Big tuition increases are nothing new to many college students, but Bloomington-based Rasmussen College on Tuesday announced a double-digit cut in its rates.
It's an unusual move that comes at a time when for-profit college enrollment is dropping.
Rasmussen is cutting tuition an average of 12 percent across its 22 campuses, which are located in the Midwest and Florida. In Minnesota, the average cut will be even deeper — about 18 percent. That means about $9,600 less for a bachelor's degree, and $8,600 off an associate's degree. Some campuses and programs will see tuition decline by almost a quarter.
The majority of Rasmussen's two-year associate's degrees cost $35,550, including books, before the cut. Most bachelor's degrees cost $63,450.
President Kristi Waite said the college is responding to the public's concerns over the cost of education.
"Rasmussen has always been market-focused," Waite said. "We listen to the demand of the employers and the students. Affordability has been a topic not only in the press but on students' minds for years."
The tuition drop won praise from Theresa Barden of Circle Pines, who is entering her fourth year in the criminal justice leadership and management program on Rasmussen's campus in Blaine.
"Cost is huge. Being as though I have two children and then one on the way, reducing the amount of cost that I'll have to pay in the future after I graduate is a big deal," said Barden, 22.
The college also continues to guarantee that it won't raise tuition for those who are continuously enrolled. Rasmussen said that's an incentive for students to finish their studies on time.
It's not the first time Rasmussen has done something like this. It froze tuition beginning in 2010, and that year also cut tuition for students taking upper-level courses.
Waite said that played well with students, so this year they expanded the cut to almost all classes and programs. Current students can also get the new rate.
ENROLLMENT DOWN AT FOR-PROFIT SCHOOLS
Rasmussen's cut is happening at a time when national enrollment in for-profit schools is suffering.
In October, government data showed for-profit enrollment dropped 2.9 percent in the fall of 2011, and industry enrollment leader University of Phoenix announced the closure of about half its campuses.
In Minnesota, enrollment in for-profit colleges has dropped almost 20 percent since 2008, according to data from the state Office of Higher Education.
Tom Kosel, director of government relations of the Minnesota Career College Association, said the lower enrollments are probably the new norm for the colleges and they've prompted a focus on practical programs.
"I don't expect rapid growth any more," said Kosel, who's organization represents 13 for-profit colleges in the state. "I think that it's going to be aimed at programs that have an end result, that are job oriented. And people will be very careful about what they do."
As a comparison, Minnesota private nonprofit colleges saw a decline of just over 1 percent. Enrollment at public colleges and universities, however, increased more than 6 percent. Community and technical colleges saw an even greater increase.
John Nelson, who oversees the higher-education division at Moody's Investor Service, said the national drop is due to factors such as a bad economy, students' caution over debt, and regulations that have forced the colleges to be more selective over who they enroll.
"Both traditional colleges and for-profit colleges are having to, in effect, lower their expectations on what kind of revenue growth they can have, and even if they are going to have any revenue growth," Nelson said.
TOUGHER COMPETITION THE NEW NORMAL
From now on, he said, competition for students will be tougher.
"Lowering your tuition, or at least freezing your tuition is a strategy that is certainly makes sort of its obvious economic sense," Nelson said.
Waite said Rasmussen's cut is not a tool to boost enrollment. Nationally, the college's enrollment is about 12 percent down from its recession-era peak of 17,000 students in 2010. But it's still two-thirds larger than it was in 2008.
State data shows that despite a drop of 22 percent since last year, Rasmussen's enrollment in Minnesota has grown 2 percent since 2008.
And Waite said Rasmussen is opening two campuses in Kansas later this month. But she acknowledges the tuition cut comes at a cost to the college.
"This is a steep-enough discount that it does have a financial impact on the institution," Waite said. "But we planned for it and we are ready to incur that expense."
Tuition cuts and freezes are still pretty uncommon. Minnesota has few examples. The private nonprofit Concordia University in St. Paul announced in September it was cutting undergraduate tuition by a third. And both the nonprofit Minneapolis College of Art & Design and the for-profit McNally Smith College of Music announced tuition freezes in 2010.
The University of Minnesota has proposed a tuition freeze for the coming biennium — but that's if the Legislature provides the funding that enables it to do so.