Money for Nothing. College for Free.

October 31, 2017  |  Pat McGovern

Education

Free tuition is an idea that could catch on. What happens if it does? Are you ready to survive in this new world?

Buy-one-get-one pizza deals or a token gift, like a toaster, with the purchase of a major appliance are the kinds of free offers that make sense to me. But free college tuition? That’s a little harder to wrap my head around.

The idea caught fire in 2016 when then-presidential candidate Bernie Sanders introduced the notion of Free College tuition for everyone. On his website, Sanders said:

“In a highly competitive global economy, we need the best-educated workforce in the world. It is insane and counter-productive to the best interests of our country and our future, that hundreds of thousands of bright young people cannot afford to go to college, and that millions of others leave school with a mountain of debt that burdens them for decades. That shortsighted path to the future must end.”

Wow. A true game-changer. To me, this idea seemed like wonderful political banter. A pipedream. A campaign ploy. Vote bait. Turns out, though, it didn’t die when the election was over.

Free college is a thing

Since the campaign, there’s been a steady movement toward making tuition free at colleges and universities throughout the country. The biggest such announcement came out of New York where Governor Cuomo signed into state law the Excelsior Scholarship, providing free tuition for students with household income of $125,000 and under.

Not to be outdone, Tennessee announced it would become the first state in the nation to make community college free for all adults, expanding the Tennessee Promise Program that launched in 2014.

Other states (Oregon, Rhode Island, Indiana, Montana, Minnesota, Kentucky, Nevada, Washington and Arkansas) and some cities (Detroit, Pittsburgh, New Haven, Kalamazoo, Oakland, and Tulsa) are also considering plans to cover or greatly reduce tuition for some or all students.

And at the Federal level, the beat goes on.

Senator Sanders introduced a bill with Senator Elizabeth Warren and Representative Keith Ellison, and several other members of Congress are seeking to eliminate tuition and fees at public four-year colleges and universities for students for families that make up to $125,000 per year. The bill would make community college tuition-free for all income levels.

True, this bill faces an uphill battle with the GOP controlling both houses of Congress. However, 2018 could change the power structure putting this idea back in play. We’ll see.

Additionally, websites like the Campaign For Free College Tuition have emerged to help fan the flames. This site now boasts a network of 5000 volunteers that have signed up to promote the cause. It tracks progress by state, categorizing each by their likelihood of providing free tuition.

What Does This Mean For Higher Education?

Assuming this movement continues to pick up momentum and other states adopt a policy similar to New York’s, how will free tuition impact how schools will position themselves going forward?

Before we discuss this idea, let me first layout the 30,000-foot view of the current higher education landscape. It breaks down into two categories:

The HAVEs. These are Ivys, the big state and private colleges flush with students and endowment war chests that match the size of some countries. These schools are the ‘big box’ players – immune from many of the pressures impacting higher education.

In the short-term the free tuition situation will leave these schools relatively unscathed. They will still be able to attract the number and quality of students they want and need. Moreover, they will be able to deal with the financial burden because they have the dollars and the alumni base to raise the needed funds to fill in most economic shortfalls. Some may even make increases to housing, food services, and other amenities offered to regain some of the lost revenue.

It won’t be until much further down the road that these schools will start to feel a pinch, depending on how far free tuition spreads, universities in states that have free tuition may lose out to those in states without free tuition. As columnist David Brooks points out in his New York Times article, once states (like New York) move schools into a purely public-funded model, “schools may suffer from the slow decay that has hurt many state systems.”

Going forward, some of the big players may suffer at the hands of a bureaucratic system and eventually start falling behind to schools located in states without free tuition. The size of the impact will vary from state to state.

The HAVE-NOTs. This is the other half of the story. These are the smaller, second-tier public and private schools that are struggling to maintain enrollment numbers and improve alumni donations.

Many of these schools, especially private institutions, are already hanging on by a thread and free tuition could very well be the final straw, because it could easily siphon students away. And as this begins to happen, it will force these smaller private schools to discount tuition rates, possibly to a much greater degree than they already are, pushing them deeper into the red for each student they bring in. The more they enroll the deeper the hole becomes. It’s a downward spiral that, for some, will force consolidation with other schools to stay afloat. Or close their doors altogether.

The second-tier public schools stand to benefit the most. Free tuition may open up a new stream of potential students which is a positive. However, once enrolled they will need to invest in staff to ensure these students stay enrolled and don’t drop out or transfer. And this will add costs somewhere in the chain.

As these schools try to take in as many students as possible, they may resort to telling a price story vs. trying to connect emotionally with students. The problem with price, as many of us know, is that it’s a short-term strategy that’s not sustainable for the long haul. That is unless you can guarantee you are the lowest price available.

No school can do that.

Moreover, what school would want to?

For all involved, this idea of free tuition is a major disruptor.

Marketing will play a key role

Going forward, colleges and universities will need to think more like business operations in the traditional sense of term. They’ll need to capitalize identify the best types of students (customers) and win their business (tuition dollars).

Richard Greenwald, Dean at Brooklyn College sums it up beautifully:

“Many academics believe college is not a business. But in order to have the mission, you need the margin. So, it is a unique business, a delicately focused business. Many faculty do not recognize the fiscal realities that most colleges face.”

Well put, Mr. Greenwald. But it’s not just faculty that need to change their mindset. College leaders across the enterprise need to align behind the shift to a consumerism mentality where marketing (selling) is accepted and embraced.

So many factors

Free tuition is one of several massive threats facing higher education. A decreasing high school graduation pool in major parts of the country. The rise of the non-traditionalist student and the decrease in the middle class to even be able to afford four plus years of college. Now is not the time to sit back.

Investing in marketing isn’t the only action that will save your school. But it is an investment that needs to be taken. And there is a growing body of work now available to demonstrate that it is having a positive impact.

How schools decide to move forward and the actions they take will determine who will survive and who will go the way of Blockbuster.

What are your thoughts on free tuition?

Is this something that should be adopted by all states?

Will it have the intended impact of getting more students to graduate and raise overall rates?

How do you think free tuition will impact colleges and universities throughout the country?

Drop a line, I would love to hear your thoughts.

................................................

is VP at BVK

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