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I spend an inordinate amount of time thinking about the price and cost of higher education. In my 20+ year of working in enrollment I’ve listened to hundreds, if not thousands, of people sound the alarm about “spiraling costs” and politely (more appropriately, naively) recommend that in order to slow discount rates (a phrase I just hate), colleges must reduce their price to be more aligned with what the cost to attend really is after financial aid is applied.
If I’ve heard it once I’ve heard it one thousand times, “if you just charge what you actually net,” all of the college’s problem will be solved and families will be more inclined to enroll.”
I mean isn’t this exactly why the feds pushed for the Net Price Calculator? If families just know what the real cost is… And, with increased chatter about “affordability” and The College Scorecard the calls for real pricing are likely to stronger than ever before. And, the urges to study it further will be attractive.
I, myself, spent time recently contemplating what real pricing might look like in higher ed and at my institution and have some ideas about how it might work. (I will share that in a future post).
For now, though, for all of those who want real pricing in higher education, I hope you are paying attention to what has and is happening to JC Penney.
JC Penney’s multiyear turnaround, which heretofore has revolved around an ill-defined (and probably ill-conceived) plan to charge real prices for the goods they sell looks like it is a disaster. JC Penney’s “no sale” strategy, which was built around dropping prices does not appear to be working within a marketplace that values bargains and really likes sales.
Could JC Penney experience shed any light on why more colleges and universities have not followed a similar path to offer a real price?
I think it does.
I think the JC Penney’s mess forces important questions about a stakeholder’s interest in and understanding of real price.
JC Penney believed that real pricing would be welcomed by their customers. However, early evidence suggests otherwise and as of late-January of 2013 they’ve abandoned the “no sale” approach.
I recently read a wonderful piece in Forbes written by Jonathan Salem Baskin, which dissects the JC Penney debacle and offer some things for the real price advocate in higher education to consider. You can read the full article here.
Baskin identifies the following problems, which I believe would be similar problems for colleges that adopt a real price strategy:
- The pricing plan was never explained or substantiated.
- Nobody knows what the real price should be at any store, not just Penney’s, which means there’s always going to be a suspicion or expectation that they can (or should) go lower.
- The no sale strategy was opaque on its fundamental issue when it could have established a new approach…
(The phrases above are taken directly from Baskin’s piece)
Baskin nails it! He offers some excellent cautions for colleges that might be seriously considering some sort of real price strategy. I fear college would struggle mightily with explaining a new pricing plan. I am skeptical about the public’s understanding of true costs. And, higher ed. and opaque are too comfortable with one another. Are there ways colleges could avoid the same mistakes and move beyond the gimmickry that defines most price adjustments or freezes?
Baskin does not get into why people want a bargain, but there are plenty of behavioral economists who can opine on this matter. And, nearly every enrollment manager I know can tell you that students and families really value a scholarship or grant—otherwise knows as a “discount.” For more on this, pick up Robert Reich’s “The future of success” in which he has an excellent chapter on “The age of the terrific deal.” It become pretty apparent, quickly, why we’ve been conditioned to value a deal, a discount and a door-busting sale…and, why when we don’t find one, we jump ship.
So-called real pricing in higher education, while on the surface sounds really good, is likely to go the way the “no sale” strategy that JC Penney just abandoned.
Please let me know if you have feedback or ideas about real pricing in higher education.
W. Kent Barnds a.k.a. @bowtieadmission
Another reason why #highered should very be cautious about the proposed College Affordability and Transparency Center: The College Scorecard and its emphasis on earnings potential as a key indicator. #admissions #college
Last week a colleague (the ever-politically-aware Kai Swanson) sent me the link to the draft of the Obama Administration’s “College Scorecard,” which they propose be housed within the College Affordability and Transparency Center.
The purpose of the College Scorecard is described below:
“The Administration is planning to add a new tool to the College Affordability and Transparency Center that would assist prospective students and their families in comparing colleges before they choose using key measures of college affordability and value. The purpose of the tool is to make it easier for students and their families to identify and choose high-quality, affordable colleges that provide good value.” (White House)
The five areas the administration seems to care about (since they are the only ones listed) are:
- What will it cost me to attend?
- Will I graduate in four years?
- Will I be able to repay my student loans?
- How much debt will I have when I finish?
- Will I be able to get a job when I finish?
I think these questions are good questions for a prospective student to ask and I think colleges should be sensitized to answering these questions, too.
However, I must admit to wondering if the administration cares about student learning? The questions they’ve chosen as a “scorecard” advance the narrative that “cheaper and faster” is the way to go and what should define “value” in higher education. Right?
I guess what disturbs me even more than the continued emphasis on “cheaper and faster” and the lack of attention to learning outcomes, is the emphasis on jobs and earnings.
It’s not that I object to the need to illustrate successful outcomes; I think that’s a good thing. (In fact, we spend a lot of time thinking about this at Augustana and have developed an “outcome-oriented dashboard” of indicators that consider questions about student learning and learning outcomes).
I also understand from where this comes (most would suggest this is necessary to combat the predatory nature of some [very few] bad apple for-profit institutions).
But, this crazy one-size-fits-all solution in the College Scorecard is not the way to go.
I genuinely worry about governmental involvement in determining whether or not a college or university, or, for that matter, a student, has been successful based exclusively on jobs and potential earnings.
I certainly hope faculty, senior administrators and all others who believe that a college education is more than just job preparation will take notice, stand up and share their voices.
Seriously, is a job and high earning potential the only reason for college? Gee, I hope not. I hope we do more than that. I hope we are more than a factor looking for cheaper, faster and a higher profit margin.
I think my reservations about this are heightened by the recent kerfuffle about gaming the rankings (too many articles to offer hyperlinks, but think Claremont).
I fear that the next thing will be gaming the outcomes to make sure we look dandy on the College Scorecard.
If one were to play this out; in an effort to game the scorecard, it is conceivable that some colleges may begin to eliminate programs that lead to lower paying jobs. It is also conceivable that some of these jobs are exactly those jobs that are important to civic engagement.
There are some serious questions about this how it is being tied to “value.”
Here are some questions we should be asking.
When is the right time to track the job?
Who’s going to track and verify all of this? (The honor system doesn’t seem to work, so does that mean we are beholden to another bureaucracy?)
When does the earnings thing matter? (Right away? Five years out? Twenty years out?)
What credits will those colleges and universities which prepare graduates for service and civic engagement receive to “level the playing field” or tip it depending upon you perspective? (One might think about the Service Academies, which might demonstrate full employment, but not great earnings right out. And, how about the Peace Corps and Teach for America?)
Those of us who understand the real purpose of higher education and recognize that learning is more than just high earning potential have to stand up to this and speak our mind.
What are your thoughts about the College Scorecard and The College Affordability and Transparency Center? Does it capture the right things? Does it truly represent value?
W. Kent Barnds a.k.a. @bowtieadmission