Concordia goes against the grain

Concordia’s decision to change its financing model appears to have paid off.

For most goods and services, a higher price usually indicates a higher quality. However, after years of seemingly arbitrary tuition increases, the same cannot be said for colleges and universities, especially private ones.

The sticker price of a college often neither reflects the quality of the institution nor even what most students will pay. Paired with high tuition are large financial aid packages, so almost no students end up paying the advertised price.

This financing model is not sustainable. Rising prices keep middle and lower-income students from enrolling, well before they are awarded financial aid.

After years of using the high tuition/high financial aid model, Concordia University of St. Paul announced a “tuition reset” for fall 2013. The reset cut the school’s $29,700 undergraduate tuition by $10,000, in tandem with cuts to financial aid.

It was a risky move that could have resulted in a huge revenue loss, but last week the Star Tribune reported record freshman and transfer enrollment at Concordia, along with a significant jump in applicants and campus visits. The tuition reset, at least in the short term, had paid off.

It’s unclear how low Concordia will be able to keep its tuition in the coming years, and whether the education it offers will change as a result of the influx of students. But we hope Concordia’s bold change in its financing structure inspires other colleges using the high tuition/high aid model to do the same.

If colleges and universities are more honest about their costs and refrain from raising sticker prices to give the appearance of higher quality, students and their families can make better decisions about what institution they should invest in.