The Market Price of Tuition

Transcription

1 The Market Price of Tuition CAEL and Bellevue University s Human Capital Lab November 2007

2 Research Conducted by: Elizabeth J. Hibner, Senior Product Manager The Council for Adult and Experiential Learning (CAEL) 55 E. Monroe Street, Suite 1930 Chicago, IL The Council for Adult and Experiential Learning (CAEL) is a national, non-profit organization with a mission to expand learning opportunities for adults. CAEL works with colleges and universities, companies, labor organization, and state and local governments to remove policy and organizational barriers to learning opportunities, identify and disseminate effective practices, and deliver valueadded services. For more information, visit In Partnership with: Bellevue University s Human Capital Lab Frances Street Omaha, NE The mission of the Human Capital Lab is to develop innovative and valuable approaches to unlocking the long-term potential of human capital investments. The Lab manages a network of researchers, funds Bellevue University graduatestudent research, conducts seminars, publishes results, and consults with organizations on human capital investment issues. For more information, visit our website at

3 Executive Summary Corporate America is spending billions of dollars for the training and education of the workforce. With respect to expenditures for tuition assistance programs, however, the vast majority of companies have done little to measure the impact of those expenditures. CAEL and Bellevue University s Human Capital Lab believe that those expenditures are important investments and can and should be measured accordingly. Companies who have been able to track tuition expenditures as an investment have found dramatic results. One notable example is Verizon Wireless. Dorothy Martin, the national program manager for LearningLINK at Verizon Wireless, sums it up: At Verizon Wireless we have not left anything to chance. We have approached tuition assistance in a strategic way, and that has paid off in better performance, more productive employees and a workforce that is eager to take on more. (Chief Learning Officer, December 2007). For companies that value tuition as an investment, it is important for both planning and evaluation to have a clear picture of the costs of tuition. Through a careful analysis of current expenditures for 27 corporations and nine industries, CAEL and Bellevue University s Human Capital Lab offer some benchmarks for the real costs of education that are applicable to organizations of all sizes and industries. The institutions included in the study are a mix of public, private and non-profit. These degree-level courses occurred between January 2006 and June 2007 and include online as well as campus-based programs. CAEL and Bellevue examined the tuition prices (excluding fees and books) for Associate s, Bachelor s, Master s and Doctorate (PhD and JD) degree programs for a sample size of 124,000 courses. In addition, most frequently selected courses of study for each of the degree programs were examined to identify variations in market pricing by credit hour. This information can assist a company in constructing a tuition assistance policy that will align with the company s long term business goals and provide guidance for tracking return on the investment in tuition. Using a Goal-Based Approach to Cost Estimating Though a large number of companies offer tuition assistance for strategic reasons such as recruitment and retention (CAEL 2004), the amount of funds available to an employee to finance degree based education is most frequently determined by the IRS guideline of $5,250 annually, rather than the actual cost to obtain a degree. Employers do not have a clear picture for planning purposes of how many years and how many dollars an employee might need in order to reach a certain goal. By examining the market price of tuition in US colleges and universities and removing the impact of discounts, CAEL and Bellevue University s Human Capital Lab offer a truer picture around the nature of the investment required. Companies typically ask, How much money do other companies allot to employees pursuing degree-based education? In plain terms, what is their annual cap? When framed differently, the question becomes, How do we initiate a long-term plan that takes into account the investment required to support employees in obtaining degrees that support the growth of our business? The Market Price of Tuition 3

4 Summary of Key Findings Average Price per Credit Hour $1,800 $1,622 $1,600 $1,400 $1,200 $1,000 $800 $660 $655 $600 $400 $200 $253 $319 $0 Associate's Bachelor's Master's EMBA Doctorate Degree In the above graph, the price per credit hour for each of the degree types examined is displayed and shows that the price of tuition rises with each level of education. The associates degrees average $253 per credit hour, bachelors degrees are slightly higher at $319 per credit hour, masters degrees average $660 per credit hour. The credit hour price for EMBA degrees more than doubles that of the masters degrees at $1,622 per credit hour and the doctoral programs average $655 per credit hour and are comparable in price to the masters degrees. The associates degrees are typically offered at community colleges which have lower tuition rates than private four-year institutions. When looking at the total cost for a degree, some estimations around the number of credits required are useful benchmarks: Associates degrees require on average credit hours of study, which is approximately $15,200 in tuition. (Note that the credit-hour price does not take into account annual tuition increases.) Bachelors degrees typically require on average credit hours of study, which is approximately $38,300 in tuition. (Note that the credit-hour price does not take into account annual tuition increases.) Masters degrees require credit hours of study, which is approximately $19,800 in tuition. (Note that the credit-hour price does not take into account annual tuition increases.) The data also revealed that employees are pursuing the full range of business degrees in overwhelming numbers. Over 46% of the records examined were tied to a degree in business. While the companies included in the analysis list business as an approvable major, employees are not systematically guided towards this option. This leads to the conclusion that in the absence of strong company guidance towards the types of majors that are tied to the strategic goals of the company, employees are likely to opt for a degree in business. 4 The Market Price of Tuition

