The Lawlor Group conducts extensive qualitative and quantitative research for independent college and university clients throughout the United States. Based on our recent findings, combined with several outside studies available to the general public, we’ve identified three focal points in the higher education marketplace as trends for 2017 that we predict will have a significant impact on student recruitment and enrollment efforts during the coming year.
Three Focal Points in the Private Higher Education Marketplace
Sticker shock affects even families with the ability to pay.
Most undergraduates attend a four-year institution with tuition and fees of $11,730 or less, but the average sticker price at private colleges is almost three times that—and has doubled during the past 27 years, even after accounting for inflation.
Sources: College Board, U.S. Census, NCES, College Board
Families are more price-sensitive and cost-conscious.
Most families cross a college off their consideration list due to its published price before applying to it, presumably before knowing what their actual net cost would be. Student loan debt is viewed negatively, so families are holding out for more merit aid.
Source: Sallie Mae
Recommendations Regarding Price
“Affordable” is in the eye of the beholder, and even those with the ability to pay the expected family contribution think about whether they are willing to spend that much.
- Conduct price sensitivity research. Institutions can experience a pricing perception problem in the eyes of prospective students and families when their published price is out of alignment with their market position. (For example, a college may have the same price as institutions that are considered to be a tier above in prestige, that have much higher endowments, or that are more selective in their admission criteria or have a class profile that reflects higher academic ability students.) Price sensitivity research can reveal the perceived value associated with an institution versus that of its key competitors and what students and their families are willing to pay for this value.
- Optimize the price/discount model. The high-price/high-discount tuition model has become problematic for all but the most elite, selective, and wealthy institutions. In this model the published tuition price rises each year, eventually hitting a ceiling at which families consider it unaffordable before even finding out how much financial aid they’ll get. Or they’ll consider the college but think it’s not worth that price, and then demand a high discount. At this point, the college cannot afford the discount required to counteract how high its published price has risen. Financial modeling can reveal solutions, among them (appropriate for a select few colleges) a tuition reset.
- Avoid gapping the least wealthy. Meeting the full demonstrated need of low-income students signals a college’s commitment to affordability. The fact that most small private colleges with lower endowments and fewer supplementary income sources are unable to do so now will only become more problematic over time, since demographic projections indicate growth in the college-going population will come mostly from segments that traditionally have had lower family incomes. Closing their need gaps can also represent an opportunity to generate more contribution revenues as the college demonstrates a commitment to meeting community needs.
- Award a few high-status scholarships. Automatic merit awards can help counteract the sticker shock of a published price. But on top of that, a competition for a few awards (or even just one) of an academic scholarship for full tuition (or a comparably large dollar amount) can enhance perceptions of prestige—and therefore willingness to pay, even among those who didn’t win the award.
- Cap reliance on loans in aid packages. Student loans are generally perceived as debt rather than as financial aid, and families are paying more attention to the amount of student loan debt the student will have upon graduation. While only the wealthiest colleges can institute no-loan policies for low- and middle-income families and meet their full need with grants instead of loans, all colleges must take steps to address loan aversion.
- Offer cost-saving pathways. As families become more sophisticated about college affordability, more of them are planning up front for all four years of their college financing. They may be favorably disposed to hearing about cost-saving pathways such as articulation agreements with area community colleges, three-year bachelor’s degree programs, dual-degree programs for a bachelor’s and master’s degree, micro-master’s degrees, certification programs, or a lock-in tuition cost for four years.
- Diversify revenue streams. Over-reliance on tuition revenue from a traditional-age, residential population of students makes a college vulnerable because it must raise its tuition price each year more than the marketplace is willing to accept. Instead it can offer a variety of degree programs spanning a range of audiences (i.e., high school students, adult learners), levels (i.e., certificate, graduate), and deliveries (i.e., online and evening classes, destination experiences).
Reputation does matter, and people check it out online.
A strong academic reputation has consistently been the top reason students select their college, more important even than the college’s price. Families turn most frequently to third-party online sources to research colleges and their rankings.
High sticker price drives expectations of high quality.
To gauge the quality of colleges lacking national name-brand recognition, families consider the personal attention they provide. Student satisfaction is highly correlated with receiving support and guidance from faculty and staff in a welcoming environment.
Recommendations Regarding Quality
Authenticity, distinction, and relevance are key as students and families assess what a college is great at delivering, what it offers that others don’t, and how well it matches what they seek.
