More Books for the Buck

More Books for the Buck

Textbook rental programs help students keep more money in their pockets.

Stephanie Huck knows a deal when she sees it. Or rents it.

After transferring in from another school, Huck was excited to learn that she would save 60 percent on her textbook bill each semester thanks to Southeast Missouri State University's rental program. Now, she pays only $85 per semester for all of her books.

"Whenever you would return the books, you would not even get half of that back," the senior marketing major says of her previous school's traditional purchase system.

Although the Public Interest Research Group (PIRG) claims the average college student spends close to $900 on textbooks per year, the American Association of Publishers disputes that figure. "No other source is available to support this assertion. Research by Student Monitor says the average four-year undergraduate spends approximately $625 a year on textbooks. Textbook spending equals six cents of the average student's education dollar, according to the College Board," states a release by the AAP.

Still, it is no wonder students have been on the hunt for alternative, cheaper sources for books: online stores, online auctions, or even illegally photocopying books.

Stores can try to keep them from going through different channels for books by creating rental programs. But only a few IHEs across the country have experimented with them, with varying degrees of success.

For IHEs considering starting their own rental program, Ed Schlichenmayer, senior vice president of the National Association of College Stores (NACS), suggests to first consult professors. "One common denominator among every IHE [considering a rental program] is not to restrict the academic freedom of faculty."

Another factor, of course, is financial resources. According to a study conducted by Illinois' Board of Higher Education, startup costs can be as high as $15 million.

One thing to keep in mind, however, is that rental programs are created in the best interest of the student body; profits, if any, are an after-effect. Schools thinking profit first will come away financially bruised, according to industry authorities, due to unpredictable variables like rate of return and returned-book condition.

But that doesn't mean a school can't minimize costs--and keep its student body happy--through a little creativity and experimentation.

In the fall of 2001, Sarah Emerson, former bookstore manager, instituted Hillsborough Community College's (Fla.) textbook rental program at a cost Schlichenmayer calls "negligible."

Emerson's cost-conscious tactics may not seem plausible for a larger school. A community college, on the other hand, caters to a student body that is often taking introductory level courses, which have large enrollments, making it easier to predict how many books may be rented out and returned to the store. Her motivation was driven by one factor--needy students. More often than not, those students went through whole semesters sitting through classes without textbooks because they couldn't afford it.

"Every year, it was getting harder and harder to get books because of money. That's why they live at home."

When Emerson spoke one-on-one with faculty members about implementing a rental program, she recalls, "They were going to do whatever it took," to get students to buy books.

But Emerson checked out 15 other rental programs across the country, and not one was a good fit for Hillsborough. That's because the community college depends heavily on the bookstore's revenue.

She first spoke about her ideas with the five campus presidents, each of whom she was on a first-name basis with, and after she convinced them, Emerson says, she had overcome her biggest obstacle: persuading administrators. "I didn't even have to convince my own boss because they convinced her."

Starting with 80 titles, Emerson began renting textbooks at 40 percent off in the first semester. The rental program's publicity campaign kicked off with a large advertising banner that hung atop the bookstore's cash registers. At this point, "the only person ready to do me in was a private store down the street," she quips.

"I think it's important in retail to give students a choice," Emerson stresses. Rental books were marked down 40 percent for new or used books, or they could buy them. "They flew off the shelves. Used books are always selling like melting ice in the middle of a Florida summer. Students were so thrilled."

By the second semester, the rental price was dropped to 50 percent because "it had been going so well."

Emerson's belief in quality customer service led to her manning an aisle every day that students were allowed to rent. "I made sure to work the aisles in one of the stores. Students would ask, 'Well should I rent or should I buy?' And I would ask them, 'Are you a math major?' If not, then I would say rent. 'But if you're a math major you might want to buy your book and keep it.'"

Emerson stresses setting strict rules for issuance and returns. "You have to be very firm and upfront about what is going to happen if they don't return the book."

Students are required to sign a contract detailing the consequences for not returning books on time.

From her experience, the first 86 percent of students returned books. Those who didn't return books would have their credit cards charged with the retail price of the book. In cases where credit cards are denied or have been cancelled, the student's account is sent to the accounting department and classified as an account receivable. That means they are not allowed to register for classes or borrow from the college library. This accounted for 3.5 percent of all students, Emerson says.

But, she says, "It's amazing how many people settle bills." And she recounts, "You have to have the accounting department's cooperation, to enforce the contract's provisions."

"Every night we would check to make sure we had a copy of a contract," which required extra work and extra staff.

