Episode 65 - Tuition Decrease for Online Only Students
This episode we discuss SUU's plans to lower tuition costs for online-only students in an effort to make an education more accessible.
Full Transcript
Steve Meredith: Hi again everyone, and welcome to Solutions for Higher Education, a podcast featuring Scott L Wyatt, the president of Southern Utah University in Cedar City, Utah. I’m your host, Steve Meredith, and I’m joined today, as I always am, by Scott. How are you, President?
Scott Wyatt: Terrific, Steve. How are you?
Meredith: I’m great.
Wyatt: It’s another beautiful fall day in Cedar City.
Meredith: It is. Good to be in Cedar. I’ve got one of my favorite things, I sometimes say this when people ask me who are my favorite guests, and I love all of our guests and we love so much that they are willing to volunteer their time to join us by phone or in-studio, but some of my favorite discussions are those like today where it’s just you and me. And we’re going to just talk about an area of higher education that's of particular interest to us, and that is the cost of higher education...
Wyatt: The cost.
Meredith: And how we can keep those costs down.
Wyatt: One of our leading values here is to make sure that education is accessible and affordable so that students can come and they can complete and move on with their life goals. Access and affordability lead to completions with a high-quality degree.
Meredith: Right.
Wyatt: That’s right there at the top. Have an amazing experience, but one that’s affordable. And we have about 11,000 students. 91% of them are taking face-to-face, on-ground programs and 9% of them are online.
Meredith: Online only.
Wyatt: Online only.
Meredith: And then there’s a much larger bunch that are combining the two.
Wyatt: Right. A lot of our students are taking both.
Meredith: About 30%.
Wyatt: We’ve been doing online for a number of years, but in the last couple of years, we’ve been focusing on this with the leading goal of providing a high quality education to all the people in our communities and in the world generally that simply can’t afford to quit their job and come to school or can’t afford to move to campus. And some of these students are single moms waiting tables in a small town, trying to find a way to put food on the table for their own kids or mid-career individuals who want to advance their career but they can’t advance it because they can’t leave their career...
Meredith: That’s right.
Wyatt: To finish a degree. Utah ranks right at the top of the list for the percentage of its population that has some college but no degree. Just started and life happened...
Meredith: Right.
Wyatt: And quit for one reason or another and then no idea how to get back.
Meredith: And are place-bound for whatever reason.
Wyatt: Mhmm.
Meredith: And so, to go back in the traditional sense is not a reasonable expectation, and honestly, if you’re 35 years old, you may feel uncomfortable sitting in a room with a bunch of 18-19 year olds.
Wyatt: Yeah.
Meredith: So, even if you could come back, which most cannot in that kind of situation, you may opt not to just because online education gives you that flexibility, whether you’re place-bound or not, to not only work it around your schedule but also to avoid...that’s the wrong way to say it, but to have the same educational experience without having to be in the large classroom setting. So, there are a number of people...we have some social anxiety issues in our family line, and so, online education is great for people that may even be of “normal” college age but struggle...
Wyatt: [Inaudible]
Meredith: Yeah, they struggle in a big room full of people. And even at SUU where our rooms are not that big and the group of people is not that big, there are lots of reasons that it’s right to increase accessibility.
Wyatt: There’s really two reasons why a university would expand online, and the one reason is what we have described.
Meredith: Right.
Wyatt: Which is, “How do we reach out and let other people come in and get a degree, a ticket so they can advance their lives.” Another reason is, and as we have talked, Steve, as we have talked with universities around the country, it’s apparent that many of them are expanding online because their trying to generate revenue.
Meredith: So that they can afford to...
Wyatt: Yeah. It’s a new market. We’re expanding into new markets, we’re going to get this revenue, it’s going to help build stronger face-to-face programs or it’s going to make us more stable as an organization. For many universities, it’s a financial motivation. And frankly, as SUU continues to grow and we gain economies of scale, there is a financial benefit to us. We are financially more stable as we get larger.
Meredith: Right.
Wyatt: But that’s not the driving motive. The driving motive is access and affordability, helping people move up. And as we have been talking about online, we’ve discovered that there are some challenges for online students to get in and get a degree, and one of those is cost.
