Colleges Getting Price Paranoia? Schools Trying to Cut Costs With Technology

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Published March 27, 2013

| FOXBusiness

It’s no secret that the cost of college has been on a steady rise over the last decade and is easily outpacing inflation, but now some schools are starting to fight back against the tuition sticker shock to entice students.

More than ever, families are putting the cost of college under a microscope, says Mark Kantrowitz, publisher of FinAid.org. And with good reason: As college costs continue to climb while the economy remains sluggish, and with student debt topping $1 trillion for the first time ever in 2012, cost has become priority No.1 when picking a school.

Kantrowitz, who also authored Secrets to Winning a Scholarship, says generally when the net price difference between two schools is less than $1,000, the student will attend the school that is perceived to be more esteemed. When the difference is more than $5,000 per year, they almost always choose the lower cost school because that difference multiplied by four years can mean paying at least $20,000 more.

“In between that, they agonize over the decision,” Kantrowitz says. “Family incomes over the last decade have been flat or declining while the government has shifted the burden [of higher education] onto families. Some, mainly low-income students, are not going to college at all.”

Colleges across the country have been battling with tighter budgets in the last five year with less state funding and smaller endowments, but some schools are starting to take measures to reduce their cost to students in hopes of increasing admissions.  

Smaller private schools in particular are feeling the pressure to reduce costs, Kantrowitz says, because they don’t have the branding to compete with elite colleges yet their price tag is similar.

Here’s a look at some of the other ways colleges are seeking to rein in costs across the country.

Offering More Online Classes

Schools are increasing their offerings of Massive Open Online Courses (MOOCs) to help reduce the cost of earning a college credit. These courses are offered by universities through platforms including edX and Udacity, which allow anyone to participate for free online. If a student wants to receive credit from a university, he or she must pay and complete tests and coursework. While thousands may participate in MOOCs, the number of people receiving credit is small.

Antioch University’s Los Angeles campus recently slashed the credit cost of MOOCs. A typical three-credit course at the school can cost up to $1,800, whereas an online MOOC for credit can cost under $300, according to Joanna Gerber, the school’s director of communications. Students seeking credit must pay to complete testing and then work with an Antioch representative to create a reflective portfolio to demonstrate what they learned.

Because online classes are relatively new, the challenge today is getting undergrad students interested  and aware of them, Gerber says.

“We are so entrenched in the day-to-day that the average bachelor student doesn’t know about these courses,” she says. “We are committed to making these more affordable. In the pilot phase, we are keeping the average cost per course under what a student would pay at any of our four-year California state universities.”

San Jose State University began offering MOOCs through edX last year, and offered a hybrid electrical engineering course where students used MOOC tutorials at home and participated in interactive problem-solving activities in class. The model proved successful with a 91% pass rate compared to a 60% rate in a conventional class setting, according to Patricia Harris, media relations director at SJSU.

As the largest public school in Silicon Valley, Harris says SJSU felt a sense of responsibility to integrate technological advances into its curriculum.

“MOOCs at public universities are trying to expand access for people we were not reaching in the past,” Harris says. “Students were failing that conventional engineering course. We would lose up to 40% of them—they would retake it, change majors or leave the college.”

While the MOOC opportunities at SJSU do bring down costs, Harris says the university is more focused on spending its students’ money more effectively. Other courses SJSU is offering though Udacity include college-level algebra and statistics classes. The classes are open to the public, however students get first priority so only around  30 seats out of 300 tend to be non-university students.

Helping With the Cost of Books

Skyrocketing textbook costs also take a substantial bite out of students’ budgets and are a major player in student debt. While consumer prices have increased 250% in the past 34 years and health-care costs have increased 575% during the same period, textbook costs have soared 812%, says Richard Baraniuk, professor at Rice University.

Baraniuk is director of OpenStax College, a nonprofit organization that develops and has educators review textbooks that are offered for free to students. Some books are newly-developed and others are purchased copyrights of old texts that are updated to fit current course criteria.

The goal of the program is to create 20 free and open digital textbooks that are designed for the 25 highest-impact introductory courses. OpenStax hopes to have these offered at every school no matter its status or cost.

The program launched its first books last year, according to Baraniuk, and has funding for 11 books from sponsors, including the Bill and Melinda Gates Foundation. Up to 140 institutions have already adopted the books with its physics book nearing 3% of the entire market for college physics textbooks, he says.

“In California, the cost of textbooks now exceeds the cost of tuition [at state schools],” Baraniuk says. “It’s a detriment to the competitiveness of our nation going forward.”

Brooklyn College’s on-campus Barnes & Noble (BN) bookstore uses three strategies to bring down the costs of textbooks: selling used books, electronic books and offering rentals at reduced prices. The library also maintains copies of all textbooks for general circulation in the school’s reserve section, according to its media department spokesman Ernest Mora.

Other Cost-Cutting Measures

Union College has set its cost-savings measures on the energy industry, according to Gail Clover, senior director of communications. The school had wind turbines installed in 2010 which now supply 40% of the regular power at the college’s athletic complex. In addition, the campus community participates in efforts including its Do it in the Dark competition, which challenges students to reduce the consumption of electricity, gas and water. Students in one of the school’s complexes reduced their consumption by 30.86 %, she says.

“We have tightened budgets and continue to seek out efficiencies and ways of saving resources, such as launching efforts to lower our consumption of energy and locking in lower energy prices,” Glover says. The lower the school’s energy costs, the less it has to pass on to student’s tuition bills.

The school is also working to reduce its day-to-day administrative operations costs including streamlining human resource materials, she says.

Still Far to Go

While every cost-cutting measure can help reduce a student’s tuition tab, FinAid.org’s Kantrowitz says the cost effectiveness of  MOOCs may be overhyped, and eBooks don’t replace the real thing. Schools are going to have to come up with more tangible benefits for students if they want to keep their interest peaked.

“People aren’t committed to MOOCs, they may participate because they are interested, but you learn by interacting with materials, tests and office hours,” he says. “Not everyone can handle this type of education. The same thing applies with eBooks—it's just clumsier.”

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