A Shell Game by Any Other Name — The Grove City Value

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The Grove City Value

Editor’s note: This article originally appeared in the Summer 2016 issue of the GēDUNK, Grove City College Alumni Magazine.

In recent years, the public has lost confidence in the value of American higher education, citing runaway college tuition and student loan debt as key concerns. Ironically, the very issue that is now causing such alarm—high tuition—has long been a signature feature of the financial model intentionally employed by the vast majority of smaller private colleges in the U.S. In fact, most of these institutions routinely inflate their published “sticker price” and then offer deep tuition discounts to their prospective students. Upon learning of this widespread practice, many wonder why colleges do not simply charge students the net tuition price (sticker price minus the discount) and avoid all the bad press about skyrocketing college costs.

Although counterintuitive at first glance, the “high-price/high-aid” model enables colleges to signify three important institutional characteristics to students: quality, value and appreciation. First, because people tend to equate price with quality, inflating the tuition sticker price provides the appearance of educational quality. Second, offering deep tuition discounts fosters a perception of educational value, as prospective students are able to purchase a quality education at a fraction of the cost. Finally, by packaging these tuition discounts as merit scholarships, colleges are able to demonstrate their appreciation for prospective students and their unique characteristics and accomplishments. All three of these signals—the appearance of educational quality, the opportunity to realize significant value, and the sense of personal validation—provide powerful incentives for matriculation.

However, the high-price/high-aid model has a number of drawbacks as well. Tuition discounting promotes artificial pricing, it encourages students to adopt a consumerist mentality toward higher education, and it diverts attention away from the best measures of academic quality—student outcomes. Perhaps most concerning of all is the redistributionist pricing scheme that results from the high-price/high-aid model. Because all students do not receive the same discount, some students end up paying a higher tuition rate so that other students can go to college for less. Worse still, most of these students have no idea that their tuition dollars are subsidizing their classmates’ education.

Believing that no one student should have to pay for another, Grove City College has chosen a different path. The College is known by many for deciding, on principle, not to accept federal student aid. Less known is the unique approach Grove City College takes to tuition pricing and financial aid. This approach is grounded in the College’s historic mission: to provide an academically excellent education in a thoroughly Christian environment at an affordable price. Grove City College’s approach to tuition pricing and financial aid is guided by several of its core institutional values: fiscal responsibility, fair pricing and academic quality.

Throughout its history, the leadership of Grove City College has believed in the management principle of operating debt free. As a general rule, all necessary capital is secured for new buildings prior to construction, and annual maintenance costs are fully funded. Student tuition does support the upkeep of the college campus, but no student has to contribute to the debt service for a new building that she may never have the opportunity to use during her college career.

Grove City College exercises wise stewardship of private resources by utilizing a lean administrative structure and offering an excellent—but not extravagant—educational experience. At its founding, the College’s first board chair, Joseph Newton Pew, instructed the College’s first president, Isaac C. Ketler, “Make the College healthful, for that is essential. Make it beautiful, for that is an education.” Today, Grove City College students enjoy a Collegiate Gothic campus designed by the sons of Frederick Law Olmsted, the father of American landscape architecture. Noticeably absent, however, are the expensive amenities—climbing walls, lazy rivers, salons and spas—that add cost rather than educational value.

According to the National Center for Education Statistics, in fiscal year 2014 there were 94 private baccalaureate colleges operating in the United States with an undergraduate headcount between 2,000 and 3,000 students. Those institutions had an average operating budget of $82.4 million. In contrast, Grove City College supported its 2,502 undergraduate students that same year with an operating budget of a little more than $60 million.

Grove City College sets its tuition price according to the requirements of its operating budget, not an artificial sticker price designed to capture excess consumer demand. Over the years, the College’s tuition rate has regularly been among the lowest in the country. For example, Grove City College’s published tuition and fees for 2012-13 was only $14,212—far lower than the average ($26,405) for other similar private colleges. Some Grove City College students do receive institutional scholarships that decrease their tuition bill, but these scholarships are fully funded by private sources and not by tuition surpluses collected from other students. This straightforward approach to tuition pricing models the College’s core values of honesty and fairness, which cultivates a sense among prospective students and their families that the institution is trustworthy.

Instead of raising its published tuition price to signal educational quality to prospective students, Grove City College seeks to maximize its performance on key indicators of academic quality: student retention, student graduation and student job placement. The College retains 88 percent of its first-year students, while similar institutions retain only 73 percent. Likewise, 77 percent of Grove City College students graduate within four years, far higher than the 42 percent average at similar institutions. Finally, 97 percent of Grove City’s graduates secure employment or admission to graduate school within six months of graduation.

In practical terms, this means that students who enroll at Grove City College are far more likely than their peers at comparable institutions to both persist to graduation and find gainful employment in a timely manner. The economic impact of this success rate is significant, because students who drop out of college, who take longer to graduate, or who fail to find jobs after graduation risk not only paying additional tuition over time but also suffering the impact of lost wages for the years during which a college graduate would be earning a full income. In sum, rather than signaling apparent quality to prospective students through its tuition price, Grove City College endeavors to achieve actual quality by ensuring student success from matriculation to graduation, and beyond.

As colleges costs continue to rise, the Grove City College financial model will remain as a straightforward contrast to the high-price/high-aid scheme employed by the vast majority of smaller private colleges. Indeed, prospective students, their families and the American taxpayer can count on Grove City College to provide a transparent approach to college tuition pricing and student financial aid, one informed by enduring institutional identity rather than transient financial expediency.

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