Meredith: Right.
Wyatt: The cost is...it took a while to really figure this out because we hadn’t thought about it.
Meredith: Right. The typical face-to-face student...not only are they different groups of people that we’re talking about really here, but they exhibit different characteristics. The typical face-to-face student will take 12 hours on average.
Wyatt: At least.
Meredith: Yeah. And part of that is because there are financial aid stipulations and other things, but part of it is this thing that we’ve always had, this plateaued tuition. And I don’t know if a lot of our listeners know what that is, but...
Wyatt: If they went to college, they probably experienced it...
Meredith: They probably do.
Wyatt: But the term “plateau”...so, the thought is that if you are a student, we would like to motivate you to get through and get your degree done. And in order to motivate students to get in and get it done, we create a tuition schedule that incentivizes larger class schedules. And even for students that we have typically thought weren’t quite prepared to study at a university, the data suggests that all these students, if they’ll take 15 credits, they’re going to do better.
Meredith: That’s right.
Wyatt: Some academic advisors used to say, “You know what, you’re brand new into college, let’s start you out with 10 or 12 credits so you can ease into it.” But students who come to college and immediately jump in and take 15 credits are going to be more successful, regardless of their level of preparation. There’s just something about being fully engaged, not partly engaged.
Meredith: That’s right.
Wyatt: So, we have...if a student comes and signs up for one class, it’s kind of expensive. And then if they take a second class, the cost of the second class is less than the cost of the first, so the costs are starting to drop.
Meredith: But we frontload.
Wyatt: We frontload the first class, yeah.
Meredith: Yeah, the tuition.
Wyatt: And then third class, and by the time they get to 12 credits, they we say, “Your next couple of classes are free. There’s no additional charge because we’re trying to incentivize you to take a full load.” Well, the first class is expensive, the second class not quite, the third class less, the fourth class is free. Well, how does that impact a face-to-face student? Well, for the most part, face-to-face students can choose whether to take a lot of classes or a small number. So, it’s fair for them and a great motivator. But how does that impact online students? And in this new world that we all live in, we have a tremendous amount of data and it’s easy to analyze all of these things, but it was only in the last year that we really discovered exactly how this is impacting our online students. We had all of the anecdotal information. So, of our online students, it turns out that 94% of them are part-time. And they’re part-time because they have to be part-time.
Meredith: That’s right.
Wyatt: It’s not a choice.
Meredith: That’s right.
Wyatt: And if we have some tuition schedule that's designed to motivate them to become full-time, they still can’t become full-time. It’s just not possible.
Meredith: So, they’re going to pay all those front-loaded costs and never get to the benefit of the plateau.
Wyatt: Right. So, we went back and said, “OK, well what are our online students doing?” As it turns out, the largest group of online students are taking 12 credits per semester. And at 12 credits per semester, they’re in this expensive pre-plateau phase. And so, we made a decision that we were going to change this plateau for these online students. But this kind of illustrates the problem, Steve, and you and I have been in the throes of this for a long time. So, if a student, a face-to-face student, and the cost of the tuition here has always been the same for both, if you take tuition and fees and everything together, a student who is taking 7 credits is going to pay $2,500 dollars. A student who increases the number of credits from 7 to 15 is going to pay about $3,500 dollars.
Meredith: Wow.
Wyatt: So, it’s actually only...
Meredith: So, you get double the credit for another thousand bucks.
Wyatt: You get more than double for about another thousand dollars.
Meredith: Wow.
Wyatt: Well, if a student, and so then here’s our playout of the numbers and we’re just taking a hypothetical two students. The hypothetical full-time, face-to-face student shows up, it takes 120 credits to graduate, if that student takes 15 credits per semester over four years, that student is going to end up paying $29,000 tuition and fees, we’re not counting inflation, it’s just $29,000 to get a bachelor’s degree. Then, if we take the hypothetical average online student, this is a student who is taking 7 credits because that’s all she can take, she’s going to take 17 semesters to finish from start to finish.
Meredith: Wow.
Wyatt: And at $2,500 per semester, she’s going to end up paying $43,000. So, the cost difference...
