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Grants, financial aid help soften college sticker shock

The published price to attend Canisius College in 2012-13 was $45,680. But the actual cost, on average, for tuition, room, board and other fees was $19,668.

Niagara University listed its total price at $41,030 for that year. The actual average bill was $17,586.

At Medaille College, where the sticker price was $35,638, students actually paid $13,057.

If fact, at all nine private colleges in Western New York, students and their families saw an average 46 percent knocked off the published price of attendance, a Buffalo News analysis of federal education data shows.

The numbers reveal, in part, just how far some schools were willing to cut prices to get students in their classrooms. For many students who faced a deadline this week to decide on where they will enroll for the fall, costs loomed as a deciding factor. And that reality has forced colleges nationwide to offer more discounts or risk losing students.

“It’s really about filling seats,” said Natalie Pullaro Davis of the National Association of College and University Business Officers. “Some institutions would rather take half price on a seat than have it go empty.”

Enrollment drops have helped fuel more discounting, said Pullaro Davis, manager of research and policy analysis for the association.

“I don’t see any signs of it stopping right now,” she said.

The gap between the list price and what students actually paid widened from 2008-09 to 2012-13, due in part to discounting, although other factors were at play, according to The News’ analysis.

Local colleges raised tuition and room-and-board rates by an average of 15 percent over those five years.

But most of them offset those hikes by funneling the money back to students in the form of merit and financial aid, otherwise known as institutional grants, or discounts.

The average net price at the residential colleges climbed just 2.5 percent – half the inflation rate over that time.

So while the average published cost for the nine local colleges was $35,571 in 2012-13, the average net price – the amount students and families paid out of pocket, after grants and scholarships were factored in – was $18,350.

The Western New York schools were a relative bargain, given that the average net price at four-year private schools nationwide was $27,900, according to the National Center for Education Statistics.

Hard choices

Still, for most families, $18,350 is a lot of money, especially when multiplied by four, the traditional number of years of undergraduate study. Even with discounts, many students or their parents have to take loans to help pay for college.

Lake Shore High School senior Tyler Becker received a financial aid package of grants and federal loans from Rochester Institute of Technology that would reduce his out-of-pocket costs from about $48,000 to $20,000. Becker was grateful for the awards, but wary of taking on debt at such a young age.

“I’m going to have to take out more loans for the $20,000 I don’t have,” he said.

And he worries about whether choosing RIT over other schools ultimately will pay off.

“That’s the problem – I don’t know,” he said. “I have no idea, and there’s not really anyone that can tell you it’s going to work out because so many things can happen.”

Becker’s classmate, Nick Emhof, was shocked at the tuition and fees charged by the colleges to which he applied.

“They’re outrageous,” Emhof said. “Even for a SUNY school, which is supposed to be cheap, it’s ridiculous.”

The Town of Evans student said he didn’t receive much grant aid to help with costs.

“It’s mostly loans,” he said.

Emhof considered Canisius and Alfred and was leaning toward Canisius because he figured he would save money by living at home and commuting to campus. But even that plan won’t be cheap. Emhof needs a car and gas money to make it work. He’s been working a few days a week, trying to save money for college expenses, but he’s nowhere near what he needs, he said.

“I got in a car accident, so I had to buy a new car,” he said.

Another Lake Shore senior, Aleah Jaworski, will stay in the area, too, thanks in part to discounts offered by Daemen College.

Jaworski was thrilled to win a scholarship to help her pay for Gannon University in Erie, Pa. But even with the scholarship, Gannon would have cost about $30,000 more than Daemen College, she said.

Jaworski really wanted to enroll at Gannon, where she could continue cheerleading. It would have meant taking out student loans, something her parents cautioned against.

“They don’t want me to be in debt when I graduate,” she said. “They want me to make the decision, but it’s so hard.”

Jaworski’s choice of Daemen put her mother, Amy, more at ease. But even with a $9,500 annual scholarship from Daemen, the Jaworski family is looking at a hefty bill.

“I was hoping for more of course,” said Amy Jaworski. “It’s not that much, when you look at the college being 36 grand a year.”

Canisius reality

At Canisius, much of the discounting reflected “the very real fiscal realities of the families in our major recruiting markets,” said Canisius President John J. Hurley.

Canisius’ average discount was $2,000 more than the average of seven peer institutions, including fellow Jesuit schools Fairfield University, John Carroll University, Le Moyne College, Saint Joseph’s University and the University of Scranton.

Canisius has been trying to rein in its discounting, after an outside consultant warned in 2013 the college’s financial aid practices and enrollment strategies weren’t sustainable. But the practice is unlikely to go away altogether, Hurley said.

The college has explored the possibility of pushing the “reset button” on tuition and room and board, bringing the total cost of attendance in line with net price. But Hurley said that strategy hasn’t worked at other schools. Even with an intense nationwide clamor over rising tuition and fees, marketing studies consistently show that students and their families equate higher prices with a higher-quality education, he said.

Lowering tuition, especially while personnel and technology costs are still climbing, would hurt the college, he said.

Besides, merit aid and financial aid packages help Canisius attract the brightest students, regardless of their family’s income level, he said.

Without the aid, “if you set the price at say, $20,000, then the only people you can recruit are those that can pay the $20,000,” he said. “The school (would) look a lot different than it is today. Financial aid really is used by the colleges to shape the look of the classroom.”

But Hurley also acknowledged that trying to recruit increasingly larger freshmen classes, in part through generous grant awards, added too much to the college’s expenses. Canisius has since backed off that strategy, cutting about $12 million from its operating expenses over the past few years.

It is now focused on being a somewhat smaller institution moving forward, with an undergraduate population closer to 2,500, instead of 3,000 to 3,500.

