University of the South Slashes Tuition, Cites Economy

Daily News Article   —   Posted on March 10, 2011

(by Kevin Helliker, The Wall Street Journal, WSJ.com) – In a move likely to reverberate among America’s top-tier private colleges, the University of the South [announced in February] it will slash tuition and fees for the coming school year by 10%, or about $4,600.

Commonly known as Sewanee, for the Tennessee town where it is based, University of the South said the cut represents an acknowledgment of “new economic realities.”

“Higher education is on the verge of pricing itself beyond the reach of more and more families,” John M. McCardell Jr., the university’s president, said in a press release.

If not the first, Sewanee is the largest private school to institute such price cuts in recent years, said Tony Pals, director of communications for the National Association of Independent Colleges and Universities.

“It’s a bold move that will have the potential to put competitive pressure on Sewanee’s peer institutions,” said Mr. Pals.

In 2010-11, tuition at private colleges rose at an average rate of 4.5%, the second-smallest increase since 1972, Mr. Pals said. The smallest increase since that year-4.3%-came in 2009-10.

University of the South raised tuition by 5% last year but decided to change course this year.

Asked if the cut-which applies to students in all classes-represented a challenge to other private universities, Sewanee spokeswoman Laurie L. Saxton said, “It’s not an explicit challenge. But we’ve actually heard from some board members of other universities that I think will bring it up with their respective boards.”

Owned by 28 dioceses of the Episcopal Church, University of the South ranks among the nation’s top liberal arts colleges, having produced 25 Rhodes Scholars. It was ranked 32nd among liberal arts schools by U.S. News and World Report.

Sewanee’s Ms. Saxton said the university wouldn’t need to dip into its endowment to accommodate the cuts. [Endowment is the part of an institution’s income derived from donations.]  Already, she said, news of the impending move had precipitated [brought about] an increase in financial support from alumni and supporters of the university.

She said Sewanee also expected the move to increase awareness of the college and possibly boost the number of applicants for the school year starting in the fall of 2012. For 425 spots in next year’s freshman class, Sewanee received about 3,000 applications, she said.

Sewanee junior Kelly O’Mara said the tuition decrease would lower the amount of debt she and her parents will carry beyond her graduation in 2012. “When you’re paying for college, even a decrease in my final year will help,” said Ms. O’Mara, a studio-art and American-studies major who also holds a job on campus.

Some higher-education experts say the strategy could bring Sewanee accolades without actually costing it much money. That’s because financial aid is so prevalent at many colleges that few students actually pay the full tuition price.

“Institutions that are already discounting for most students have a reasonable opportunity to cut their sticker prices without actually diminishing their net revenues,” said Sandy Baum, a senior fellow at George Washington University School of Education. “I suspect some other schools will do something similar,” she add, “But I don’t expect it to be the most popular strategy.”

Write to Kevin Helliker at kevin.helliker@wsj.com.

NOTE:  This article was first published at wsj.com on February 17, 2011.

Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved.  Reprinted here for educational purposes only.  Visit the website at wsj.com.