Meredith: About $14,000.
Wyatt: About $14,000. It’s a 48% increase of cost. And it’s actually more than that, because inflation kicks in and your income potential stays low longer. But it’s going to cost more than 50% more for an online student.
Meredith: So, as we’ve looked at these universities that you’ve suggested where we say, “Yeah, our students are paying tuition, they’re paying the same rate whether they are paying online or face-to-face, or attending online or face-to-face, the truth is, though, that the face-to-face students are, in fact, being subsidized more than likely by the online students.
Wyatt: Online students.
Meredith: Because the online students, because of who they are demographically, are taking longer because they can only take a limited number of classes per semester, and so, factored out over the number of semester, it’s going to cost them significantly more and that money is coming to the university. And the universities have been quite candid in saying, “We use this to support our face-to-face instruction. We use this to support the on-campus model.”
Wyatt: Yeah. And sometimes, the reason for that is to convince the face-to-face faculty and staff that, “Online is OK because we’re going to help make your life better.”
Meredith: Right. And...
Wyatt: We’re supporting this...
Meredith: And it does. There’s no question that expanding into online education does support face-to-face stuff. Now, the question that we had was, “Is it fair to have it...”
Wyatt: So heavy?
Meredith: Yeah. Subsidize it that heavily, right?
Wyatt: Yeah. Regardless of what we charge, the larger we grow, we gain on economies of scale. And financially, it’s good for the university to grow. So, growing online, growing face-to-face, either one helps every aspect of the university.
Meredith: Right.
Wyatt: If we doubled enrollments, we don’t need two presidents, it doesn’t cost twice as much to have a president’s office. If we double enrollments, it doesn’t cost twice as much to have staff to mow the lawns, it doesn’t cost twice as much to do alumni relations and fundraising and all these things.
Meredith: Budgetary audit and so forth.
Wyatt: We gain economies of scale like any other business does.
Meredith: Right.
Wyatt: Well, so we’ve gone back in and this year, this semester is the first...is the last semester that our online only students will be paying the same tuition schedule as our face-to-face. Beginning in January of 2020, we have a completely different schedule.
Meredith: A different tuition schedule.
Wyatt: Yeah. Our online students will be paying a linear schedule that moves up to a certain level and then there’s a plateau above that.
Meredith: But it’s not frontloaded with the expense.
Wyatt: But it’s not frontloaded, yeah. It’s just if you can take another class, it’s free. But, we’ve taken all of the tuition, all of the fees—this is course fees, program fees, tuition, all of these different costs, everything but books—we just added it up, put it together and said, “For an online student, undergraduate, the cost is $300 per credit.” It’s just $300 per credit. And if a student is taking one class, that means that one class for the online student is $305 less than one class is for a face-to-face student.
Meredith: And circling back to our example that we used before, the student that’s taking seven hours versus the student that’s taking 15...
Wyatt: The student that’s taking seven hours...
Meredith: It’s $2,100 bucks instead of what was $2,500, right?
Wyatt: At $300 a credit for the online student, versus the plateaued tuition that we’ve got, for an online student taking seven credits, that student is going to pay $453 less. That’s a substantial reduction in cost.
Meredith: Yep. Factored, especially, over 17 semesters.
Wyatt: Times that over 17 semesters...
Meredith: Yeah, now you’re talking money.
Wyatt: That’s a lot of money. Anyway, one of the great benefits of this, too, is that now when a student signs up, the student knows exactly what the cost is. There’s no, “This is the tuition, well, how much money do I have to pay in fees and then what are these lab fees” or whatever else. It’s just all one cost.
Meredith: Well, we’ve said this before, this may hearken back to the Great Recession, but students that are coming to the university now have a different set of expectations from the university. Many are the same as they have been in previous generations, but one that is, again, I think because of the Great Recession where people saw that student loan debt was really weighing people down and that that can’t be discharged in bankruptcy, in spite of the fact that people went bankrupt and other things, they are really looking at the cost of higher education and saying, “I want a return on my investment that makes sense.” And so, us changing this tuition rate is part of a larger strategy, a larger initiative, that you’ve been leading here at the university to keep costs down. Because the expectation of our students is not only will they have a great experience, but they are not going to go into lifetime, crippling debt to get it, right?
