Shopping around for a college education can feel a lot like shopping for a new car — in that very few people wind up paying the sticker price. Many colleges set tuition prices with the assumption that, on average, students will pay 33% less, thanks to financial aid and scholarships. But one university has decided its pricing strategies shouldn’t be comparable to those of car dealerships or discount department stores.
Starting with the next incoming class of freshman, tuition for students at the University of Charleston in West Virginia will cost $19,500 per year. That’s a 22% drop from the current rate of $25,000.
CNNMoney interviewed the university’s president, Edwin Welch, who said the changes came on the heels of the school’s first enrollment decline in a decade. The university is not only decreasing tuition but financial aid as well, with the idea that the drop in aid will be balanced out by cheaper up-front prices. And the university hopes that the cheaper up-front price helps attract more students.
While lowering tuition is highly unusual for a college, it’s not unprecedented. Last year, Sewanee: The University of the South announced a 10% decrease in tuition and fees because the school “recognizes today’s new economic realities and the pressures that families face,” according to one official. The University of Charleston’s move is also not the strangest price-cutting strategy cooked up to attract students. That title belongs to Chicago‘s National Louis University, which offered tuition for one class for less than half price via Groupon.
But in an era when 5% and 10% annual tuition hikes are commonplace, the University of Charleston’s decision to cut prices goes against the grain. Ditto the startling, refreshingly honest way that the university’s president spoke to CNNMoney about how most colleges come up with tuition prices:
As universities we tend to market education the same way Joseph A. Bank advertises clothes, thinking the advertised price is not that important but the discounts are the most important part.
By deciding to stop playing the discounting game, the University of Charleston and Welch bear quite a resemblance to JCPenney and its new CEO, Ron Johnson. The retailer, long known for inflating original prices mainly so that the inevitable discounts seem more impressive, launched a new and simpler pricing strategy in February that included across-the-board cuts of 40% or more off the old original prices. JCPenney’s new approach has been dubbed Fair and Square, and that’d surely also be the way that the University of Charleston would like its new tuition prices to be described.
While the tuition price break signals the end of one marketing strategy, it doesn’t mean that the university is dropping all the age-old sales games. For one thing, the way tuition was set is similar to how retailers price an item at $19.99 rather than a flat $20:
We had thought about cutting tuition by 20% at first, but the board said the total price should be under $20,000, so we cut it a little further and agreed on a ceiling price of $19,500.
JCPenney, by contrast, has instituted an all-new big round-number pricing system, meaning that a sweater or pair of boots would be priced at $40, never $39.99.
In related news, there’s a University of California at Riverside student circulating an interesting “Fix UC” proposal to ease the burden of tuition on students and grads. The idea is that students would pay no money up front to attend college, and later pay 5% of their income for the first 20 years after graduation.
It’s not clear how such a program would work for the university, the state and students in the long run. But it sure would give current students a major break — at least until they graduate.