5 Case Studies: The Full Cost of a Degree In order to better understand the length of time involved (a substantial investment by the employee) in obtaining a degree, as well as the impact of an annual $5,250 cap, these case studies have been constructed. For the purposes of this analysis, we are assuming that the employee does not have any prior college credits and that s/he is able to engage in 15 credit hours per year for six years without interruption. For the majority of adult learners who are also employed fulltime, the time horizon to obtain a degree would be considerably longer. Case Study One: Employee seeking an Associate s Degree An Associate s Degree requires credits $253 tuition per credit hour 15 credit hours of coursework pursued per year Degree is obtained in 4 years* (includes 6% increase in tuition annually based on 2006 College Board report) Year 1 = $3795 plus fees and books Year 2 = $4020 plus fees and books Year 3 = $4260 plus fees and books Year 4 = $4515 plus fees and books Total tuition = $16,590 If company tuition policy funds $5,250 per year, the Associate s Degree would be fully funded (provided fees and books come in at no more than $700 in the final year). Case Study Two: Employee seeking a Bachelor s Degree in Business A Bachelor s Degree requires credits (assume employee starts with no transferable credits) $323 per credit hour 20 credit hours of coursework per year Degree is obtained in 6 years * (includes 6% increase in tuition annually based on 2006 College Board report) Year 1 = $6460 plus fees and books Total tuition over 6 years = $45,060 If company tuition policy funds $5,250 per year, the Bachelor s Degree would be only partially funded by the company policy if the employee sought to complete his/her degree in accelerated fashion within six years. In year one, the employee would be left to self-finance $1,210 for tuition, plus all additional charges for books and fees. In year six, that figure would be $3,395 for tuition, plus all additional charges for books and fees. The Market Price of Tuition 5

6 There are several strategies that can be employed to reduce the timeframe and costs for the Bachelor s Degree completion. Those strategies, however, do require the company to become actively engaged in guiding employees in finding a faster path to degree completion in areas of study that are linked to long term workforce needs. Understanding the real market price of tuition can assist corporations in constructing tuition programs that align policy provisions for dollar allotments and allowable degrees of study with business goals in order to realize a sizeable, measurable return on the investment that will support the long term goals of the corporation. 6 The Market Price of Tuition

7 Project Summary CAEL and Bellevue University s Human Capital Lab have researched the real market price of tuition. CAEL currently manages corporate tuition assistance programs for 32 companies and approximately 710,000 eligible employees. CAEL reviewed transaction data for courses that were attended by employees across 27 employers and nine industries at regionally accredited institutions. The institutions included in the study are a mix of public, private and non-profit. These degree-level courses occurred between January 2006 and June 2007 and include online as well as campus-based programs. CAEL and Bellevue examined the tuition prices (excluding fees and books) for Associate s, Bachelor s, Master s and Doctorate (PhD and JD) degree programs for a sample size of 124,000 courses. In addition, most frequently selected courses of study for each of the degree programs were examined to identify variations in market pricing by credit hour. Research Findings Average Tuition Price per Credit Hour Degree Program % of Total Sample Average Price Per Credit Hour Associate s Degree 20% $253 Bachelor s Degree 52% $320 EMBA (Executive MBA) 2% $1622 Master s Degree 25% $660 Doctorate Programs 1% $655 All Degree Programs 100% $416 Over half of the sample records were for coursework towards a bachelor s Degree. One quarter of the sample records were for master s coursework and 20% of the sample records were for associate s coursework. The sample size for Executive MBA degrees (2,150 records) and doctorate programs (1,105 records) were much smaller in terms of percentage and sample size but still offer a useful benchmark. The Market Price of Tuition 7

8 All Degree Programs: Top 20 Most Popular Courses of Study (By number of records*) Course of Study % of Total Sample Average Price per Credit Hour Ranking by Price Business 46% $ % $397 8 Accounting 4% $ Management 4% $548 3 Finance 3% $595 1 Business Info Systems 3% $559 2 Marketing 3% $ % $ % $ Telecommunications 2% $446 6 Communications 2% $ Human Resources 2% $ General Studies 2% $ Liberal Arts 1% $ Management Info Systems 1% $472 5 Psychology 1% $ Criminal Justice 1% $ Education 1% $395 9 Health Sciences 1% $ Organizational Development 1% $496 4 *Each record represents total tuition price for a course fully funded by the company sponsored tuition assistance program. Overwhelmingly, students in this sample set are pursuing business degrees (46%), which are not the most expensive of the degree options noted. The pricing for courses in Finance are the most expensive at $595 per credit hour. 8 The Market Price of Tuition

