VCU Meets Supply-and-Demand

vcu_president_house

President’s House at VCU.

Surely Virginia Commonwealth University has an economics department. Surely, there is someone at the state’s largest institution of higher learning who is conversant with the law of supply and demand. But, then, maybe not…

The VCU Board of Visitors will be asked to increase tuition 3.5% next academic year and pay a new $50 library charge, according to the Times-Dispatch. The cost of room, board and parking will increase as well. The proposal, notes Karin Kapsedelis, comes “amid concerns over loss of revenue from declining enrollment.” The university expects to see enrollment drop from 31,288 students this year to 30,962 — about 1,000 fewer than had been projected.

University administrators proffered a number of explanations for the decline in enrollment, but none of them involved price. Let me help: One big reason enrollment is dropping is that you charge too much! Jacking up tuition again will not help.

Like other state universities, VCU has ratcheted up tuition, fees and other charges by two to three percentage points faster than the inflation rate for many, many years, even as most Virginians’ incomes remain flat. Over time, those charges add up. It doesn’t help that the population of college-age students is peaking after years of growth, nor that distance learning is becoming an increasingly viable alternative to traditional classroom education, nor that an increasing number of Americans are questioning whether the cost of attending college is worth the pay-off.

While a 3.5% increase doesn’t sound like much, it exceeds inflation, which has been running somewhere between 1.0% and 2.0% over the past year, and it comes on top of an aggressive tuition restructuring that jacked up in-state charges by 4.2% on average and out-of-state charges by 2.14%.

While VCU does have undisputed centers of excellence, and while it has undeniably made a tremendous contribution to the revitalization of downtown Richmond, it is still a middle-of-the-pack state university. It is in serious danger of pricing itself out of the market.

– JAB

23 Responses to VCU Meets Supply-and-Demand

  1. I think I agree.. but what would be interesting would be a chart for several Va colleges showing tuition/other costs vs enrollment over the last decade or so.

    you can bet the folks who run these institutions are doing something similar but here’s a question.. if they CUT their costs, would they get more students?

  2. I agree with Jim this time. It is amazing what VCU is requiring students to pay out of their activities funds. And, what is it hoop coach Shaka Smart makes? $2 million? Just to get to a national playoff? Meanwhile, VCU, like other schools, is paying peanuts for its adjuncts.

    VCU’s strength is that it is a fair to middling school with some strong standouts and is a bargain. But it ain’t Harvard. It ain’t UVA or W&M. It shouldn’t start pretending it is with higher tuitions.

  3. Interestingly, the Economist recently found that U.Va. had the best ROI of all the major universities.

    Higher Ed policy in Virginia is ridiculous. There are way too many “state” schools. Programs/schools could easily be consolidated or eliminated.

    You start with Tech, U.Va., W&M, JMU….those 4 schools are very good academic/research institutions….no problem.

    Then you get to Mason (pretty good academics) and ODU…..there’s a case to made that the state’s 2 populations centers need major universities. Fine.

    But as for the other 4 year schools….I’d make VCU a great graduate school for medicine, fine arts, and social work.

    Everything else? Why don’t others make the case? Is there a true case for Longwood, CNU, Norfolk State, Mary Washington, etc.? What programs or degrees do they offer that are not available at the other schools? Why couldn’t you combine ODU and Norfolk State?

  4. Demographics are also behind the flat trend lines on college enrollment. Cost is not the only issue. The pool of students from the groups that traditionally send HS grads onto four year institutions is shrinking, and the pool of minority students or students who would be the first in college — that is where the growth needs to come from. But I strongly disagree that overall the state needs fewer seats at these schools, and I note this fan of the Dalton clan is making no threats to Radford University….!

    Why couldn’t you combine ODU and Norfolk State indeed. That may indeed come. NSU and VSU are the two state institutions in the greatest danger.

    The price is too high. Too much is wasted on sports, political correctness, worthless police departments who can’t protect students from being mugged in Richmond, and layers and layers of bureaucracy. Complaining about it is easy but the General Assembly lets it all happen.

