Earlier this month, with temperatures still well in the 80s in Washington, D.C., I had to decide whether I should purchase a ski pass for the winter ahead. Labor Day—months before the first snowflake might fall here—was the last day to purchase the Epic Pass at a steep discount.
Pricing at ski resorts is so much more dynamic than when I started skiing in the Pocono Mountains of Pennsylvania in 1980. Yield—filling those chair lifts as many hours as possible—is critical for resorts, but global warming means the seasons now are much more unpredictable.
The solution? The multi-resort season pass that allows skiers to hedge their bets and essentially chase the snow across the country. There’s just one-catch: the best deals are offered when most of us are thinking about the beach, not the slopes.
As I weighed my options for the ski pass, I thought of my trip the week before to Hersheypark, with my kids in tow to celebrate the final days of summer break. It was more crowded than I expected. Tired of standing in line, I decided to pay extra to skip ahead with Hersheypark’s version of Disney’s FastPass (which the entertainment giant announced last month it would begin to charge separately for).
Virtually every sector of the economy has some form of dynamic pricing now. We’ve all grown accustomed to paying surcharges for perks, which used to be included in the basic price. Commit early, you get a discount. Fly on a Wednesday, your airfare is cheaper. Pay a subscription, get a monthly box of clothes or food delivered to your house.
But what about higher education?
Dynamic pricing exists at colleges but it’s hidden from the consumer.
- Colleges discount their sticker price with either need-based or merit-based aid.
- Merit aid is akin to dynamic pricing because it uses algorithms to allocate dollars based on students’ willingness to pay—and ultimately to persuade them to enroll. But most colleges don’t advertise how these discounts are given out.
The pandemic has put more pressure on what the public perceives as the value of higher education, requiring colleges to rethink their pricing strategies in the years ahead.
Over the summer, I collaborated with Rick Staisloff, founder and principal of the rpk Group and a former CFO at public and private colleges, to write a brief that looks at the forces bearing down on institutions and what some alternative pricing models might look like.
👉 Download the brief, What’s Next for Higher Education Pricing? here (underwritten by Worday; free registration required)
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🖥 Today at Noon ET/9 a.m. PT, Becky Munsterer Sabky will be joining me for NEXT on LinkedIn Live. Becky is the author of the new book, Valedictorians at the Gate: Standing Out, Getting In, and Staying Sane While Applying to College.
- To watch, go to my LinkedIn page or click +FOLLOW on my profile to be notified when we’re live. We’re also simulcasting on Facebook Live. (the conversation will be archived in both places).
🎙Future U. The latest episode dropped this week. You won’t want to miss David Thomas, the president of Morehouse College, talk about what will stick from the pandemic inside the classroom, how partnering with other institutions and the private sector helps colleges extend their brand, and why deans might have the right skills to be the next generation of presidents.
- Ask us a question: We’re taking listener questions about the future of higher ed and work and what’s next for innovation at colleges and universities. If we end up answering your question on the air, you’ll get swag: a Future U. Tervis tumbler. Reach out on social media or reply to this email with your question
🚨 Finally, I’m hiring. I’m looking for a part-timer or an intern reporter/researcher to help out on this newsletter, the podcast, and other writing projects (including a potential new book). Apply here.
- And soon, I’ll be launching a search for a chief of staff/project manager to assist with various research projects, events, and the Future U. campus tour when we go on the road later this year. More details on that job coming up, but if you’re interested or know someone who might be comfortable wearing many hats in a wide-ranging role, contact me.
Covid and College: A Year Later
Last year around this time colleges were in a general state of upheaval. There was worry about:
—Enrollment…and whether students would show up when classes were largely online or if they would retreat from higher ed for a year—or permanently.
—Revenue…especially from so-called auxiliary services on residential campuses, including things like room and board, parking, athletic tickets, bookstores and coffee shops.
- The dirty secret that few college CFO’s like to talk about is how much money their institutions make from on-campus housing and food and how that profit subsidizes other parts of the university.
—Admissions…as ACT/SAT testing sites closed or significantly reduced capacity. Without tests, colleges couldn’t easily buy the names of students to recruit or follow their traditional process in selecting their next class.
What’s happening: Now we’re getting a clearer picture of last fall with the release of several reports this past week. As expected, the data show basically everything is down—from enrollment to revenue to the number of SAT test takers.
