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Private Colleges Slash Costs to Compete
BusinessWeek
When Carlos Cortez of Austwell, Tex., sat down with his parents to discuss his options for college this fall, he quickly realized his options were limited. Even though Cortez was the No. 1 student in his class and a star basketball player at Austwell Tivoli High School, his parents told him could afford to send him only to one of the large public universities in Texas. It was a blow for Cortez, 18, who had his sights set on Texas Lutheran University in Seguin, Tex., a tight-knit private university with 1,360 students and a hefty price tag of nearly $33,000 in tuition and fees.
“I knew that if I didn’t get any kind of help, it was just going to be too expensive for my family,” says Cortez. “Texas Lutheran was just out of the question.”
At least that’s what Cortez thought. To his surprise, Texas Lutheran announced a new program—the TLU Choice Scholarship—this February promising to match the tuition and fees of two of the large state public universities, University of Texas at Austin and Texas A&M University. The only caveat? Students admitted to TLU had to show the school acceptance letters from one of the schools to get the deal. For Cortez, who was accepted at both Texas Lutheran and those two public universities, the news was an incredible stroke of luck. His parents soon agreed to let him attend his dream school.
Closely Watched Model
“When we saw you could go to a private school for the same cost as a public, we were like, ‘Wow, we can’t believe it,’” says Patsy Cortez, Carlos’ mother. “That really made the difference.”
For years, private colleges have competed with public universities by offering students generous scholarships, financial aid, and merit grants. But with the economy in turmoil, some private schools are starting to take a more aggressive approach to recruiting students like Cortez, promising them a top-rate private school education at a public school price. At least five private colleges in states from Texas to West Virginia have announced programs—including several in recent months—where they promise to keep tuition and fees equal to those of state flagships, and more may follow suit in the coming months, says Tony Pals, a spokesman for the National Association of Independent Colleges & Universities (NAICU), a group of 952 private schools.
“It is a model that will be closely watched,” Pals says. “In typical years, private colleges have always competed well in value. But this year, because of the recession, we are seeing a lot more pressure to compete on price.”
While the price competition is having little impact on public institutions, some worry this could change, especially if the trend accelerates. Top students without the financial means to attend elite private colleges would have that option. At West Virginia State University, a public institution that now competes on price with neighboring Davis & Elkins College, these developments are being closely watched. “Right now, we haven’t noticed a difference one way or the other, but there could be an impact in the future, especially if other schools start to do it,” says Pat Dickinson, a spokeswoman for West Virginia State.