    • I think there may be a bit of a sleeper in this and it’s the Virginia Community College System which in 2012 was given the ok to accept dual-enrollment high school students.

      2 yrs can get a kid a certification for some jobs and/or transfer to a 4 yr and much more doeable thing for kids and families who are not flush financially.

      the standard 4yr, full-boat college experience is shrinking to fewer and fewer families.

      but colleges and Universities are like Kodak. They know change is ongoing but they cannot seem to evolve and adapt except for one notable exception – Liberty College in Lynchburg:

      ” Liberty University is a private, Christian university located in Lynchburg, Virginia, United States. Liberty’s annual enrollment includes 12,600 residential students and over 90,000 online students as of May 2013.
      When including the number of people taking its online courses, LU is the largest Evangelical Christian university in the world, the nation’s largest private nonprofit university and 7th largest four-year university, and the largest university in Virginia”

      Others are not only seeing declines – they are also having to admit less academically qualified.

      • Larry, I am a little confused by your first comment. VCCS has been in the dual enrollment business for a long time now, from less than 4,000 to over 27,000 students http://research.schev.edu/?xeRk.

        Maybe you mean something else?

        • @tod – my understanding is that not until recently had it been extended to all high schools… no?

          at any rate – it’s certainly a useful option … for kids to begin transitioning to college rather than jump straight to a 4 year from graduation.

          • Larry, there might have been a few schools left behind, but I think that had less to do with VCCS than the divisions/high schools, though I may be wrong. However, if you look at the link I provided, the dual enrollment activity is only a modest increase from 2012.

          • lots of links there ..don’t see one for community colleges…or am I missing it?

          • not really growing … at expense of 4 yr…

          • your website is a treasure trove of information and maybe it’s me but I cannot easily navigate it to find info…

            for instance, this one for community college enrollment:

            http://research.schev.edu/enrollment/E25_Dual_Enroll_report.asp

            I tried to go back to figure out how I would navigate to that report and missed the bubble somewhere…

            if I try to go back to “enrollment” I get “forbidden directory”.

            is there a trick to navigating you site other than asking you for info?

            ;-)

          • Larry, the easiest way to navigate is with the breadcrumb trail in the top black bar. The drop-down box includes all the reports in the current topic, which is in the breadcrumb. Clicking “SCHEV Research” takes you back root page.

  5. I forgot to mention VMI in my earlier post. It has a distinct mission and has very good academics. I think it, too, has a place in Virginia’s public university system.

    larryg….I usually agree with you. But I know a prof at a Virginia Community College. The “trades” aspect may be o.k., but she said the quality of the average community college student has dropped like a stone in the past 10 years. The instruction level has also taken a dive in order to try and assist those at the bottom. I get the impression that the community college student of say, 1994, was either a guy or gal who wanted to be a plumber, electrician, etc. or someone who was determined to get a 4 year degree, but had financial issues and thus wanted to finish their first two years at a cheap price.

    Whereas today’s community college has a lot of kids roaming around who were told “you need to go to community college” once they got out of high school. They don’t have any real purpose, it’s just 2 more years of high school.

    • re: quality / mission of community colleges -

      perhaps… in our area – some of the top-end students in high school, the AP-types are dual-enrolling to get a head start on college..

      and others.. are using it to get a job-certification to be able to start earning enough to pay for the remainder of 4 years.

      but yes.. there are also some folks wandering around that ought not be there.

      the community college system in Virginia does seem to be growing.. still growing…

      but would be interested in more dialogue and views from others on the Virginia Community College situation.

  6. All things equal -and they never are…

    a kid who is capable of college academics but the family lacks financial
    resources (perhaps as a result of the recent financial unpleasantness) – AND does NOT like the idea of a mountain of school debt will look for other options and a nearby community college is one.

    2 years in a local community college while continuing to live with Mom/Dad maybe working a part time job, is a way to do it ….

    Community colleges in Virginia not only now allow dual-enrollment at most local high schools but they also transfer credits to 4 yr Va institutions.

