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Behind Concordia's bold tuition cut: 'Maybe we can actually do something'

lamott and vogel
MinnPost photo by Gregg Aamot
Concordia administrators Eric LaMott and Kristin Vogel advocated for what college officials are calling a “tuition reset.”

While covering important events in our civic and cultural life, journalists typically focus on facts, controversies, issues and their impact. They rarely look through the lens of understanding leaders and leadership: who is leading the causes and creating change, how those leaders were motivated to tackle tough problems and create opportunities for their communities, and how they worked through the challenges that arose.

In this series, "Driving Change: A Lens on Leadership," MinnPost is profiling such leaders in order to provide new insights — and, we hope in some cases, inspiration — for our readers. Each profile is paired with comments from a leadership expert. (See ‘Driving Change’ panel: ‘Lots of applause’ for the duo behind tuition cut.) The project is made possible by a grant from the Bush Foundation.

On Sept. 12, 2012, Concordia University, a small Lutheran college located in St. Paul’s historic Union Park neighborhood, made a stunning announcement in academic finance circles: It was cutting tuition by 33 percent.

For private schools, especially, this was both a revelation and a provocation; few, if any, have mustered the will to lower their costs significantly over the past few decades, an era of steady tuition hikes. At the time of the announcement, Concordia’s yearly tuition was $29,700, an amount high enough – even with the myriad layers of available public and private financial aid – to scare off many students (not to mention their parents). Tuition at some Minnesota private colleges exceeded $40,000 last fall.

Seven months later, school officials are ready to carry through on their promise. Tuition for this fall’s incoming freshmen has been set at $19,700. Moreover, upperclassmen will see their tuition dropped to the same level while the cost of room and board will be frozen at this year’s rate.

The dramatic move comes with a caveat: Financial aid will also be reduced, meaning that savings for many students and their families will most likely be modest rather than dramatic. Even so, the change has garnered the attention of college presidents and deans across the country.

“It was a long process,” said Kristin Vogel, Concordia’s director of undergraduate admission and one of the leaders behind what college officials are calling a “tuition reset.”  “I think that, instinctively, Concordia knew that the cost was becoming out of reach for our students and we wanted to address that in some way.”

Ultimately, the college’s board of directors and its president, Tom Ries, agreed that the change was needed if the school wanted to attract students who were flinching in the face of high tuition and fulfill its mission of serving people regardless of economic standing.

Added Vogel: “We looked at lots of things — more scholarships or partnerships with other schools. Some things like that. But, really, reducing tuition was the way to get the message out that Concordia is an affordable place to go.”

Applications are up sharply

Apparently, that message got out. According to school officials, applications for admission have increased 30 percent for this coming fall over the previous year.

This school year, according to the Minnesota Private College Council, a consortium of 17 schools, Carleton College had the highest private-school tuition in Minnesota at $44,445, followed by Macalester at $43,693. Bethany Lutheran, a Mankato school, had the lowest tuition in the group at $23,140.

Tuition has been on an upward climb at public and private colleges for years. According to the National Center for Education Statistics, the cost of undergraduate tuition, room and board rose 42 percent at public universities during the 2000s; at private schools, the cost rose 31 percent. As tuition has risen, so have financial-aid packages, including government loans that can saddle students with debt for years after they have earned their degrees.

According to the Minnesota Private College Council, nine out of 10 students who attend any of the private schools in the organization receive some form of financial aid. Indeed, the sticker price is rarely the real price; scholarships, Pell Grants, government loans and other financial aid offset the price, often significantly, for most students.

But Concordia officials argue that there is something confusing, if not a bit dishonest, about that so-called “high tuition/high discount” model. In one sign of discontent, the school was beginning to see fewer applications from high-school students and more from students at community colleges; in other words, many students were simply giving up on the idea of attending four years at a private college.

Thus began a rethinking and re-evaluation of what makes an education worthwhile and effective.

Changing perceptions about value

“It used to be the perception that you would only have value if you have a high price tag,” said Eric LaMott, who serves as Concordia’s vice president of administration and also teaches kinesiology courses. “That is changing.” 

According to the school, students could save anywhere from perhaps $400 at the low end to as much as $10,000 at the high end, depending on the level of financial aid they have been receiving. “At the end of the day, the key here is that it is just not sustainable to have high tuition and high tuition discounts,” LaMott said.

Lynne O’Shaughnessey, a journalist and higher-education expert who runs a blog called The College Solution, said schools haven’t had to put the brakes on tuition because they have a captive market: eager students. But online education and other factors are creating pressures that could force colleges to lower their cost, she said. (Full disclosure: this reporter has taught online and traditional courses at several public colleges).

