By Paul Cerkvenik
At Minnesota's private colleges, students receive an education of exceptional value, as recognized by the more than 40,000 students who choose to enroll in our colleges and demonstrated by our hundreds of thousands of successful graduates. The economic returns of higher education are unequivocally clear, in the form of more stable employment, wider professional opportunities and higher average lifetime earnings. But today few personal or family financial decisions are as significant as the investment in a college education. The price of a college education is important because both the economic benefits and the economic costs associated with it are so significant.
College pricing works differently at different kinds of institutions. Public colleges charge lower initial or published prices because taxpayers subsidize a portion of their annual operating costs. These public subsidies are substantial, totaling over a $1.3 billion each year in Minnesota, allowing public colleges and universities to charge tuition rates substantially below the cost of the education they provide. Private colleges, in contrast, receive no direct support from taxpayers to underwrite their annual operating costs. As a result, most private institutions depend principally on revenue from tuition to support their annual operating costs.
Though their sources of funding are different, private colleges, like public colleges, serve public purposes. Private colleges are nonprofit, mission-driven institutions that share a common purpose of offering a high-quality education to students from all walks of life. Many were founded and nurtured by faith-based immigrant communities seeking greater educational opportunity for their children and grandchildren. Minnesota’s private colleges always have been and today remain committed to making the high-quality education we offer accessible to all students, especially those with limited means.
So how does tuition pricing at private colleges work practically and economically for families? While each private college has a published price for tuition and fees, private colleges do their best to meet every family and student where they are at financially through need-based and merit-based scholarships. As a practical matter, there is not one single price that every student and family pays, but rather a multitude of prices. Students attending any of Minnesota’s private colleges pay a net price that reflects a combination of ability to pay and their academic merit. In the end, 95 percent of students receive financial aid that does not have to be paid back, meaning that nearly all students actually pay a net price that is substantially below the published price. In fact, the amount that the average first-time student pays for tuition is less than half the published price.
This approach to tuition is progressive: students from lower-income families typically pay less than students from the highest income families — an approach that allows private colleges to accomplish their mission to provide a high-quality experience to all students. The price any family pays requires a significant financial investment. Our colleges ask each family, whether wealthy or not, to pay a price that bears a relationship to their means and ability to pay.
The pricing model at private colleges is critical to making our high-quality education accessible to families of all means. And we do this very well: the average family income for Minnesota residents attending the 17 private colleges who are members of the Minnesota Private College Council is actually lower than at the University of Minnesota. And, 25 percent of our students receive federal Pell grants, meaning they generally have family incomes below $40,000.
Once enrolled, we provide an exceptional educational experience based on small class sizes, personalized interactions with faculty, rich experiential learning opportunities and lots of mentoring and attention to student needs. These efforts payoff: collectively, our colleges have the highest four-year graduation rate in the state and region and among the highest in the nation. On-time graduation is one of the most effective ways to limit the cost of college and student borrowing. Among those students who start at and graduate from our colleges, nine out of ten complete a degree in four years or less.
Our approach to tuition combined with the exceptional outcomes of our students means that our colleges are engines of educational equity and social mobility for less-advantaged students while providing an education of incredible lifelong value for every student.
Private colleges provide families with clear information about the price they'll pay. All colleges, public and private, provide net price calculators on their websites. This tool allows a student or family to quickly estimate the net price they might pay at any particular college prior to applying. Accepted students receive a full and complete explanation of the types of financial aid they have been awarded (grants, loans, or student employment) and the net price they will be asked to pay if they choose to enroll. At private colleges, admissions and financial aid counselors work closely with families and students to ensure they fully understand the cost of the investment they are making and that support continues after students are enrolled.
Is this model simple? No. Is it fair, rational and transparent? Absolutely yes. Private college leaders are deeply committed to college affordability and to providing a high-quality education within reach of all students. Meeting families where they are at financially has been and remains the very best approach to ensuring that all students have access to the great value of an education at a private college — an opportunity that can best meet the individual aspirations of students and one that serves the educational needs of our state.