- Conduct market position research. Market analyses, brand strength studies, and the like can reveal an institution’s competitive advantage. For example, if an institution’s admissions overlap is primarily with a larger, public-funded institution, then a private college can tout personal attention and mentoring. But since almost every small college can boast that, then something else (the curricular benefits of location, for example) must be promoted by small colleges when distinguishing themselves from each other.
- Align programs with market demand. Even communicating what is distinctive and authentic about an institution may not suffice if those particular differentiators are not what prospective students actually desire. And what they primarily seek is job preparation. So while the benefits of a college degree are definitely more wide-ranging than that, it is essential to translate the value of the educational experience in terms of career relevance to show students “you can get there from here.”
- Invest in indicators of quality. All across the spectrum of interactions with potential students, from the navigability of its website to the paper stock of its brochures to the curb appeal of its campus, a college should project quality. Sensory cues create first impressions—and lasting impressions.
- Be responsive. Especially for small private colleges that tout personal attention, responding to the questions and concerns of prospective students and families in a timely manner is a key brand attribute that breeds favorability. Responsiveness to the needs of students reflects a student-centered approach of advising and mentoring students at every stage of their educational journey to facilitate their success at college and beyond.
- Engage in data-based decision making. To satisfy families’ expectations of relevance and responsiveness, institutions must evolve by acting on informed insights. Too many institutions gather data but are remiss in analyzing it and then using the findings to make logical reforms in response to dynamic market conditions. Colleges should maintain robust institutional-level market research to guide their continuous improvement.
- Target communications to segmented audiences. Technological capabilities for microtargeting are vastly underutilized in the higher education industry. Whether online or in print, communicating with audiences in customized ways based on a specific shared affinity can foster more effective dialogue.
Academic alignment with job demand is important.
The most important reason students give for attending college is “to be able to get a better job,” so families put a premium on clear paths to employment success, knowledge and skills that are relevant to the job market, and experiential learning outside the classroom.
Worth is ultimately based on post-graduate results.
Due to heightened demands for accountability, college outcomes by institution have become more accessible. Time to graduation, employment/graduate school results, starting salaries, and student loan debt loads are all factors for determining whether a degree is worth its cost.
Recommendations Regarding Outcomes
To communicate its value proposition and prove its return on investment, a college must demonstrate how its alumni achieve the end results desired by prospective students.
- Track post-graduate success. The national focus on college affordability has also brought accountability to the forefront, bringing in new players and transparency tools. For instance, state agencies are creating ways to match graduate data from their departments of education with wage data from their departments of employment and economic development to report the average earnings of a college’s graduates. So institutions themselves must build data collection systems that measure outcomes and conduct alumni satisfaction studies to prove their return on investment in a variety of manners.
- Make results transparent. Just as families want to know up front what they’ll pay, they want reliable indicators of what they can expect to get for what they pay. Data about retention rates and graduate rates can help offer assurance the student will be able to persist and graduate on time. And data about the percentage of the most recent graduating class members who have landed jobs or are attending graduate school within six months has become an industry standard that people expect a college to be able to cite.
- Build career pathways. Currently, Americans are almost evenly split on whether they feel a college education is “still the best investment for people who want to get ahead and succeed” or “a questionable investment because of high student loans and limited job opportunities” (Public Agenda), so colleges that can demonstrate they provide pathways to job success have an edge. Examples of such pathways include learning objectives that are aligned with workforce needs, experiential learning incorporated throughout the curriculum, integrated academic and career advising, and connecting students with alumni in their desired fields.
- Consider offering guarantees. While some for-profit institutions have gone to an unethical extreme and been punished by regulatory agencies for making promises to prospective students they can’t keep about resulting outcomes of their degree, it is possible to offer genuine assurances. For example, some colleges provide a job guarantee that involves promising to make the student loan payments of graduates for several months if they have taken qualifying steps yet do not find employment within a certain time frame after graduation.
- Help students translate their experiences. Today’s liberal arts college experience has expanded beyond the intellectual life of the mind to encompass experiential learning, intentional community, problem-based inquiry, and interdisciplinary collaboration—all of which have utility in the job market. But still, students need assistance in finding the language to link what they’ve learned and done during their time in college to the transferrable skills and abilities valued in the workplace.
- Empower brand ambassadors. Prospective students and their families seek word-of-mouth endorsements or go online to verify any claims a college makes about itself. So an institution should make it easy for alumni, parents of current students, high school counselors and independent/CBO counselors, and other influencers to share good news about the college, especially via online networks. Additionally, institutions should closely monitor third-party sites and social media to ensure their data are current and portrayals are accurate.