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Business Officer Magazine

Shift Your Enrollment Focus to Net Tuition Revenue

In this track were sessions covering new strategies for controlling textbook costs, increasing student retention, and enrollment management.

A Shift of Perspective

When discussing the tuition discount rate with senior staff and board members, "Language matters," said Bill Hall, president of Applied Policy Research, in the session "Net Pricing in Liberal Arts Colleges and Regional Universities." Instead of focusing on the tuition discount rate, Hall and other presenters described the results of a focus on net tuition revenue.

Charley Gillispie, vice president for administration and finance at Valparaiso University, Valparaiso, Indiana, and Susan Palmer, vice president for finance and administration at the College of Saint Benedict, Saint Joseph, Minnesota, shared changes their institutions have experienced using an integrated net revenue management plan.

Valparaiso's new strategic plan for 2011–15 is based on increasing net tuition revenue rather than lowering the discount rate, since the university views net tuition revenue as the key to meeting its other goals. So far, Valparaiso has been able to increase enrollment and retention without sacrificing SAT scores or tuition revenue. The College of Saint Benedict also used goals of increasing net revenue in its strategic plan moving forward, omitting any reference to the discount rate. The immediate results for FY12 were that the college maintained enrollment goals, increased net tuition four of the last five years, and provided raises for faculty and staff.

Both institutions were able to shift the thinking about tuition discounting to a long-term policy for net tuition revenue, and both have experienced success weathering the recession.

Right-Pricing in an Economic Downturn

The session "Net Revenue Perspectives in Good Times and Bad" examined results from the New American Colleges and Universities' Net Tuition Revenue Project, which has been tracking tuition pricing, discounting, and enrollment in the 19 institutions of its consortium for the past eight years.

NAC&U institutions, on average, experienced losses in net tuition revenue in 2009-10 and a recovery in 2010–11—a finding that is consistent with the trend identified in the NACUBO Tuition Discounting Study. The NAC&U research was presented by Bill Hall, president of Applied Policy Research (APR), which conducted the study. Among the study's conclusions: "It's not the net price itself, but the rate of change in net price that should govern strategic decision making."

Butler University, one of the NAC&U institutions, served as a case study. Butler's Bruce Arick, vice president for finance, and Tom Weede, vice president for enrollment management, described how the university was able to avoid losses in net tuition revenue during the recession. Since 2003, Butler has been able to produce double-digit gains on two separate occasions by increasing the price and decreasing the discount rate. Butler experienced growing demand, as documented through the rising number of applications, but was able to maintain moderately selective acceptance rates. Yield rates declined over the study period except for 2010–11, which was influenced by an NCAA basketball win.

APR's Bill Hall concluded with takeaway advice:

  • Hold onto market share.
  • There is no pricing power without excess demand.
  • The aggregate revenue generation is the bottom line.

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