    I don’t think that declining enrollment at 4 yr institutions means less people are pursuing higher educations. instead, I suspect, they’re finding other ways to do it. Perhaps there is data….

    I think folks might be underestimating the effect that Community Colleges could be having on the 4yr institutions.. or at least – this – when comparing enrollments at 4yr Va institutions – include enrollment at the Community Colleges.

    and as an aside – having experienced both flavors, – one of my perspectives is that all this stuff about ‘quality’ is overblown at the 100-200 course level.

    I do remember several classes where there were 100-200 of us sitting essentially in an auditorium listening to lectures delivered by heavily-accented graduated assistant and asking “what did he say?”.

    we seem to have this obsession about class size in K-12 but it all goes away first year of college, eh?

    ;-)

    • Larry,
      There is plenty of data at: http://research.schev.edu/ and the only thing it does not include is the for-profit sector.

      Total public four-year enrollment has grown from 163,000 to 214,000 between 1992 and 2013. With the last three years essentially flat.

      Public two-year enrollment has grown from 134,000 to 190,500 over the same period after hitting a peak of 199,000 in 2011, kind of typical in a recession.

      Private four-year enrollment has gone from 49,500 to 132,000 with almost that attributable to Liberty. Many of the other privates are struggling.

      If you visit our site, you will also find detailed data on student debt and wage outcomes following completion. (The wage outcomes reports are being updated and expanded to match the debt reports.)

  7. TOD – I thank you much for the URL to your site.. and will peruse it and thanks for the answer to the question.

    so.. Va Community Colleges are _not_ particularly making inroads on the 4yr institutions.. right?

    scratch that speculation!

  8. Larry, the answers to this get fairly complex. There is always some shifting going on between sectors and schools. The four-year colleges have pretty good control on who they accept and enroll and that rarely changes much.

    This blog post from January runs the numbers down that compare 2012 to 2013 and compares to enrollment projections. http://research.schev.edu/apps/blogs/datablog/post/2014/01/10/Enrollment-Changes.aspx

    I consider most of what happened to be normal noise in a changing economy with a growing sensitivity to student debt.

    • not so clear, eh?

      let me ask you about this:

      UMW weighs tuition increase

      http://news.fredericksburg.com/newsdesk/2014/04/10/umw-weighs-tuition-increase/

      excerpt: ” Key drivers for the upcoming budget include state-mandated costs, such as a 1 percent salary raise for all employees and benefits increases totaling $2.1 million, and addressing the academic year’s enrollment shortfall totaling $1.3 million. ”

      this sounds like what Bacon was talking about with other institutions.

      but you say that we’re not seeing increases in other alternatives.. so overall enrollment across the board whether it’s 4 yr or 2yr is declining or flat?

      it does seem to me, I agree with Bacon.. that if you are seeing declining enrollments, it seems counter-intuitive to increase your prices..

  9. Larry, I tend to agree, but most undergraduate students don’t really seem to understand what they pay, leading to the whole ‘net price’ discussion. There are too many third-party payments (financial aid) distorting the equation. Especially since the pricing behavior of competitor institutions is the same.

    In VCU’s case I am more inclined to credit their pricing structure change to be more impact than changes in price. VCU was actually up in first-time in-state freshman (6 students) and down in out-of-state(29) http://research.schev.edu/?xeS5 further, in-state new transfers was up by 101 and out-of-state down by 19 http://research.schev.edu/?xeS6 . So, it is certainly possible that pricing affected the out-of-state transfers.

    So, the remainder of the loss was continuing students. It might have been possible to retain them with increased aid, but maybe not. They have been both financially and academically borderline. They may have also found useful jobs. Not likely, but possible.

  10. As for UMW, they have other problems. They have lost in competition for certain types of students with JMU and CNU. The latter has become a real powerhouse of attraction for the high-B student with a conservative bent.

    While UMW saw an increase in instate first-time freshmen of 34 students, the decrease of 46 from out-of-state really hurt the budget. Lowering out-of-state tuition might help, but only CNU, RU, VSU, and NSU have significantly lower rates….altho that might be a hint.

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