The average size of an institutional grant from a Western New York private school grew to $16,827 in 2012-13, an increase of 17 percent since 2008-09. Over the same five years, area institutions spent about 25 percent more on grants to students. Both increases outpaced the rate at which their published prices grew.

“In general, the trend from at least 2000 on is for the schools to raise their sticker prices fairly aggressively and then hope some subset of the student population will pay full price,” said Richard K. Vedder, an economist and director of the Center for College Affordability and Productivity. “There has been sort of a Robin Hood effect.”

Many private institutions across the country did the same.

“They’re not lining their pockets,” said Pullaro Davis of the National Association of College and University Business Officers. “They’re giving that back to students in some form of institutional grant.”

Lower bills

A high concentration of colleges in the region, combined with a shrinking pool of potential undergraduate students, helped keep net prices in Western New York flat.

“There’s plenty of competition. We all have to be very conscious of what the other guy is doing,” said Richard Schott, vice president at Daemen College. “We have a product that we’re selling, just like a product in the store. You’re going to be compared, whether you like it or not, to another brand.”

At two schools, Medaille and Alfred University, students actually paid thousands less, on average, in 2012-13 than they did in 2008-09.

“Everybody knows that there are fewer 18-year-olds in the world today,” said John P. Crawford, vice president for college relations at Medaille. “A lot of that discount rate, as it is with other colleges, is our response to market conditions.”

The college’s institutional grantmaking grew significantly during that time, from an average grant of $7,393 to an average award of $11,956.

“It goes back to doing what we can to make college affordable for people,” Crawford said.

College administrators know that it can become a risky proposition to offer more, or deeper, discounts in the hope of meeting enrollment targets.

“It’s very difficult to pull back from,” said Earl E. Pierce Jr., vice president of enrollment management at Alfred University.

Alfred students on average paid $3,200 less in 2012-13 than they did in 2008-09, even though the published price increased 13 percent.

Pierce said those numbers weren’t surprising, given the state of the economy during that time.

“During the recession it climbed,” Pierce said. “It’s a high rate of subsidy for our students. That’s one of the biggest challenges – trying to cobble together enough financial aid to make it work.”

Besides discounting, other factors may have contributed to the growing gap between published prices and actual prices in Western New York.

At Medaille, for example, the percentage of Pell grant recipients on campus shot up from 42 percent of freshmen in 2008-09 to 60 percent in 2012-13 – which translated into more federal money helping bring down the net price. At Alfred, about 40 percent of students receive federal Pell grants, which Pierce called “fairly high,” and many of them are first-generation college students. “The families that we provide opportunities to have much larger needs,” he added.

College administrators also pointed out that Western New York has a relatively low cost of living and that some schools have high percentages of commuter students – which also help bring down a school’s average net price, because it’s cheaper to live at home.

Reform or close

There’s no question some area schools offered big discounts. But how much longer can they continue to do so?

Most colleges and universities don’t have large enough endowments to sustain their discounting, especially when it starts cutting into net tuition revenue, said Vedder of the Center for College Affordability and Productivity.

“There does become a limit as to how far you can go with that strategy,” he said.

Wealthier schools with lots of prestige – which in New York includes Cornell, the University of Rochester and Colgate – can rely heavily on income from endowments to support their discounting strategies. Meanwhile, schools with fewer resources and name recognition are forced to fund much of their discounting with tuition revenue.

Some schools already saw enrollment declines, even as they maintained or increased their discounting – a double whammy on the bottom line.

“It’s a tough position to be in when enrollments start going down,” said Schott, the Daemen vice president. “That’s when you get to a point where you have a smaller pot of revenue and you have to figure out how to live within that.”

The announcement in March that Sweet Briar College in Virginia would close at the end of the semester sent shock waves throughout the academic world, largely because the all-women’s college had a storied history and appeared to be on strong financial footing, thanks to a $90 million endowment.

But in an analysis for the Chronicle of Higher Education, economist and Chapman University President James L. Doti pointed out that Sweet Briar had dramatically increased its discounting in recent years, resulting in lower net tuition revenues, even as it enrolled more students, adding to its costs. Doti also wrote that Sweet Briar’s situation was “not an anomaly” and that colleges caught in the same “dangerous imbalance between tuition and discounts” should consider mergers as a way to increase economies of scale and reduce costs per student.

St. Bonaventure and Hilbert College already explored the possibility of a merger, but decided against it earlier this year. But both institutions said they would continue to look for other ways to collaborate, both with each other and other colleges.

Other area schools also were stepping up collaborative efforts with other institutions, in an effort to diversify their offerings and create new programs without spending a lot of money.

This month, Canisius and fellow Jesuit institution Xavier University in Cincinnati began offering several new joint executive education and certificate programs in health care.

Alfred recently developed two new graduate programs in literacy and counseling by partnering with the Center for Integrated Teacher Education, the distance education arm of the College of St. Rose in Albany.

Daemen linked up in April with the Lincoln Memorial University College of Veterinary Medicine in Harrogate, Tenn., about 10 hours south of Buffalo, to offer an accelerated doctor in veterinary medicine degree that could help revive a sluggish undergraduate program in pre-veterinary medicine studies at Daemen.

Additionally, many local colleges and universities are building deeper ties with area high schools, hoping to establish a better pipeline of future students.

But Vedder said it may take far more radical changes for many colleges and universities to survive, and higher education is not known for its ability to adapt to change.

He predicted several hundred colleges and universities will end up like Sweet Briar in the not-too-distant future.

“Where you have schools of a limited reach and reputation still charging a sticker price of $30,000, $40,000, $50,000 a year, those are the endangered species in higher education,” Vedder said. “Some of these schools are going to close. Either that, or it’s going to be a reformation.”

email: jtokasz@buffnews.com