Utica and Rosemont Colleges are both cutting their tuition costs by 40% next year. We need to guarantee students and families discounts. Increased sticker prices mean more discounts, so this model cuts the sticker price and cuts discounts, but also cuts the overall cost.
Does that actually result in cash savings?
At Rosemont, the average savings will be $815 over next year," said Hirsh, the president of Rosemont "but that ranges according to the individual students' packaging anywhere from $100 only to ... $14,000."
Utica's Hutton added that "The entire range of our students will save money. Ninety-three percent per year will save between one thousand and five thousand per year. The remainder will save five thousand and up. The vast majority of our students will save significant dollars in this."
Rosemont College President Sharon Hirsh told CNBC that the effort was part of an attempt to shift an existing model. "We realized that we, among so many other colleges, were going according to a model that was raising the sticker price at the same time that we had to raise discounts," she said. "And so we've gone from a high sticker price/high discount to a lower sticker price/low discount rate."
Watch the video here.