1. The Art of Discounting Bluefield College Board of Trustees February 18, 2011

2. Defining Tuition Discount (a)Gross Tuition & Fee Revenue$xx,xxx,xxx (b)- Institutionally Funded Financial Aid-xx,xxx,xxx (C)= Net Tuition Revenue$xx,xxx,xxx (D)(b)/(a) = Tuition Discount % xx.xx% NACUBO, 2006

3. College Board Trends Data for private nonprofit colleges o Published tuition & fees averaged $27,293 in 2010-11. o $1,164 (4.5%) higher than 2009-2010 o Average total charges are $36,993, up 4.3% o In 2010-11, FT students receive an estimated average of $16,000 in grant aid from all sources. College Board, Trends in College Pricing, 2010

4. alarming growth in discounting and non-need-based aid and mentions that many colleges feel locked in "arms race" The NACUBO study documents the alarming growth in discounting and non-need-based aid and mentions that many colleges feel locked in "arms race" with each other as they compete for students. In our 2008 white paper, "Time to Reexamine Institutional Cooperation on Financial Aid", we examined the issue of non-need-based aid, suggested ways that increased cooperation among colleges could be structured to benefit colleges and students, and looked at the current antitrust rules that may hinder cooperation. Given the findings of this study, now is the time for colleges to step up and raise the issue of institutional cooperation and what legal changes might be necessary to facilitate it. Matt Reed Program Director The Institute for College Access & Success mreed @ticas.org www.ticas.org"Time to Reexamine Institutional Cooperation on Financial Aid" www.ticas.org

5. Balancing the Goals # Q$

6. $35,000 or less1 in 17 will earn a BA degree by age 24 (Approximately 6.0%) $36,000 - $60,0001 in 10 will earn a BA degree by age 24 (Approximately 12.7%) $60,000 - $85,0001 in 4 will earn a BA degree by age 24 (Approximately 26%) $85,000 or more $94K - $121K 1 in 2 will earn a BA degree by age 24 (Approximately 51.3%) Source: Postsecondary Education Opportunity Analysis, Based on 2002 Census Data Factoid – USA Today – Feb. 2, 2005 Family Income Assessing the ability to pay for college

8. Distribution of Full-Time Undergraduates at Four-Year Institutions by Published Tuition and Fees, 2009-10 Source: The College Board, Trends in College Pricing 2009; Annual Survey of Colleges.

9. Distribution of Full-Time Undergraduates at Private Four-Year Institutions by Published Tuition and Fees, 2009-10 Source: The College Board, Trends in College Pricing 2009; Annual Survey of Colleges.

10. Distribution of Undergraduate Enrollment by Sector, Fall 1990, Fall 2000 and Fall 2007 Sources: The College Board, Trends in College Pricing 2009; NCES, unpublished data provided by IPEDS staff.

11. Sources: College Board, “Trends in College Pricing, 2008”; Bureau of Labor Statistics, 2009, www.bls.gov ; U.S. Census, Current Population Study-ASEC, 2008.www.bls.gov

12. 12 Median Revenues per FTE by Source: 1987,1998,2005

13. Freshman Funnel 2000 to 2010

14. Tuition, Discount and Net Revenue 2000 - 2010

15. Average FTE

16. Unfunded Financial Aid per Student

17. Unfunded Aid as a % of Tuition

18. Net Revenue per FTE

20. There is no pricing power without excess demand. Demand - Apps1600 Accepted1334 Accept Rate83.4% Discount50% 47% Yield30% 27% Enrolled400 360 Net Revenue per Student $15,000$15,600$16,536 Aggregate Net Revenue $6.0M$6,24M$5.95M 2010 Actual2012 A2012 B

21. Assessment of Discount Rate by Yield # offered #accepted Average $ Yield SAT/ACT Scores by Quartile HS-GPA by Quartile

22. What do we know summary?  The pie is getting smaller  Only 30% of all college-bound students attend colleges priced >= Bluefield College  Only 20% of college-bound students at private colleges attend a college with our price or less  Colleges are more tuition-dependent  Financial aid is increasing more than price  New lesser-priced experiences are gaining popularity and market share

23. What are our options?  Reduce our price  Increase tuition & fees and room & board at a higher rate than planned  Enroll more full-paying students  Charge for premium services/experiences  Increase enrollment  Eliminate/reduce merit-based scholarship assistance  Reduce expenses  A combination

24. What are our options?  The Muskingum model: Reduce price.  Works for the short-term, but has long-term consequences  Forfeit forever revenue from anyone who pays more than the average cost of attendance  Reduces or eliminates the lure of merit- and talent- based aid  Still must meet the financial need of needy students

25. What are our options?  The public school model: Increase our price at rates greater than planned  Pass more cost on to students  When we increase our price we become less affordable to some and others become less affordable for us  Increased attention from legislators  Seems counter-intuitive when we know the only alternative for families is increased borrowing

26. What are our options?  The Hamilton and F & M model: Eliminate merit- scholarship in favor of need-based aid  Eliminates competitive advantage  Merit has become an expectation (students, parents and high schools)  No demonstration of how much we “want” a student  Most of merit dollars already meet need and we get the psychological “bounce”  Could compromise our ability to attract students for key programs

27. What are our options?  The DePauw model: Decrease net cost by discounting more and exceeding enrollment targets to generate revenue  Capacity becomes a problem  Bond raters and others have concerns about discounting and NTR per student  Not sustainable without resources (human and financial) in place

28. What are our options?  The University of the South model: Decrease tuition 10% in one year  What happens with financial aid?  Not sustainable unless  Aid is affected  Enrollment increases to compensate for loss of revenue

29. *Pricing/Net Revenue is complex * No “silver bullet” answers *Time for a paradigm shift

30. *Stabilize Enrollment * Stabilize Demand *Then, Stabilize Net Tuition Revenue

31. Questions?