The antagonist in her rental program story is the publishing industry. "Now publishers weren't really happy with me," Emerson recalls. "One publisher called and she asked what HCC thought they were doing. I said, 'I'm making books cheaper for students.'"

The publisher told her that faculty doesn't care. But, explaining the financial dilemma for students, Emerson protested: "They do--and I care," she says. "I have a real problem ripping off college students."

But Schlichenmayer doesn't think it really affects publishers very much if students rent, because even when new books are resold as used books for several semesters, the publisher doesn't profit.

"It's not as controversial as one might think," he says. "Once sold, then it goes into the used-book channel. The recirculation of books prevents the new sale of books. Some publishers say they don't mind it or they'll make it work."

If the institution's store is selling a book for $100, "the store paid $75 for the book, plus freight ran about 3 percent of gross income," Emerson explains.

"So when you rent books at 60 percent, you're in the hole by 15 percent the first semester," she says. "In the second semester, you're breaking even."

She describes the third semester, the first summer session, as "gravy."

"You owned the book, you had on it the shelf, you didn't have to buy from publishers, didn't have freight cost. By the end of the fifth semester, we were okay. We did not quite return what we expected, but we had done well."

She goes on, "The next year (second year), we returned more than $500,000 to the college on textbook sales of about $4.5 million. We had not only made it cheaper for students, but faculty were happy because students had all their books, and you made administration happy because of the bottom line."

"I think it is something that would particularly work at a community college."

"I knew the program was a success when we came out of the second semester," says Emerson, "and one of the math instructors said, 'Sarah, I have to thank you for something. I just met with my classes for the second time and every student had a book.' So I knew the program was a success."

Currently, the rental program makes about the same profit as when it first launched, according to the current manager, Bill Wimberly. Wimberly worked with Emerson as an assistant manager before she retired in 2003.

Textbook Service at Southern Illinois University Edwardsville could easily be considered a nonprofit textbook-rental system.

The rental program, which serves about 9,000 undergraduates, doesn't generate revenue the way the campus' retail bookstore does, says Assistant Director King Lambird. But he lauds the 39-year-old rental program for remaining in the black, a worthy goal by rental-program standards.

Housed inside of a 10,000 sq. ft. warehouse, tens of thousands of books are piled, organized, and transported in and out to students by more than 35 part-time staffers and three full-timers. Two accountants help keep the finances in order for the program, which began in 1965 when the university first opened its doors.

"We're kind of like a mandatory club students must join--and pay the fee," Lambird quips. Students pay $6.80 per credit, so any student enrolling for 15 credits would pay the $104 fee in what he jokingly compares to as a tax.

Lambird says that although "out of 100, there are two or three who grouse about it," faculty are generally supportive of the rental program. This is due in part to the many faculty members who teach using the same editions of books for several years, says Lambird. "Shakespeare hasn't changed in 400 years."

Lambird relates that there are reasons why many IHEs don't implement rental programs, such as their high startup cost and having to buy and store all of the books. "That's probably why most schools don't do it."

"Textbook Service does not represent income for the college; that's what's unattractive [for IHEs looking to start their own programs]," he explains. "The advantage is to the students."

Lambird compares textbook renting to a situation where a group of people live in the country and rarely go into town to shop. "If you and seven other people chipped in to buy a car, it would make a lot of sense."

The University of Wisconsin-Eau Claire University Bookstore's rental program is unusual in that it is the only one in the country managed by Barnes & Noble, one of two major contract-management companies.

The rental program, which features $6 million in rental inventory circulating to approximately 10,000 undergraduates, has been in existence since 1916. But, in 2001, it outsourced its management to Barnes & Noble, when the university needed help financing the bookstore's renovation.

"The bookstore desperately needed a facelift," says Candy Wilson, former manager of University Bookstore who is now Business Operations Manager for University Centers and Programs at UW-Eau Claire. "Remodeling needed to be done, computer systems required updating, and a new chancellor came on board who came from a Barnes & Noble-contracted campus," she recalls. "With budget cuts in the state, there was no way of doing it alone," she says. "The hope was Barnes & Noble would foot the bill."

But Barnes & Noble doesn't derive any substantial profit from running the rental program. Stan Frank, director of marketing administration for Barnes & Noble College Booksellers, says, "We just do what we're told to do. We aim to please and we work for the university."

"What's really changed," says Andrew Soll, vice chancellor of business and student services, "is the way in which books are issued to students and returned."

