Raise or Lower

Raise or Lower



Raise or Lower Tuition

Higher education systems use different strategies to raise revenues. The financial situation of Nobody State University is the same as that being experienced by other universities. This has been prompted by raising costs due to the increased needs by students in need of financial assistance (Trombley, 2003). Most institutions opt for increasing the tuition fee. This is termed as a “one-size-fit-all” solution (Matthews, 2013).The financial stress is due to the investment by the universities in improving technologies present that deal with the admissions (Trombley, 2003). Some institutions fail to make such investments in order to utilize the tuition paid fully. In an attempt to be fair, some universities require more fees be paid by students who have more credit hours or units per semester as opposed to those who have fewer (Matthews, 2013). The tough economic crisis faced by most universities has been existing prior the recession. The situation has been further worsened by the slow withdrawal by the legislators in providing financial to these institutions (Trombley, 2003). The aforementioned facts act as guideline in understanding the reliance of the universities on tuition. The main aim of increasing the tuition fee is to close the gap existing due to the minimal financial aid from the government and the need to manage the institution that requires finances


The raising of the fee is by the university is a pricing strategy which is also been undertaken by other institutions. The need to increase the fee is in order for the tuition revenue to keep up with the inflation and economic recession. Investigating the recent trends places more emphasis on the importance of tuition increase. It is estimated that 173 private and 144 public universities have been unable to raise the prices thus they have faced political pressure and progressively diminishing number of enrolments (Trombley, 2003). However, the increase of tuition to accumulate more revenue should be done by using pricing structure, which will ensure the revenue will go up. There are two advantages, which present themselves. They include the relative demand of higher education and secondly, the perception students have towards the quality of varied programs in the institution. If the university follows the strategies, it is likely to experience an increase in revenue.


 Outlining the strategies is as step, which will shed light on how the revenue increases and the recommendations on how the NSU University can increases the revenue especially with the price elasticity at – 1.2.

1.1 Credit-Hour Pricing

During enrollment of a sophomore, the tuition fees are equal or rather it is at a flat rate considering they are offered more units per semester as compared to the continuing students (Fourneir & Kennedy, 2008). This means that the students are charged lesser compared to the other years yet they are spending more resources of the institution. This situation leads to wasted credits, which is as luxury, the universities cannot afford considering the hard economic times. The implementation of the credit hour pricing strategy means that the universities maximizes on the credit hours spent on each student by charging the credits hourly (Fourneir & Kennedy, 2008). However, it is a difficulty strategy to implement. It requires close monitoring of the course load of each student and faculty, a process that is quite involving. Tuition billing is also needed as the students may drop or add certain units depending on the affordability and their financial capability (Fourneir & Kennedy, 2008). The strategy is effective in long term as it protects the university from running to the ground due to severe inflation experienced. However, there is always a loophole in any strategy. The issue with this specific one is that it fails to consider the educational delivery costs that the university is held liable to pay (Fourneir & Kennedy, 2008). This brings us to the second pricing strategy.

1.2 Upper and Lower Level Charges

A case scenario that can best explain the importance of this strategy is a well trained and educated lecturer teaching three credits to a population of 25 students for a whole semester compared to the same number of students being taught by an amateur lecturer, say a masters finalist. The costs incurred for instructors are 25 times more compared to the credit hour pricing (Fourneir & Kennedy, 2008). This poses as a challenge from an economic perspective. There is a difference between the high and low level courses and thus they should not charge the same. Evidence that the implementation of this strategy will increase the university revenue is seen by the effort of the white house towards revolutionizing the enrollment of students in both colleges and universities. This translates to a shift in enrollment whereby the students first attend college to receive education on low-level units then proceeding to four years colleges to receive upper level education from highly trained professors (Fourneir & Kennedy, 2008). This is a strategy should be highly considered, the students should be charged higher for upper level courses and lesser for low-level courses. This strategy will also require the university to offer some financial aid to students who are taking double majors, which is a small price to pay if it means the revenue of the institution will be salvaged.

1.3 Differentiating Programs

This strategy is developed by critically following the trend in demand of the programs considered more desirable and those that receive less attention (Fourneir & Kennedy, 2008). During evaluation, the university should be keen on the programs that attract highly intelligent students. From this angle, the institution has a marketing advantage, which it can use to increase the revenue. This is done by charging more for the desired programs, a business strategy that can ensure the financial stability of the system (Fourneir & Kennedy, 2008). The only issue of concern presented might be studying the elasticity of demand and pricing. The university should be willing to test run various models of pricing in order for it to choose the one best suited for its system.


Failure by the university to implement the above-mentioned strategies reduces the likelihood of the institution to achieve financial instability(Fourneir & Kennedy, 2008). The conditions, which will cause a fall or stagnancy in revenue, are

  1. Charging flat rates to enrolling students who have more units per semester
  2. Failure to use program differentiation as a venue to increase tuition rates
  3. Failing to acknowledge instructional costs incurred in upper and low level courses.

Relationship between Increased Tuition and the Enrollment Process

The implementation of the aforementioned strategies might negatively affect the enrollment process in the institution, however, the relationship can be maintained at a positive standing. This can be done when the university develops attractive packages for high quality students (Fourneir & Kennedy, 2008). Another strategic move would be to provide programs that assist the students by offering financial aid despite the rise in tuition (Fourneir & Kennedy, 2008). This will ensure that more students are likely to enroll to the course programs offered by the system.

As president of NSU, differential pricing strategies are the most effective in terms of maintaining enrollment and financial stability of the university. Implementation of the said methods will require proper planning which if executed properly will guarantee success. Establishment of proper strategy that is in accordance with the missions, ambitions and culture of the system is beneficial to all parties involved. Maximizing on the tuition revenue not only secures the financial stability but also empowers the university with means through which it can better provide the applicants’ needs and invest in various programs which are important in fulfilling the goals set.


Trombley, W. (2003). The Raising price of higher education. NATIONAL CENTER FOR PUBLIC POLICY AND HIGHER EDUCATION. Retrieved from http://www.highereducation.org/reports/affordability_supplement/affordability_1.shtml

Matthews, D. (2013, August 28). The Tuition is Too Damn High, Part III — the three reasons tuition is rising. The Washington Post.

Fourneir, J.T & Kennedy, B. (2008). Education: Strategic Tuition Pricing Offers Universities The Opportunity To Increase Revenue And Improve Student Quality. Huron Consulting group. Retrieved from http://www.huronconsultinggroup.com/Insights/Whitepapers/Education/Strategic_Tuition_Pricing


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