9 Business Business Info Systems General Studies Accounting Telecommunications Liberal Arts Marketing Count Business Business Info Systems General Studies Accounting Telecommunications Liberal Arts Marketing Price per Credit Hour Associate s Degrees: Top 10 Most Popular Courses of Study (By number of records) $600 10,000 7,500 $400 5,000 $200 2,500 0 $0 Course of Study % of Total Sample Average Price per Credit Hour Ranking by Price Business 9% $201 5 Business Info Systems 2% $626 1 General Studies 1% $ % $272 3 Accounting 1% $168 7 Telecommunications 1% $354 2 Liberal Arts 1% $ % $ % $181 6 Marketing 1% $ The tuition prices across the spectrum of Associates degrees are clustered below $300, with the notable exceptions of Business Info Systems ($626 per credit hour) and Telecommunications ($354 per credit hour). The Market Price of Tuition 9

10 Business Accounting Marketing Management Finance Communications Telecommunications Count Business Accounting Marketing Management Finance Communications Telecommunications Price per Credit Hour Bachelor s Degrees: Top 10 Most Popular Courses of Study (By number of records) 30,000 $400 20,000 $300 $200 10,000 $100 0 Course of Study % of Total Sample Average Price per Credit Hour Ranking by Price Business 24% $ % $368 2 Accounting 3% $294 6 Marketing 2% $280 9 Management 2% $ % $290 7 Finance 2% $297 5 Communications 2% $286 8 Telecommunications 1% $ % $ The tuition prices for business courses are again the most popular with students, but the price point is located in the middle of the range at $323 per credit hour. Telecommunications is the at the highest price point in this category. 10 The Market Price of Tuition

11 Business Finance Management Human Resources Marketing Management Info Systems Accounting Count Business Finance Management Human Resources Marketing Management Info Systems Accounting Price per Credit Hour Master s Degrees: Top 10 Most Popular Courses of Study (By number of records) 12,500 $750 10,000 7,500 $500 5,000 $250 2,500 $0 Course of Study % of Total Sample Average Price per Credit Hour Ranking by Price Business 12% $653 3 Finance 2% $889 1 Management 2% $ % $594 7 Human Resources 1% $ % $673 2 Marketing 1% $600 6 Management Info Systems 1% $626 4 Accounting 1% $ % $552 9 Students pursuing Masters degrees in Finance are paying over $200 per credit hour, more than the second most expensive option, engineering. Students are pursuing Masters in business at much larger numbers than any of the other majors. The Market Price of Tuition 11

12 Law Business Management Psychology Organizational Development Health Sciences Management Info Systems Count Law Business Management Psychology Organizational Development Health Sciences Management Info Systems Price per Credit Hour Doctorate Degrees: Top 10 Most Popular Courses of Study (By number of records) 200 $ $ $ $0 Course of Study % of Total Sample Average Price per Credit Hour Ranking by Price Law.2% $ % $725 2 Business.1% $589 7 Management.1% $ % $588 8 Psychology.1% $ % $559 9 Organizational Development.1% $673 5 Management Info Systems.1% $676 4 Health Sciences.1% $641 6 The sample size for this type of degree is substantially smaller than the other degree options. However, it is interesting to compare the price of a PhD in Business ($589 per credit hour) with the price of an EMBA ($1622 per credit hour). 12 The Market Price of Tuition

13 References Baum, Sandy and Jennifer Ma, Trends in College Pricing, CollegeBoard, Klein-Collins, Rebecca and Dorothy Martin, Verizon Wireless: Getting ROI From TAP, Chief Learning Officer, December The Promise & Practice of Employer Educational Assistance Programs, 2004 State of the Field Strategies & Trends, Council for Adult & Experiential Learning, In the past ten years or so, the field of adult learning has been paying more attention to the question of persistence of adult learners, looking at the extent to which adult learners stay in school consistently after they start an educational program. The National Center for Education Statistics, for example, has studied the enrollment patterns of traditional-aged students (under age 24) with those of adult learners (over age 24) and has found that adult learners are less likely to be continuously enrolled[1] and they are also less likely to re-enroll after dropping out.[1] The NCES believes that the reasons for this difference include: greater family and work demands, goals that are less than degree (in other words, they may say they want a bachelor s degree, when actually they want to learn specific skills to advance in their job, for example, and leave after achieving those objectives), and the fact that they have been out of school longer and may therefore be less prepared academically or psychologically to be in school. [1] Five percent (5%) of part-time associate s degree students 24 and over were continuously enrolled, compared with 24% of part-time associate s degree students under 24. (Source: U.S. Department of Education, National Center for Education Statistics, 1990 Beginning Postsecondary Students Longitudinal Study First Followup) [2] Forty-six percent (46%) of those 24 and older seeking a bachelor s degree dropout without re-enrolling, compared to 23% of those under 24. (Source: U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study) The Market Price of Tuition 13

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