Per-credit charge breeds success

Paired with tuition cut, new fee structure lets students graduate sooner

It has been said that it takes a village to raise a child. To make a huge change at a university, it takes the entire village, a.k.a. a really good team, to make it happen. Here’s our story.

Millersville University of Pennsylvania has 7,500 undergraduates, 1,000 graduate students, seven unions representing faculty and staff, and a $152 million budget.

In 2014, with a continuing decrease of state support, changing demographics, increased competition and increased expenses for the state pension plan and utilities, Millersville faced an $8 million shortfall. We knew we’d have to think out of the box.

Our “really good team” included finance and enrollment management as well as representatives from the budget office, the bursar’s office, financial aid and admissions. In addition we relied on the data supplied by our institutional research team. Our goal was to figure out how to maintain affordability but increase revenue.

In the Pennsylvania State System of Higher Education, the board of governors sets tuition. Traditionally, tuition has been exactly the same for all 14 universities for in-state undergraduates taking 12 to 18 credits.

Around the same time that we were facing a huge deficit, the board began to recognize that differences in universities and student markets required more locally driven pricing strategies. They acknowledged that the differences, student ability to pay, program mix, brand strength and local competition all played into pricing. And in January 2014, they established a pricing-flexibility pilot program.

A new approach

What would happen, we asked, if we took our traditional tuition cost and made it into a per-credit charge? The state system study on affordability and brand strength showed that among enrolling students, nearly eight in 10 would make the same choice at a $3,000 increase in cost.

We ultimately hit on a per-credit model where we would roll back tuition 7 percent the first year and restore it gradually over the next three years. In rolling back tuition and making students pay for each credit, we generated an additional $4 million in tuition to help offset the deficit.

This model was fair—students would pay for the education they received. They would be more deliberate in their course selection and could take fewer credits to graduate.

In addition, the model allowed us to grow our adult market. The board of governors approved our plan in July 2014 and we piloted our flexible-pricing tuition program that fall. Under the new plan, students who took fewer than 13 credits paid less, and students who took more paid more. We also set aside $1.1 million as a buffer to help those impacted financially by the per-credit model.

At the same time, we communicated our plan to all constituents. This was done by sending letters to students and their families, providing information on our website, writing articles for our faculty/staff newsletter and providing interviews with regional media.

The results

The perception that “the higher the price, the higher the value,” seems to be working. The additional revenue generated, along with other measures, was enough to balance the 2014-15 budget.

While we saw some decreases in the number of internships, double majors and additional minors, there has been no significant impact on enrollment. It remained constant the first year and, in fact, freshmen enrollment is up for the fall of 2016. We are also seeing fewer non-payments because we believe people are paying more attention to their bill.

We believe others can have similar success. You need to understand your unique challenges, evaluate the data you have on hand, and get support from key stakeholders. While one tuition doesn’t fit all, we believe the model we developed can work for any institution.

Brian Hazlett is vice president of student affairs and enrollment management, and Roger Bruszewski is vice president of finance and administration at Millersville University of Pennsylvania.

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