Should Prices Decrease to Increase Enrollment?

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Q. Our institution doesn’t differentiate between online and on-campus pricing. Should we be lowering prices across-the-board to get students to continue to enroll?

To date, conventional thinking from colleges has been: same quality, same price. Indeed, common pricing was a good way to reinforce the idea that online learning was simply a novel delivery mode, not somehow lesser. The joint Eduventures/Quality Matters survey of chief online officers has consistently shown this thinking in play. 

But comparable pricing assumed delivery mode choice. Amid COVID-19, suddenly schools and consumers see online as the only option. Many students that did not sign up for online study see a massive disconnect between the “college” they desire and the remote instruction on offer. Tuition prices, often hard to swallow at the best of times, may look outrageous when charged for online learning. Schools are stressing the same credit, same price, or point to the increased expense of remote instruction (more technology, more training), and the cost of paying all the faculty and staff, not to mention servicing building costs. 

In a climate of reduced funding--looming state budget cuts, weak endowment performance, and less philanthropy--schools should think carefully before cutting tuition. Arguably, schools don’t want to reinforce the idea that online is “less-than” and therefore should be priced lower. Better to find more compelling ways to justify comparable tuition. 

The tension is most acute for traditional-aged undergraduates and other programs where in-person study is central to the value proposition. Schools need to think beyond conventional ideas of online learning quality--built with adult learners in mind--and imagine how things that 18-19-year-olds care about (social interaction, extracurriculars) might be done online. This age group socializes online, so why can’t they do college online, too? 

For adult learners and graduate students, planning is likely frozen right now. There are too many unknowns about how long the pandemic will last, how bad the economy will be, and the size and shape of federal stimulus. Once these factors become clearer, adults will start to make school-related decisions. Again, our advice is to hold the line on price and instead focus on why the value is worth the outlay. Less expensive programs will be an easier sell, no question. 

The price question also raises the cost one. Many schools do not track internal costs clearly, and therefore are not sure whether online learning costs them any more or less than the campus norm. It is possible to design online learning with high fixed and low variable cost (e.g. Georgia Tech’s online computer science master’s program). Such a model permits greater price flexibility without bumping up against immovable expenses. The more a school can take advantage of cost efficiencies online, the more room for maneuver it will have.

Eduventures Chief Research Officer at ACT | NRCCUA

Tuesday June 25, 2019 at 2PM ET/1PM CT

Most colleges and universities are defined by a physical campus in a fixed location, while online learning knows no geographical bounds. Now that fully online enrollments account for about 15% of all undergraduates, and more than 30% of graduate students, the relationship between school location and student location is changing.

A few schools have used online to become national players with large numbers of students in every state, while most institutions have a predominantly local online student body. But does the future favor national or local online markets? Which strategy—local, national, or both—is in the best interests of different types of schools and different types of students, and should policymakers and taxpayers care? The answers will either reinforce institutional locations and identities as we know them, or advance a completely different relationship between institution, student, and place.

In this webinar, we will review new Eduventures analysis of online higher education market dynamics, and the emerging terms of engagement in the battle for value.

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