition discount is made possible by the income we earn from our 1) investment properties 2) private fund raising and 3) auxiliary enterprises.  Under this new pricing model, additional endowed scholarships will still be available to APU students to further reduce their net tuition price e.g., for Alaska residents, the median net tuition price paid to APU is $15,000/year.  Alaska residents who are Pell eligible (low income students) with a GPA of 3.5 or higher pay as little as $3,000 net tuition per year to attend APU.  Quite a bargain!

Value

From my perspective, the value of a college degree is the most important, overarching issue. The Center on Education and the Workforce at Georgetown University projects that 63% of U.S. jobs in 2013 will need a higher education degree and that, on average, a college graduate with a Bachelor of Arts (BA) degree will earn $1 million more in lifetime earnings than those without. This, coupled with the fact that average overall student debt load has not increased over the past decade, when factored for inflation (acknowledging that there are many examples of excessive individual student loan debt upon graduation) indicates that college is still an excellent value for the investment. However, like any investment it depends on where you invest and how hard you work for the outcome received. And that involves some research on where you choose to go to college in order to find the best value for your own particular situation.

“Value” has many dimensions e.g., it can be expressed in strictly economic terms such securing employment, future earnings, job security; in qualitative terms such as the satisfaction derived from the degree, working in one’s chosen field, quality of life; or in educational outcomes such as the ability to think critically, reason analytically, solve problems creatively, and communicate clearly and cogently (outcomes measured by the Collegiate Learning Assessment test), representing skills that employers say are the most important.

APU can now offer a quality private education to Alaska residents at a comparable net tuition price as Alaskans would pay to attend a large public university outside of Alaska and APU’s student/faculty ratio is 8:1 compared to 400:1 at many large west coast public universities (700:1 for a biology class at UW). Class sizes and personalized attention from faculty are important variables in assessing the quality of instruction and the value of a college degree received.

To further assist prospective students made informed choices, APU has prepared its own College Scorecard.

APU is doing its part to provide a rigorous, quality private education at an affordable net tuition price to Alaskans. Our proposed 2014 tuition sticker price reduction will be discussed and voted on at our May Board meeting.

I invite your reactions.

Comments

  1. Debbie Simpson says:

    Though it would be too late to provide much benefit to my “cause,” please do reduce your tuition costs if at all possible. I am a working adult student, near retirement age, striving to obtain a degree plus plan for retirement. Though it’s my choice to go to school, I dread carrying debt rather than savings into my retirement years. Reducing tuition in my last semester would reduce at least some of that dread.

    ALSO – I firmly believe you will have a larger student population if you lower your tuition. When I tell people the name of my school, they say, “OH, the EXPENSIVE one.” People like the flexibility and quality of your programs, but they cringe at the price.

  2. APU Student says:

    If APU cut tuition, I would extend by graduation date by taking an extra one or two semesters. The reason that I have been choosing to graduate in a year (and cram 18 credits or more into a semester) is because of the high tuition rate and my student debt. I live in fear of this debt. A tuition cut would extend my stay, increase my quality of life, and bring other students to the APU body. I fear that the rising tuition costs would only decrease the already low student body at APU. I have spoken with people who have chosen to go to UAA over APU because of the price tags. If APU was more affordable, I strongly believe more people would choose to attend this small private university compared with a larger school with bigger classrooms. I strongly support the proposal for tuition cuts.

  3. Lara McGinnis says:

    That decision is three year too late or me. I’ve racked up $40,000 in student loans to get my degree I finish this fall!

  4. This is an ezcelent plan and I hope it goes into effect soon. So many people are unable to take up the expense/dept of many private colleges and therefore end up choosing a subpar option. This is particularly a concern in alaska where we have so few options if staying in state. I am wondering if this will effect the graduate programs as well. I will graduate in May ’14 but would love one semester at a lower cost and the knowledge that more people would get to go through the APU program.

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