Luring the increasingly mobile and discerning international student has evolved into a high stakes affair for educational institutions, one complicated by rising competitive pressures as well as rising costs. Those costs are commonly cited by prospective applicants as a major factor in their choice of a school.
There has been plenty of reporting on new or increased tuition fees and the results of those fee hikes. Several European countries have seen a sharp decline in non-EU applicants after the imposition of fees. In Britain, tuition increases are believed responsible for a 7.7% drop in 2012 university applications, as well as a sharp rise in the national inflation rate. In Canada, tuition hikes in Quebec triggered massive public protests.
Meanwhile, in the US high tuition costs have caused a significant percentage of the public to question whether a college education is worth the investment. Significantly for recruiters, research from the Lawlor Group shows that 80% of American adults think the education that students receive at many colleges is not worth what they pay for it. President Barack Obama even called upon universities to rein in costs during his 2012 campaign.
Something similar occurred in South Korea, where tuition costs rose on average by about 10% every year until 2012, when universities bowed to public pressure and cut fees by about 4.5%. But on the campaign trail, presidential candidate Park Geun-hye promised young voters much more – she said that her conservative party would slash college tuition by half. Geun-hye won the election.
Tuition hikes and tuition discounts
Tuition costs are strongly affected not just by the prices set by institutions and by government policy, but the relative standing of international currencies.
Euro weakness against the Chinese Renminbi, the country’s official currency, has created a potential 20% savings for Chinese students who study in the EU. Meanwhile, last year’s declining value of the Rupee caused Indian students to carefully evaluate the affordability of their study options. Last summer, Swiss universities reported receiving significantly fewer applications from abroad due to the strength of the Swiss Franc, and Australia’s high exchange rate has been one of the key factors in their recent loss of international students.
Though the direction of tuition fees has been inexorably upward, in the Unites States at least that trend is losing steam. Best College Online said in a January 2013 article that:
“Thanks to a growing shift in public opinion, new marketing strategies, and changes to the financial management of institutions of higher education, the rise of costs is slowing at many schools in the US.”
The National Association of Independent Colleges and Universities (NAICU) agrees, and the same conclusion was drawn in an October 2012 L.A. Times story citing a College Board study.
In Europe, tuition trends vary by nation. Fees have been introduced in the last few years in countries such as the Czech Republic and Sweden, and Finland is expected to introduce tuition fees for non-EU/EEA students. Switzerland’s top two schools, École Polytechnique Fédérale de Lausanne and ETH Zurich, plan to double fees for 2015-16. State support for students has recently been reduced in Hungary.
Germany, in contrast, enacted fees for its public universities in 2007, but many states abolished them and returned to a tuition-free model for both locals and internationals. Bavaria just announced they would scrap fees, leaving Lower Saxony as the last of sixteen German states to charge tuition, but likely, not for long.
In Britain fees are set to climb slightly in 2013, following the implementation of sharp tuition hikes in 2012 in which 75% of the schools that imposed fees elected to charge the maximum allowable for some or all of their courses. However, Sir Martin Harris, director of the Office for Fair Access (OFFA), hints at possible fee cuts in the future. He told BBC News in July 2012:
“It may be that some universities and colleges may have to revisit the relatively high fees that they currently feel able to charge.”
Some universities are already doing exactly that, offering across-the-board fee reductions, while others have targeted subsets of students.
Examples of the latter category include the universities of Portsmouth, Gloucestershire, Swansea and Southampton Solent, which are offering discounts of between 2% and 5% to students who are able to pay an entire year’s tuition upfront. At the University of Birmingham, in another targeted reduction, a £5,000-a-year reduction is available for academically gifted applicants in maths, chemistry, or computing courses.
In the US, more instances of targeted discounts can be found. Bluefield College, located in Virginia, offers a 25% discount for working adults who return to school to complete a degree. Union College in Kentucky offers a free final semester for those who earned good grades and got involved in college life, and the University of Rochester offers selected students a free fifth year of study.
While such discounts are eye-catching, whether they are effective is another question. As previously discussed on ICEF Monitor, the most recent tuition discount survey by the National Association of College and University Business Officers (NACUBO), conducted at the end of 2011, found that more than half of US schools offering discounted tuition (53.2%) saw a decline or no change in freshmen enrolment numbers.
Creative discount schemes
While some schools have opted for straightforward fee reductions to boost enrolment, others have focused on attracting students with clever pricing variances – schemes that are not discounts per se, but rather mutually beneficial arrangements in which schools earn revenue or cut costs while students are rewarded for their participation.
At the University of Malta, for instance, a full time fee-paying international student who recruits a second student can receive a €400 discount on his/her tuition for the year in which the recruited student applies to the school.
Johnson and Wales University in the US has a programme in which siblings each receive a US $2,000 tuition break for as long as they are enroled together. Western New England University in Massachusetts and Otterbein University in Ohio have similar programmes.
Another example of a creative discount scheme comes from Ireland, where Griffith College offers to waive tuition fees for families that provide accommodation and board to international students. According to The Irish Times, the plan was launched in direct response to student concerns about the high cost of tuition.
Some universities have gone the more straightforward route of offering gifts or incentives to students. According to a Sunday Times study, at least 60 British universities have introduced incentive schemes in order to attract candidates. Newcastle University offers £2,000 a year plus a free laptop to high-achieving applicants who enrol in its electrical or electronic engineering degrees. Another university was offering membership in a local sports club.
The practice has not been without controversy. The Daily Mail referred to incentives as bribes, and a Telegraph write-up labeled the participating schools as “outside the academic elite,” and said they were thus pulling bright students away from better schools. However, that last assessment was strictly anecdotal. While the NACUBO survey looked at discounts, to date no study has been made public concerning the effectiveness of incentives.
In the absence of such data, the use of discounts and incentives is often a function of the increasingly competitive environment in which educational institutions find themselves, as well as the overarching recruitment and pricing strategies of individual institutions.
For additional insight on changes in tuition fees compared to student affordability in 40 study abroad markets around the world, see our article “Changing affordability of markets adds to volatile global education landscape.”