Asked about Concordia’s move to lower tuition, she said:  “I think they are trailblazers.”

'Parents are looking for value'

concordia campus
MinnPost photo by Gregg Aamot
Concordia is among just a handful of private schools
that have reduced or frozen tuition.

“There is clearly a buzz that they have created because parents are looking for value and looking at that price tag,” O’Shaughnessey said. “I think more schools are going to be emulating this. Just look at the calls the folks at Concordia are getting from other colleges asking how they have done this.”

Concordia is among just a handful of private schools that have reduced or frozen tuition. According to the National Association of Independent Colleges and Universities, Belmont Abbey College in Belmont, N.C., also plans to reduce its tuition by one-third this fall. At least a dozen schools have called Concordia to ask about its tuition cut, and LaMott and Vogel have been invited to speak about tuition policy at two conferences this summer.

“We do think that this could be a trend-setter,” LaMott said.

Admissions officers know that the cost of tuition can be a non-starter, even for students who may qualify for hefty grants and scholarships because of need or academic performance. Vogel recalled how employees in the school’s admissions office have long discussed the prohibitive cost of tuition.

“We always talked about this,” she recalled.

Recounting discussions and tours with high school students who were visiting the campus, she said: “We would talk with students and their families, have them come in, and you would see their eyes get big and the big gulp at the mention of the cost. We knew the barrier that that sticker price was.”

'Why does it cost so much?'

It was a topic of discussion at fundraisers and other college functions, too. “We would kind of pay attention or be attuned to conversations at social events, and we would often hear, ‘Why does it cost so much?’ And, you know, we had to ask ourselves, ‘Well, why does it?’” Vogel said.

In 2006 and again in 2011, Concordia conducted a “pricing analysis” to gauge the amount of money families were willing to pay for a private school education. (The Minnesota Private College Council conducted its own similar study in 2006). Concordia officials found that the high cost of tuition was prohibitive even for families that knew they wouldn’t pay the full price – who knew that scholarships, Pell Grants and other funding would vastly reduce the expense. For many students and parents, the tuition price tag was simply proving to be an emotional turnoff.

The results weren’t so surprising to Vogel and LaMott, who have both spent several years in higher education. They consider their work to be a calling as much as a vocation, so the high tuition – and its seemingly steady, inevitable, yearly climb – has grated on both of them.

LaMott grew up in Boise, Idaho, attended Boise State University and joined Concordia 19 years ago after earning a doctorate at the University of Minnesota. He also serves as chair of the Kinesiology and Health Sciences Department. Vogel, who grew up in tiny Hamburg in the western exurbs, went to work at Concordia a decade ago, earned a master’s degree in Family Life Education there and became its undergraduate admissions director in 2007. She, like LaMott, has also taught courses at Concordia. (Both said, with a laugh, that an apt job disclaimer for many Concordia employees could be ODA — “Other Duties Assigned.”)

Recognition of a barrier

In 2009, the two were returning to campus from a workshop at the University of St. Thomas, where tuition and other issues had been discussed. They were visiting in their minivan when the discussion of tuition came up. The presentation at St. Thomas had underlined what they had been finding – anecdotally and in their pricing study – about the negative perception that was created by high tuition and its smoke-and-mirrors pricing method.

“On the way back, we said to each other, ‘You know, there is research that supports this, supports what we have been discovering. This is really a barrier and maybe we can actually do something about it,’” Vogel recalled.

The two went to work, crunching numbers and developing proposals for how tuition could be reduced. Meanwhile, the school hired two consultants, The Lawlor Group and Noel Levitz, to garner outside ideas for the change. After three years of planning, the board of directors and president Ries signed off on the plan.

To reach the tuition cut, the school relied on trims in administrative expenses, growing revenue streams and projected increases in enrollment.

Most significantly, Concordia reorganized its administration over the course of several years, largely by not filling posts that were left vacant by retirements.  The school has also seen growth in its graduate programs (and accompanying tuition and fees) in recent years and believes the tuition cut will allow it to slightly increase its undergraduate class sizes and retain more upperclassmen, which will also generate revenue.

The school also has an endowment “in the mid-20” millions of dollars, LaMott said, that it uses for student scholarships. Officials believe the positive feedback the school has been receiving about the tuition cut will increase donations to the fund.

martin luther statue
MinnPost photo by Gregg Aamot
A statue of Martin Luther on the Concordia University
campus.

