Sewanee, a Tennessee liberal arts college.

For those who wonder how college tuition costs manage to keep rising year after year, apparently defying laws of economic gravity, Sewanee, a liberal arts college in Tennessee, has an answer: they can’t.  On Wednesday, Sewanee announced that it will cut its $46,000 annual bill for students by 10 percent in the fall.

 

The college, formally Sewanee: The University of the South, is betting that the drop in tuition — which at this point it can afford — will help it compete on two fronts: with the public universities that are siphoning off a growing share of the students it accepts, and with other private colleges where tuition is likely to increase by 4 to 5 percent this year, as it has for the last two years.

“The university has made a bold and perhaps risky move,” said John M. McCardell Jr., who became vice chancellor of Sewanee a year ago. “But given the realities of higher education in the current economy, we believe that some college or university needed to step up and say, ‘Enough.’ ”

Sewanee’s move has not been tried by any other institution in the top tier of U.S. News and World Report’s liberal-arts college rankings. And according to the National Association of Independent Colleges and Universities, no college has reduced its tuition this year, and only about a dozen colleges have frozen it.

“Sewanee’s stepping up and out of the box, and it will create some reverberating effects,” said David L. Warren, president of the association. It is a sign of the times — a move prompted not only by the recession, but also by the degree to which small private colleges now compete with large public universities, whose tuition has been rising quickly because money from strapped state governments is declining.

Increasingly, Mr. Warren said, private colleges are competing with the flagship universities in their region. California Lutheran University allows incoming students who have been admitted to some University of California campuses to enroll for the same price they would pay at the public university. Other colleges seek to entice desirable candidates by offering them a similar deal.

Something of that sort was on Mr. McCardell’s mind as well. In the past two years, in head-to-head competitions for students, Sewanee lost 46 to the University of Georgia, 39 to the University of Tennessee, 37 to the University of Virginia and 28 to the University of North Carolina.

The new tuition would put Sewanee within striking distance of the out-of-state tuition at Georgia ($27,000 this year, without room and board, and probably substantially more next year).

Mr. McCardell, the former president of Middlebury College in Vermont, emphasizes that Sewanee is by no means in dire straits, and the pressures and challenges it faces are much the same as those that many — probably most — other small liberal arts colleges are encountering.

Like most, Sewanee has a declining number of students paying full tuition, and a rising number who pay a discounted rate. Nearly 3 out of every 4 students received some financial aid, including loans. The applicant pool is growing, as students submit applications to more colleges — but the percentage of admitted students who choose to enroll at Sewanee is shrinking, and, at just under 24 percent, is at its lowest level of the past decade.

“The trends are discouraging, and what we definitely don’t want to do is move, however slowly, in the direction of dying,” Mr. McCardell said.

The price cut at Sewanee will mean that, over the next three years, about $6 million to $8 million less will flow into the college’s coffers. That means Sewanee may have to draw more heavily on its $315 million endowment for a few years.

But Mr. McCardell, in a memo to the board of regents broaching the idea of cutting tuition, suggested that other considerations were paramount.

The memo read, in part: “If we believe this is the right thing to do; if we believe it will benefit the university in significant, even fundamental, ways; if we believe in the quality of our product; if we believe that all we need to do is bring Sewanee to the attention of a wider audience; and if we believe that there is a value, however computed, to boldness and leadership, then we will figure out how to cover the shortfall.”

Sewanee’s approach goes against the grain. Of the 19 colleges that have cut tuition since 1996, most have been little-known institutions with serious problems. More common have been decisions to increase tuition and fees sharply, in search of what is widely known as the Chivas Regal effect — the perception that high price equals high quality.

And that has sometimes been a boon to colleges. After Hendrix College in Arkansas raised its tuition and fees 29 percent in 2004, for example, its freshman class grew by 37 percent.

Mr. McCardell, though, is not sure that would work in the current economic environment.

“When you look at those things, you have to remember that that was then and this is now,” he said.

Via New York Times