It’s Almost Like There’s A Bubble Or Something: Minnesota College Slashes Tuition 33%

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Concordia University in St. Paul is reacting to declining enrollment numbers by slashing tuition prices, and it’s not a modest discount either. The institution has cut the price of attending by 33%:

ST. PAUL — After slashing its annual tuition by $10,000, Concordia University in St. Paul is now preparing for one of its largest entering classes in decades.

The college rolled back its undergraduate tuition this fall from $29,700 to $19,700. The result is a 65 percent jump in the number of new students, both freshmen and transfers.

“I was pretty excited,” said Margot Cowing, of Springdale, Ark., whose son is an incoming freshman. “Most places are raising tuition — nobody’s cutting.”

School officials announced the tuition drop last year after realizing the sticker price might be scaring away potential students. The college was already subsidizing more than 40 percent of tuition costs with grants and scholarships, so executives decided to just lower tuition outright.

“People don’t even look at you if you’re over a certain price point,” said Eric LaMott, the school’s senior vice president.

It will be interesting to see what the long-term impact of this will be, but there a couple of immediate take-aways:

First, this illustrates just how hugely inflated the cost of higher education has become. An institution that can slash 33% out of tuition (with most of that cost coming out government grants and scholarships, etc.) was raking in a big profit margin. Many higher education critics, including this one, have long argued that these institutions have been jacking up tuition to take advantage of increasingly generous tuition subsidies and taxpayer-backed loans from the government. This example (and there are others) proves just how true that is.

Second, this also indicates just how important prices signals are. Were it not for the government’s efforts to promote higher education, institutions like Concordia likely would have hit this upper limit where the cost of tuition produces lower enrollment numbers long ago. Put another way, we wouldn’t have a problem with skyrocketing higher education costs if it weren’t for government meddling in the higher education markets.

As is usually the case, we’d be better off if the government had done less not more.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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