Ohio Northern promises to slash tuition

Effort touts 20% cut, graduation warranty; true savings unclear

10/11/2013

ADA, Ohio — A new program by Ohio Northern University would drastically reduce the school’s sticker price, though it’s unclear how much students would actually save.

Officials from the Ada-based private college unveiled “The Ohio Northern Promise,” at a news conference Thursday at the Ohio Statehouse in Columbus, promising to reduce tuition by at least 20 percent and offering a four-year graduation guarantee, among other elements of the program.

University officials said the tuition cuts will lead many students to pay less, but the move is much more about changing the school’s pricing structure. A corresponding recalculation of financial aid will mean students won’t see a full 20 percent reduction in cost.

In many ways, the effort is a recognition that students and their families are increasingly sensitive to college costs, and a rejection of an assumption that the “Chivas Regal effect” still applies to higher education. The effect, named for a brand of Scotch that saw sales increase after it raised its price, maintains that consumers assume highly priced products are of higher quality.

Many universities raised tuition to keep pace with peers, fearing low tuition would signal they were a lower-tier institution. They then gave generous financial aid to keep down costs.

“For decades, private universities were approaching a model of high tuition and high aid, and I think that model is unsustainable,” ONU President Daniel DiBiasio said.

Parents and students are less concerned with school prestige and more concerned with return on investment, Mr. DiBiasio said.

C. Todd Jones, president of the Association of Independent Col- leges and Universities of Ohio, said that not all private universities have used that model, noting many actually cost less than public universities. Most independent colleges market themselves as an overall cost savings because students graduate in four years at higher rates than in many public schools, he said.

Under ONU’s plan, the university will lower 2014-2015 tuition rates between 20 and 25 percent for incoming students, depending on which of ONU’s five colleges they enter. The university calls the change a “tuition reset,” returning tuition rates to prerecession levels. For instance, annual tuition for the College of Arts and Sciences will drop from $36,470 to $27,500 under the plan. But that doesn't tell the true story of what students pay.

With room and board, the annual sticker price for a student in the college this year would be about $51,000. But financial aid cuts that sharply; university officials said the average net tuition price for ONU students is $17,140.

Net tuition for current undergraduates will be frozen next year at current rates, Mr. DiBiasio said. University officials said they could not tell yet how the tuition reset will impact net tuition for new students, but they intend for the move to make college more affordable. “It’s so dependent on each individual student,” Mr. DiBiasio said. “It’s just hard to determine what [net tuition] would be.”

Students could see a potential larger savings through the four-year graduation guarantee, which will allow students who “meet specific standards and expectations for progress toward a four-year degree” to receive a free additional semester if they are unable to graduate in four years, according to the plan approved by the university’s Board of Trustees on Saturday.

Mr. Jones said several other private schools in Ohio have developed similar four-year guarantees.

The university plan, developed over the past year, includes efforts to expand internships and other experiential learning experiences, and to boost its already-high job placement rates.

Ohio Northern is the latest in Ohio to drastically cut tuition. Ashland University announced this summer it would slash tuition by $10,000, though the net cost to students would stay about the same.

Muskingum University cut its tuition in 1996 by 29 percent. In 2004, Sylvania’s Lourdes University — then known as Lourdes College — lowered tuition by more than 40 percent. Both those moves led to enrollment increases.

— Nolan Rosenkrans