Following its mission

Concordia University, which is affiliated with the Lutheran Church-Missouri Synod, is one of several private colleges in Minnesota with religious roots, many of Lutheran and Catholic varieties. (Some, like Carleton and Macalester, long ago cut ties with the religious denominations that were present at their founding.) About 3,000 students are enrolled in its undergraduate and graduate programs.

Concordia’s student body includes a lot of evangelical Christians, many of them from middle-class families or those just on the edge of it. College officials felt that they were missing out on people looking for a Christian education and, in general, not serving students of all stripes who might be interested in Concordia.

Vogel, who attended two colleges with Christian evangelical roots – Bethel University, where she received her undergraduate degree, and Concordia – said faith was certainly one part of the conversation that led to the cut in tuition.

“Faith really informs a lot of the decisions that we make, so it is definitely a part of that. We were really motivated to make this decision for students, and that is an example of the Lutheran ethos here. Making school accessible is right in line with the values of being an institution of the church,” she said.

Along those lines, LaMott noted that “servant leadership” – a management philosophy with Christian overtones – is a guiding principle at the school but seemed to be taking a back seat as tuition increased ever upward. “Servant leadership is a key thing of this institution. As a business, we were pricing out our students – pricing out Christians and others and ultimately saying they don’t have that choice.”

On its website, Concordia explains its tuition reset as a “relevant and real solution” to the crisis of high tuition. 

‘Every bit helps’

Concordia University was quiet on an unusually cold Friday in April. A statue of Martin Luther, tarnished and green, stood high on a stone foundation near the admissions building. The traffic of Interstate 94 rushed nearby.

In The Pearson Common, students filled the tables, laptops open, food and half-empty cups of coffee on the side. One of them was Katie Pronsati, a fifth-year senior from Freeport, Ill., who was graduating in a few weeks with a degree in Christian education. Her husband, Andrew, was about to graduate, too, with hopes of becoming a pastor.

Their combined school debt? About $100,000, Pronsati said.

“I’m excited for the students who will benefit from this,” she said, adding with a laugh, “I wish I would have!”

Pronsati, who has worked with youth groups, added: “I talk to a lot of young kids about college, and the only thing that stopped me from telling students to come here was the tuition. Now that has been lessened.”

Pronsati said she has heard some rumblings among students that the tuition change is more marketing ploy than serious cost reducer, a judgment she doesn’t accept. “I know Concordia cares for its students, and you have to start somewhere in getting a handle” on the cost of higher education, she said. “Believe me, every little bit helps.” 

Vogel and LaMott, in a follow-up interview with MinnPost on campus, said the tuition cut took some pushing and prodding but that school officials were really looking for a significant change in direction. The board of directors, in fact, initially threw its support behind an even larger cut in tuition than the amount that was eventually settled upon.

“One of the board members said to us, ‘There is more risk in not doing this than in doing this,’” Vogel said. “We think that’s true.”

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Comments (7)

A question posed in the column is left unanswered...

“We would kind of pay attention or be attuned to conversations at social events, and we would often hear, ‘Why does it cost so much?’ And, you know, we had to ask ourselves, ‘Well, why does it?’”

Then, the article moves on to an analysis of the price perceptions of the buyer (students, parents), as though that were somehow an answer, which it is not.

It is easy to see two causes for the increases in cost in the last few decades:

- building projects, and

- salaries of staff (and in the case of the U of MN, huge increases in administrative staff count).

But do these factors fully explain the massive increases ? I'd like to hear representatives of these institutions give their reasons.

a question posed...

total agreement with titerud. saw that question in the article and thought "aha, somebody
has done some serious investigation," only to find no answer.

On the right track

It's good to see some folks stand against the spin up of capital assets in education. With entities like Phoenix "University" we can see the anti benefits of capitalization. Now the next step is to return to a sacred creed from our past: that an educated, healthy nation is a strong nation. So, from cradle to grave, education and healthcare. With a fed brain and a healthy body, the nation could be great again. The current model supports a return to the classism the American revolution was supposed to end forever.

Maybe the “high tuition/high discount” model...

...sought benefits for the institution that have now been overwhelmed by its excesses.

This model reminds me of the health care industry's "high retail price, high discount" model - wherein procedures that are settled through employer contracts or Medicare or Medicaid at $800 are invoiced at $2,500 - or more. The retail price is a pure fiction, as no one pays it - EXCEPT of course for those few least able to pay it - the retail uninsured patient. THEY get the highest price in the world.

The high retail/high discount is in part used as a sales tool - to tell the employer what a special customer they are, to tell the insured what a fantastic deal all those premiums are getting. But that doesn't seem to explain it. There must be other hidden benefits that no one's talking about.