Wyatt: Right.
Meredith: And so, for the first time in I think you said something like 40 years, SUU this past year did not raise tuition or fees at all.
Wyatt: On any student.
Meredith: On any student.
Wyatt: Yeah.
Meredith: So, coupled with lowering the tuition rate for online students and holding the line for face-to-face students, we’re actually making a concerted effort at maintaining affordability. Increasing accessibility and maintaining affordability as best we can.
Wyatt: And as you’re talking about student debt and tuition costs and all of that, it’s interesting that just this month, U.S. News & World Report released its rankings of universities based on student debt. And Southern Utah University is ranked 7th lowest...
Meredith: Wow.
Wyatt: In the country, and 2nd in the west for the lowest student debt among all regional universities. Pretty amazing.
Meredith: That’s pretty great, yeah.
Wyatt: The median debt of an SUU student upon graduation is only $11,000. Nationwide, it’s $37,000. So, while we’re trying to keep the cost down, we’re also helping our students avoid debt.
Meredith: That’s right.
Wyatt: Which starts them out in their careers in a much better place. $11,000 in student loan debt is not a bad investment in a person’s life.
Meredith: No kidding.
Wyatt: We’ve talked about that before.
Meredith: Yeah. Return on investment. Even if you took out student loans for your entire time, it’s still a good investment because SUU’s tuition is low. But if our average student is graduating with just $11,000 in debt, that’s enormous upside. Yep.
Wyatt: The average income with a bachelor’s degree per year is more than $11,000 in excess of the average salary for a person with just a high school diploma. So, it’s a great investment.
Meredith: And we think that this holding the line on costs is going to be important for higher education generally moving forward, because one of the...as higher education has taken a little bit of a black eye, one of the things that we’ve taken a black eye about is that we’ve ridden the student loan money train to just raise costs all out of proportion to really any sort of economic thing that you would tie to a cost increase. It has just been outrageous.
Wyatt: A lot of universities have that as their strategy.
Meredith: Absolutely.
Wyatt: “I can raise tuition, the federal government will pay for that tuition through student loans...”
Meredith: That’s right.
Wyatt: It’s clear we’re not following that strategy.
Meredith: And it’s also clear that that strategy is ultimately not sustainable. [Both laugh]
Wyatt: That’s right.
Meredith: Right? I mean, we’ve started to see the closure of the small colleges now and our concern is that that contagion will spread. And part of it is because of that business model. In fact, one of my favorite anecdotes about this whole thing is when we went to change the tuition for online students—I want to be clear about the fact that we were lowering the tuition—the governing body said, “Well, you...we think you have to go through,” there’s a process of who we go through called tuition hearings, “We think you have to do that.” And we said, “No, we don’t because that’s...whenever we talk about tuition changes, it’s always raising tuition. And it’s right and correct that we should have hearings and we should do all of those things, but we’re not talking about raising tuition, we’re talking about lowering tuition, and there’s no student in the world who would need to have a hearing about whether or not they can pay less.”
Wyatt: Lowering their costs.
Meredith: Right. And so, that was...one of my favorite parts of this process was people kept asking us...
Wyatt: “Did you go through the process?”
Meredith: “Do we need to go through the process?” And we kept saying, “No, we really don’t because when we talk about tuition, we only talk about one direction and it’s up and we’re going down.”
Wyatt: Yeah. So, the truth in tuition hearings that are required in Utah, and they’re I think common across the country, we have to have a hearing, we have to explain we’re increasing tuition, we have to explain the efforts we have taken to avoid tuition increase...
Meredith: That’s right.
Wyatt: We have to explain where we’re spending the revenue that we’re generating from the tuition increase, we have to allow students to give input back and none of those things make any sense when you’re reducing tuition.
Meredith: That’s right.
Wyatt: They just...
Meredith: We just said, “There’s no point in having that meeting.” [Both laugh] “Because none of that is going to take place.”
Wyatt: And I haven’t had a complaint from anybody yet.
Meredith: That’s right. Almost nobody complains about paying less for the same product.