"In the past, we had the rental books separated from the purchase books." Students would have to go to a different section of the bookstore, pick out rental books, and then wait on line to have them manually checked out. Paper receipts were placed in file drawers, but students did not get a receipt. Then students would shop for books and wait on a second line to purchase them.

"What we've done with Barnes & Noble is put all the books together. The student can simply go through the store once and take them all up to the register," says Soll. "The rentals are stamped, they're scanned, and the computer that runs the registers separates them out. They can get supplies, clothes, greeting cards, candy bars all together."

Now, students can get one receipt that lists all of the books they are taking, and notates which ones are rental.

"Barnes & Noble really streamlined the operation: Students only have to stand on line once and there are more registers to make shorter lines," says Soll. Now, 24 registers can be placed in the bookstore during the rush periods at the beginning of semesters.

With the rental system, "When they return books, they're scanned in again and it shows students' accounts and gives receipts. This helps with disputes."

Barnes & Noble installed a computer database that shows issued and non-issued books. "The convenience is the ability to track more accurately," says Soll.

UW Eau-Claire's Wilson notes, "We don't operate at a profit. It is operated from student funds. It is completely student-owned."

The rental program charges a flat $77 fee for a semester's worth of textbooks; it is housed in the bookstore and the university still owns University Bookstore.

"I think it was a very smooth transition for us," says Wilson, "It was a learning curve obviously for any contractor coming in."

The advantage of outsourcing the rental program outweighed the trade-offs for UW-Eau Claire. "[Barnes & Noble] computerized it to a certain point so check-out was faster. That was a real positive for students," explains Wilson.

But, she notes, there is always disagreement among faculty regarding the rental program. "There are some (faculty) that are very happy, there are some that are not happy."

She further explains, "A tenured faculty member, perhaps, that is comfortable with the system, has been involved with the system, is OK with the system. New faculty that don't come from schools with rentals, they have no experience so they find it inhibits their academic freedom."

Wilson's has simple advice for any IHE considering book rentals: "If they are starting from the ground up, there is a huge initial investment. There is a huge investment in space. You need the space because you're going to get the books back."

The rental program guarantees one rental title per course, and this is only for courses taken by undergraduates, like General Psychology. In the winter and summer, some courses only charge half the fee.

There's a minimum cost of $30 for a book to be rented, otherwise it is sold.

The Instructional Resource Rental Committee (IRR), made up of five faculty members and four students, are appointed and approved to deem books as rentals or to remain as purchase books.

Like other bookstore managers, Wilson emphasizes positive faculty relations. "There are huge hurdles in getting faculty to go along with this. It would require their input on how the system would work. And administration would have to be supportive."

As a way to boost sales during the semester, University Bookstore sells some new books in the rental inventory at a 25 percent discount from two weeks after the semester begins to a couple of weeks before final exams.

Follett Higher Education Group, Barnes & Noble's main competitor in the college bookstore industry, manages two rental programs. Follett has also begun experimenting with what it calls "Rent-A-Book" at a number of IHEs across the nation, although the company declined to name the schools that were participating. Rent-A-Book allows students to rent textbooks at will, while still giving them the option to buy it.

I just met with my classes for the second time and every student had a book, so I knew the program was a success. - Sarah Emerson, former manager, Hillsborough Community College (Fla.) bookstores

Outsourcing a rental program gives you an advantage, says Schlichenmayer. "There's an entirely different set of administrative systems that go along with instituting rental programs versus retail bookstores," he says, a point that is illustrated by the UW-Eau Claire example.

"If they weren't going to all be run by the same people," says UW-Eau Claire's Soll, "then we would have had to make changes to keep inventories separate. The advantage of outsourcing would have been lost. They would have gone to a separate location to rent books."

Soll says that when the store wanted to consolidate rental with purchase, they had to do a lot of rearranging. "We needed a better customer flow and service flow. We also tried to get the store staff out there on the floor." It's hard to say whether outsourcing is cheaper, notes Soll, but "it probably is slightly more cost-efficient."

"One of the things with the Barnes & Noble system is that they're all rung up at retail value. Then they see the deduction and the bottom line," says Soll. "I've seen students buy $572 worth of books, but pay only $23. People do see what it would cost. It helps eliminate any complaint."

After putting the rental program into place, an IHE can opt to take the approach of Southeast Missouri State University: marketing it as a scholarship. Jan Chisman, manager at Southeast Bookstore, says that the rental program is mentioned on all campus tours and that the reaction varies greatly depending on students' book-purchasing experience.

"The students that are here don't know the difference," she explains. "It's the ones who went to school someplace else that say, 'Oh my god, I'm really saving money here.'"


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