By the numbers…
🏫 Nationwide, some 652,000 fewer students enrolled in colleges and universities in the fall of 2020 compared to the fall of 2019, a decline of more than 3%. The overall drop can basically be attributed to two-year colleges. Enrollment actually increased slightly at four-year institutions, particularly public universities.
- Inside the numbers: Men, in particular, avoided higher education in droves: their enrollment dropped by 5.8% compared to 1.3% for women.
💵 Fewer students living in dorms, drinking coffee, buying sweatshirts, and going to football games meant that colleges collected $6.5 billion less in revenue from auxiliary services last year compared to the previous one.
- Inside the numbers: Last Saturday, a little over 100,000 fans saw Ohio State lose its first home game since 2017. Fans weren’t allowed in Ohio Stadium last year. That’s just one reason why Ohio State saw its auxiliary revenue plummet 41% between 2019 and 2020.
📉 Just 43% of applicants reported a test score in an application filed with the Common App last year. That’s after more than 600 institutions went test-optional because of the pandemic. The year before some 77% reported a test score.
- Inside the numbers: First-generation and underrepresented minority applicants were less likely to report test scores than everyone else. This follows with the advice given to many students from well-resourced high schools last year (and this year): if you don’t submit a score, admissions officers will assume it was low.
✏️ The rise of test optional policies clearly had an impact on test taking trends last year. The College Board reported on Wednesday that the number of students who took the SAT from the high school Class of 2021 fell by a whopping 32%. Fewer students taking the test meant the average test score rose a bit from 1051 to 1060.
- Inside the numbers: Nearly as many students in this year’s senior class have already taken the SAT at least once (1.4 million students) as took the SAT all last year from the Class of 2021 (1.5 million students).
What it all means: Unlike the Great Recession, which knocked even wealthy colleges off their footing, the pandemic is only accelerating a great separation in higher ed. The rich got richer over the last 18 months.
- Colleges that were already getting more than their fair share of applicants before the pandemic—big public universities and more selective private institutions—just got more during the last admissions cycle. Some of them, such as Fordham and Northeastern, ended up over-enrolling this fall, while less known publics and less selective privates were left begging for students.
- Digital-first campuses—schools that either had significant experience in online education or had invested in their “digital backbone” of student services—seem to have weathered the storm better than those that had to MacGyver a solution on the fly in March 2020.
- Another advantage for some schools was staying mostly “open” during the 2020-21 academic year to provide in-person instruction to undergraduates and tours to prospective students.
What’s next for institutions: For some colleges, it will be very difficult to play catch-up after the pandemic.
- The fiscal and demographic realities on the near horizon call for greater differentiation with the development of flexible pathways to degrees for students and improved offerings for different segments of students, such as adult learners.
- Colleges need to step away from the herd in meaningful ways. That doesn’t mean they have to throw away all the markings of the legacy model (i.e., residential education), but it does require a real distinction in the marketplace.
What’s next for students: The pandemic is prompting a great reassessment about higher education among students and their families.
- At the most basic level, as I heard in focus groups of high-school students convened for a report I authored for The Chronicle of Higher Education, they are worried about their safety and well-being, and hesitant about paying for a residential experience that’s even partly virtual.
- There is also growing evidence—both anecdotal and in surveys—that the pandemic has had a dramatic psychological effect among students on the path to college.
- Students fell behind academically during remote learning. The lack of social connections in school and in extracurricular activities affected their mental health. And a year of protests sparked by the killing of George Floyd has only intensified the expectations of a generation already highly attuned to issues of diversity, equity, and inclusion about how they want colleges to live up to those ideals.
A bit of a dense read for the average reader, but this is a really good explanation of the “Moneyball” approach to tuition discounting.
A new student finds an increase in out-of-state students was associated with a decrease in per-student tuition revenue and “is often associated with” a decrease in student expenditures.
A New Normal For Online Education — www.forbes.com
The coronavirus pandemic is leading to a fundamental shift in almost everything that we do from working to traveling to shopping. That new normal has extended to higher education as well.
✈️ Are you in Seattle next week for the National Association for College Admission Counseling conference? If so, let’s try to connect there. Come find me at two sessions I’m part of on Thursday from 2-3 pm PT and 3:30-4:30 PT in Tahoma 3 in the Washington State Convention Center.
Until next time, Cheers — Jeff