We can all see what has happened to overall health care costs under this model. I've wondered whether this pricing model is a cause or a symptom of vastly increased health care costs..

Likewise, I wonder the same with the "high tuition/high discount" model in education. Together with the liberal loan qualification for college students, this has created an irresistible flow of money to those new private "universities" which has made them highly profitable. But in the process of all this development, we've delivered a MAJOR SCREWING to a whole generation, as the debt they are saddled with exceeds consumer credit card debt, and bought them an education which doesn't appear worth the price for most students.

High tuition, high aid

Around 1996, the Private College Council endorse the high tuition, high aid (discount) model -- as a way to fund public colleges. The idea of generating revenue in order to recycle it in the form of student aid didn't seem to make any sense to many people. The PCC leaders said that this model (for public schools) would help "create competition" in higher ed by eliminating the "unfair advantage" the U of M and state schools had by having some of their operating costs funded by the state.

And yes, a huge part of this proposal was drastically reducing base funding for public colleges and giving out state-funded vouchers called "lifetime learning grants" to each high school graduate. The PCC leaders touted this as a way to give students the greatest "Choice."

Naturally, this proposal was not well received by students or most educators. However, over time this model has come to fruition incrementally due to stagnant or reduced funding for higher ed under governors Ventura and Pawlenty.

Except for the "lifetime learning grants" (vouchers) funded by the state. The funds that universities of any kind began competing for are the virtually unlimited supply of student loans. Revenues from Pell Grants pale in comparison.

The high tuition/high aid model has been broken for some time

From the University of Minnesota Department of "The Emperor Has No Clothes"
link: http://ptable.blogspot.com/2010/10/p-margin-bottom-0.html

"Executive summary: The deans are not happy with finances at the University of Minnesota and realize that there has to be a connection in the mind of the public between paying higher tuition and an increase in quality, not DECREASE in quality, which is actually what has been happening. "

"Dean Davis-Blake observed, but for the University to raise $1 million and take $1 million out of its own pocket forever to match the funds raised is unusual. She concurred with Dean Parente: The growth in financial aid is not sustainable.

[Dean Davis-Blake has left the U for Michigan. Dean Parente has left the U administration side to return to teaching]]

"Dean Finnegan said he agreed with the foregoing comments. He said that one line in the consultants' report spoke to the decision-making process, there is "visibility but not transparency." The process is not transparent. Visibility is when one is drowning in numbers, something the system produces a vast quantity of; transparency is understanding the decision-making system and how its "outputs" align with larger University goals."

"Dean Davis-Blake said there have been many attempts by individuals and the colleges to put numbers on the effects, and the aggregate numbers are clear. What is more difficult is the will to take action: Central costs must go down or in four years her college will be spending more on central costs than it does on its faculty. "

"The institution needs to move to a strategic-planning model [sic], Dean Finnegan said. It is Vice President Pfutzenreuter's job to have a balanced budget overall at the end of each year, not to set the University’s goals for financial investment."

"Professor Martin said she was not surprised by the scenario being laid out by the deans. It gets to the question of the quality of the University in the aggregate. Her question is about the quality of the student experience: Students are paying a lot more than when President Bruininks started in office, and the assumption has been that quality of the experience would increase as well. Now they are hearing that the quality is eroding. How can the University play in the global village when its costs are increasing and the student experience is declining in quality?"

"What is extremely important as the University plans for the next biennium, Dean Parente said, is that it makes clear what it is doing to enhance quality for students. That must be a main driver; the University cannot argue for tuition increases because the state is cutting funding. The tuition increases must be related to the quality of education."

Amen.

And so it goes.

Kudos to Concordia

for taking a whack at this issue. I have long wondered when this unsustainable "high tuition/high discount" model would begin to topple of its own weight. For a while, at least in the world of private colleges, what kept this going was the so-called "Chivas Regal effect". The higher the tuition, the higher the perception of value, and as long as there were a sufficient number of families able and willing to pay the sticker price, the system worked, even with generous financial aid. But as costs soared, fewer and fewer families were able or willing to pay the full load, resulting in more financial aid offset by further rises in the sticker price. Colleges were headed toward a situation in which a tiny handful of students paid an astronomical price, while everyone else got hefty financial aid. Another unfortunate byproduct was the watering down or abandonment of needs-blind admission, giving students from well-heeled families an advantage in the admissions process.

Things were headed toward a breaking point anyway, but I think what brought the issue to a head was the 2008 recession. The unappealing combination of dim job prospects and high student debt threatens to turn a whole generation against a belief in the worth of a college education.

I wish Concordia the best and hope their new plan will be beneficial to both the school and its students.