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Reducing Fees – An Outside of the Box Approach to Tuition Pricing

You have to give credit where credit is due and I must say that the University of the South, found on a majestic wooded hilltop in Sewanee Tennessee, definitely should be given some recognition when it comes to adopting tuition pricing models.

In a time when most colleges are struggling to decide how small of a tuition increase they can impose on their students, Sewanee decides to take a different approach. They contemplate how much of a tuition DECREASE they can provide families and still maintain the same excellent level of services on their campus. That magic number for Sewanee this year was 10% (or $4600).

The current rate of tuition, room and board at Sewanee is $46,000 annually. So next year, the new rate will be $41,400 when factoring in the reduction. The silver lining to this story is that Sewanee is still standing by all of their financial aid commitments to current students as well. I bring this up because I have witnessed dramatic tuition rate reductions at other schools in the past but at the same time they adjusted financial aid accordingly. So the net out-of-pocket expense for many families never really changed from one year to the next even though the sticker price went down.

The Future of Sewanee

Not many colleges take as bold of a step or “leap of faith” as Sewanee has decidedly done… and there is good reason. It is very difficult for any college to plan on a tuition decrease because this almost always insures a loss in net revenue for the school. However, the way to offset that experience is to bolster numbers (enrollment). Based upon the coverage that Sewanee has received on their landmark tuition decrease announcement, I would say that they should probably be in store for a record year in regard to the size of their incoming class. If they are lucky, they may get enough steam off of this to secure their enrollment numbers for the next two years.

I would certainly encourage other colleges and universities to keep Sewanee in their sights for the next 3-5 years. If Sewanee’s “leap of faith” in tuition pricing pays off, it may serve as a good indicator for other schools that they can do the same. Inversely, it may prove that their decision may have been a little too “outside of the box”. Time will tell.

Here is a good promo video provided by University of the South (Sewanee):

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