Grace College Develops a New Tuition Pricing Model Informed by Hanover’s Research


Effective fall of 2015, Grace College will reduce tuition by 9 percent 

The Need

The changing economic climate across the last decade proved challenging for small private colleges in the United States. Facing increased scrutiny by students over affordability, many private colleges have altered tuition models. Some experimented with tuition freezes or reductions, and others continued to raise tuition prices while also increasing financial aid spending.

Grace College and Theological Seminary (Grace College) in Winona Lake, Indiana approached the challenge with the goal of providing students more flexible and affordable degree options. In an effort to shape the future of their institution, administrators at Grace College proposed the “Reimagination” process: an institutional evaluation focused on the areas of academic innovation, accelerated degree offerings, affordability, applied learning, and adherence to Grace College’s mission.

When the College’s leadership team developed the “Reimagination” process, it recognized the importance of collecting and using data. As Dr. Carrie Yocum, Vice President of Administration and Compliance, recalls, “Many of the components we assessed throughout the ‘Reimagination’ process required research to inform the leadership team’s decision-making. As such, we reached out to Hanover to address our institution’s immediate planning needs.”

The Research Initiative

With respect to the key area of affordability, Grace College sought to investigate how to best adjust its tuition structure to maximize student enrollments. To address this research question, Hanover employed a multi-step approach spanning several projects.

Research Goal
Tuition price sensitivity survey
  • Determine the role of cost in prospective students’ enrollment decisions
  • Identify prospective students’ receptiveness to different tuition prices in relation to different financial aid awards
  • Understand the relationship between price and brand perception at Grace College and its peer institutions
  • Survey analysis of over 1,000 prospective students and parents, which included a “virtual college market” section and conjoint analysis, to estimate Grace College’s change in “preference share” under a variety of pricing scenarios
Review of tuition initiatives at other private four-year institutions
  • Review the tuition reduction initiatives among small private colleges within the last fifteen years
  • Examine the long-term effects of these one-time tuition reductions on subsequent enrollment and tuition price at each college
  • Outline the decision-making processes that led to the implementation of the tuition reduction initiatives, or the decision not to implement
  • Literature review examining tuition reduction initiatives at other colleges
  • Data analysis of tuition and enrollment data from the Integrated Postsecondary Education Data System (IPEDS) to evaluate the impact of the one-time tuition reduction
  • In-depth interviews with administrators at institutions that considered and/or moved forward with a tuition reduction
Analysis of net cost as a predictor of enrollment
  • Use student-level data to investigate the impact of the size of financial aid awards on whether students admitted to Grace College ultimately chose to enroll at the college
  • Determine how a change in financial aid award size might affect students’ enrollment decisions
  • Data analysis of Grace College’s admitted applicant data from the 2007-2008 through 2013-2014 admissions cycles
  • Data analysis of factors driving the decision to enroll at Grace College for three different student groups: traditional students, student athletes, and student affiliates of the Fellowship of Grace Brethren Churches
Tuition elasticity data analysis
  • Understand the historical relationship between tuition, federal and institutional financial aid, and macro-economic conditions on the enrollment levels of undergraduate students at Grace College and its peers
  • Data analysis of six years of tuition and enrollment data from IPEDS for Grace College and 97 identified peer institutions.



“It was an exciting opportunity for us to study the tuition proposal from so many angles,” says Hanover’s Vice President for Content, Cam Wall. “We laid out what we considered an ideal sequence of projects, and the leadership team at Grace said, ‘Let’s do all of it.’ It was clear that the team wanted to make an informed decision. We were happy to help, and have been thrilled to see the College move forward with the tuition reduction and several other very compelling new programs.”

The Institutional Impact

Grace College continues to surpass its enrollment goals. Grace’s administrators attribute this success largely to the elements of its Measure of Grace campaign. Measure of Grace prioritizes affordability standards including free textbook rentals, annual reductions in tuition with each continuous year of enrollment, and a reduction in overall tuition pricing.

Hanover established that Grace College could significantly increase student interest in enrolling at the institution by lowering its “sticker price,” even while decreasing financial aid awards. This information contributed to the overall tuition pricing strategy, as articulated by Dr. Yocum below:


We let the research guide us towards making an informed decision regarding our pricing. Based on the results of the prospective student survey, we elected to decrease our tuition, but not as substantially as initially considered. Starting in fall of 2015, tuition at Grace College will be reduced by 9 percent – a hybrid tuition model developed using a combination of our original ideas and research from Hanover. In our process to create this plan, which we presented to the senior leadership team and our board of directors, we continued to turn back to the tuition pricing sensitivity analyses that Hanover completed to support the research behind our decisions.

Once formally launching the 9 percent tuition reduction, the institution anticipates enrollment will continue to increase, specifically with respect to non-traditional student populations.


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