Wyatt: Yeah, I haven’t met anybody yet.
Meredith: That’s right.
Wyatt: Anyway, that’s our strategy. Our strategy is we’re trying to grow our online programs, we’re partnering with others to help us and we’ll be talking about that in the future, won’t we?
Meredith: Yeah. And so, I’m going to put you on the spot just a little bit here. You mentioned 90/10 is sort of where we are in terms of face-to-face, and we both admit that there’s a 30% “tweener” sort of group in there where students are doing both face-to-face and online, but we have about 10% online students now...what would you imagine in the next five years, let’s say, by 2025 maybe, what would our percentage look like?
Wyatt: It’s hard to predict, and we’ve batted these numbers around a lot, haven’t we?
Meredith: We have. That’s why I’m putting you on the spot.
Wyatt: Yeah, I think the more we put a fine pencil to this, the more we would say, 2025, 2026, what are we going to look like in seven or eight years from now? We’re probably going to be...
Meredith: Is it 70/30? Or 75/25? Or...?
Wyatt: Yeah, 12,000 or 13,000 students face-to-face and 7,000 or 8,000 students online.
Meredith: Huh.
Wyatt: We’ll continue to be...
Meredith: So, 60/40ish?
Wyatt: Yeah, something like that. We’ll continue to be primarily a face-to-face school.
Meredith: Right, of course,
Wyatt: But we want to do our part in helping those students that can’t come to get all of the same opportunities and privileges that students that can come get.
Meredith: I've shared some of the stories from students in mit online program, and one of the great blessings, and I don’t use that term loosely, one of the great blessings for students to come to SUU online is that it doesn’t matter where you live, you pay state of Utah tuition to come here. And so, our out-of-state...
Wyatt: It’s one rate.
Meredith: That’s right, it’s one rate. And so, I have become a conquering hero to almost every place in the country that I go and travel to or go on a vacation to because there’s always somebody there that has been in my program that wants to take me to lunch and shake my hand and say, “Thanks so much” and “Thanks for getting us through in a year” and “Thanks for keeping the cost low, it would have cost me three times this to do this program elsewhere” or “It’s not available elsewhere” and so forth. So, online education at SUU, which just turned into an even better value, is really a terrific value. It really is.
Wyatt: Yeah, and in Utah, all of the universities, the state universities, have in-state tuition during the summer semesters. So, we see a lot of...and it helps us. It helps us tremendously.
Meredith: It does, yeah.
Wyatt: Because it helps build us to scale in the summer so that we can have, for the face-to-face students in the summer to have a bunch of out-of-state students come, it helps build enough mass that we can have really good programs in the summer as well. Anyway, that’s our...that’s what we’re going to see here beginning in January is a significant reduction in cost for our online students. And you mentioned that this is good for any student, in-state, out-of-state. What we understand, though and what we’ll talk about I think next week?
Meredith: Yep.
Wyatt: Is that most students who do online do it through a school that’s close. So, we think that most of our online students will be in-state students, but certainly not all of them. We’re probably...70% of our face-to-face students are Utah students but 30% are not. We’re getting close to 10% of our students being international students.
Meredith: Wow.
Wyatt: Probably...
Meredith: I’m surprised by that number, I didn’t realize it was that high.
Wyatt: Yeah. Probably...well, it’s really close that 10% of our on-ground, face-to-face students who are living in Cedar City, it’s getting close to 10% being international students.
Meredith: Quality, accessibility, and affordability.
Wyatt: Yeah. And they make our world so much better.
Meredith: They do.
Wyatt: Diverse ideas...
Meredith: It brings people to Southern Utah.
Wyatt: Yeah. And we think we’re doing our part for improving the whole world, not just our little one.
Meredith: That’s right, world peace. That’s right.
Meredith: You’ve been listening to Solutions for Higher Education, a podcast featuring Scott L Wyatt, the president of Southern Utah University in Cedar City, Utah. Today, we’ve been discussing the cost of higher education and SUU’s efforts to control those costs and help our students graduate more quickly and less expensively. As always, we appreciate you, our valued listeners, for tuning in. We’ll be back again next week. That’s for listening, bye bye.