The interest fees represent a canard in the grand scheme of things. SBC was clinging to a model that is no longer viable in 2015. It is a fax machine that sells for 800 dollars and cost 1,000 to produce.
Kudos to its leaders to stop throwing good money after bad. They will be able to take care of their own and die as they lived. The bubble of self-interest just popped and the reality became inescapable. Many seemed to have been blinded by the size of the cookie jar and did not realize most of the sweets were not for human consumption.
I skimmed CMC’s report. I noticed that the amount of tuition discounting decreased and the growth in net tuition per student increased … at the same time that the no-loan policy was discontinued. In other words, need was still met, but through loans rather than grants. I wonder what effect there may be on applications in the future as a result of the move to including loans again.
Unfortunately, xiggi, the once dear fax is a good comparison. Yes, there’s still a need, somewhere. Yes, someone, somewhere, may now like that it comes in colors. And is discounted so heavily it’s nearly a giveaway. But if you can’t create a viable, wider (and ongoing) market willing to buy, you can’t sell the goods. I find it interesting that, other than the Saving SB group and the faculty action, both probably limp, we aren’t hearing a hue and cry from the masses of alums. Not even from my friends who went there.
He says the donor base was dwindling. But in my set of unanswered questions, is: what about C&F, Corprorations and Foundations? Did they pull the rug out? And if they did, is that some lack of endorsement of the smaller, struggling, limited LACs?
Kelsmom, the announcement was followed by … an increase of 20 percent in net applications. With an admit rate of below 10 percent, further increases might not make sense at a LAC. Twenty times more applications than open spots is unheard in this group of schools.
xiggi, I did notice that. I just think it will be very interesting to see what happens over the next 5 or so years. I know I will be watching, because I find this very interesting, as it goes against what I am seeing (and hearing from colleagues). I work in higher ed, and there is so much pressure from students to discount tuition. It’s really odd … students will say to me, “School X gave me a scholarship of Y amount; what will you give me?” But then I show them that School X has tuition of Z more than ours, and that we have provided a grant based on need that, when coupled with the difference in tuition, brings our school’s cost to the same or less than School X. It kind of baffles me.
Perhaps SBC might attract the Koch riches to nurture the next generation of wealthy horse loving conservatives. A bit of the antidote to Antioch. It would fit the region.
@kelsmom: So a high-sticker-price school might be positioning itself to be able to claim they’ve given an amazingly high scholarship, when in fact they’re simply bringing the cost down to levels comparable with the competition that isn’t giving as large of a scholarship? Interestingly cynical strategy, that.
That strategy allows the school to college more revenue from students with low-end-of-the-admit-range academic qualifications and wealthy-and-willing-to-pay parents. Note that this applies to both merit scholarships and need-based financial aid. Discounting with merit scholarships is an attempt to lure high-end-of-the-admit-range students who would otherwise have a lower yield. Discounting with need-based financial aid is an attempt to lure those from non-wealthy families who may otherwise choose a lower net price school that is within their budget or not go to college at all.
Not every high sticker school relies on NON-need based aid to lure wealthy applicants, especially when athletic scholarships are not available. For instance, freshman merit aid in the last class of CMC amounted to less than 150,000 with 15 students out of 327 enrolled.
@xiggi, I think everyone involved in the discussion understands that.
In case it’s escaped you, the schools under discussion aren’t in or close to the Ivy-equivalent category.
@kelsmom, @dfbdfb, @ucbalumnus : yep, and that’s partially why, despite so many people saying they deplore it, the high list-price/high-aid model still persists. It’s in part to capture the consumer surplus on the high end and in part it’s because many consumers are stupid/irrational. Stores that advertise “50% off!” (after a high markup) have known this for years.
@PurpleTitan: I actually like the high-list/high-aid model—having a low list price creates the problem of lower-wealth families effectively subsidizing higher-wealth families rather than the other way around, so I’m good with it. I simply hadn’t really thought about the relationship between those schools and their perceptual relationship to moderate- or low-list/moderate-aid schools.
I thought that the whole yield management strategy around merit aid was old news. It is financially advantageous for a school to give $5K “merit” discounts to 4 kids who otherwise would be full pay as opposed to giving $50K to one kid who really has a low EFC. It is flattering to the kids who are awarded merit, and attractive to their full-pay parents, and they are more likely to attend, thus improving yield. Which improves their USN&WR rating. Of course, the school can also give the $20K to one higher-stats needier kid who really needs $35K, intentionally gapping him or her. If the kid attends, the unfortunate family will have to take out big loans for the first year or two, and the kid will likely have to drop out after that. But the school gets “credit” for the higher stats.
Give me a break, Barrons. The comment was directed at the proximity of Liberty, a school that is especially in the news today. If you do not think it fits the conservative mantra, so be it. But if you do not get that the Koch comment was tongue-in-cheek, I can’t help you.
It did not escape me, but the comparisons between LACs is extremely relevant. The financial crisis of 2008 did not leave a “rich” school such as Claremont McKenna immune. in fact, the BOT is still working hard to avoid a similar debacle and is continuing to improve the facilities and the perception of the school.
The comparisons are also important in terms of market positioning. A decade ago, the school attracted 3,000 applicants with an admission rate above 30 percent. The demographics do not account for such changes anymore than they have an impact on HYPS.
All in all, and despite the occasional criticism of such viewpoint, it is all about perceived ROI.
It would be helpful to know when SBC started drawing excessively from their endowment on an annual basis, or when it because apparent that if things didn’t change radically they would have to start doing so in the near future.
It seems that they did start making some changes not too long ago, such as adding engineering of some sort, but that didn’t result in more applicants. It would seem pretty obvious to me that they should have made vigorous plans to enlarge the student body back in the 70s and early 80s when other schools were doing it and thus bring in more tuition, make better use of their facilities, and presumably shrink their fixed costs per student.
If they wanted to remain single-sex, perhaps an alternative would have been to add some 2-yr degree programs of a more vocational type that drew on their existing facilities and strengths, such as Equine Studies. Perhaps they would have had more success drawing students who wanted a credential but didn’t want to commit to 4 years in their location. Perhaps they could have made the AA program(s) coed while retaining the 4-yr liberal arts program for women only.