5 Ways Desperate Colleges Are Cutting Costs
Business + Economy

5 Ways Desperate Colleges Are Cutting Costs

iStockPhoto/The Fiscal Times

In Pittsburgh, the community is the college ... at least according to The Saxifrage School, a higher education experiment in providing inexpensive college degrees. The start-up school reduces operating costs by foregoing a brick and mortar campus and instead holding classes in restaurants, church basements, community spaces and anywhere else that's available.

"Rather than isolating ourselves and our students, it's a no-brainer to use places that are already established," explains Andrew Heffner, Saxifrage's director of campus partnerships.

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The arrangement benefits local businesses, too. A coffee shop, for example, that hosted a three-hour computer programming course last fall brought in revenue after regular business hours by offering prepackaged dinners that students could purchase during class breaks. Heffner estimates the shop made an extra $1,200 by hosting the class for 12 weeks.

Though Saxifrage is still new (it offers only limited short-term courses and isn't accredited yet), Heffer says that as the school grows, its "nomadic campus" model will help keep tuition and fees at or below $6,500 per year. That's about half the cost of tuition and fees at the average Pennsylvania public college.

Grappling with lower enrollments as well as state budget cuts, colleges across the country are looking everywhere and anywhere to make, or save, a buck. For some, that means increased efforts at recruiting out-of-state and international students who pay substantially more than state residents. The California State University system, for example, recently imposed an admissions freeze at some CSU campuses for the spring 2013 semester because of state funding cuts – but higher-paying, non-California residents are exempt.

Many other schools are going outside the box to save dough. Here are four other ways that some institutions are creatively cutting back.

Save the Earth, Save the Cash
Energy and resource changes translate to big savings for some schools. The nearly $1.2 million solar voltaic system installed last year on Laney Community College's campus in Oakland, California, saves the school $240,000 a year in energy costs. The one installed at nearby Merritt College saves about $100,000 annually.

"Obviously there are the economics [to be] considered, but there is the educational component to consider” as well, says Charles Neal, energy and environmental sustainability manager for the Peralta Community College District, which includes Laney. In addition to creating energy savings, the solar system also provides a hands-on facility for the district's green jobs training programs.

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For some schools, environmental initiatives go far beyond mere savings. Butte College in Oroville, California, provides all of its own energy and is set to become the first school to start selling energy back to the grid.

The little things add up as well. Messiah College in Grantham, Pennsylvania, expects to save more than $30,000 this year after replacing metal-halide light fixtures with fluorescent ones. According to the National Association of College and University Food Services, more than 70 schools have eliminated cafeteria trays in the past few years. North Carolina State University estimates that the move saves 51,500 gallons of water per week, which translates to about $42,400 a year off their water and electric bills.

Try Private Parking
Ohio State University turned heads last June when it opted to lease its parking operations to a private company, LAZ Parking, for the next 50 years. The $483-million up-front payment is expected to generate roughly $3.1 billion in interest earnings to expand the school's faculty and research initiatives, scholarships, and arts programs.

“Quite simply, to remain competitive, to attract the best and brightest students and faculty, we must have the ability to invest in and enhance our academic core," the school’s senior vice president and CFO, Geoff Chatas, said in a statement. "The leasing of our parking operations allows us to do just that.”

The move could potentially raise parking rates and many students and faculty oppose it, but it got the attention of other institutions. Shortly after OSU inked the deal, Indiana University contracted Goldman Sachs to evaluate the economics of privatized parking on two of its campuses.

Sell Your Wares
Student singing groups and literary magazines have long sold their works for fundraising, but some schools now sell their students' work to raise funds for academic programs. Sales from wine made by students at Walla Walla Community College's Center for Enology and Viticulture in Washington State funnel directly back into the program's wine education program.

The same is true for student-made ceramics, brooms, blankets and anything else sold through Berea College's long-running crafts program in Berea, Kentucky. Students work in every level of the program – from creating sellable goods to running accounting and shipping departments. Though crafts program director Tim Glotzbach won't say how much revenue the school's store generates, it serves approximately 25,000 internet and 60,000 catalogue customers and provides goods used on campus. Students in the crafts program are in the midst of building 270 pieces of furniture that will be used in one of the school's new residence halls.

"Our purpose is to provide the institution with an engaged and transformative learning experience for the students," Glotzbach says. "[The crafts program] teaches them business skills. It teaches them soft skills like initiative, dependability, hard work, and discipline...if they're working in the front office, they understand different things about accounting, customer service, and communication skills."

Connect to the Future
Some schools have taken another approach: They’re banking on the alumni of tomorrow. This past November, Florida Governor Rick Scott called upon his state's public universities and colleges to create reduced-cost degrees in majors that feed into high-demand professions like engineers, scientists, and health care specialists. With some of these four-year degrees going for a mere $10,000, the move would dramatically increase education affordability and result in what officials hope will be a direct boost to the local economy when the graduates enter the workforce, assuming they stay in the state. 

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Texas Governor Rick Perry made a similar request last year. Since then, several schools, including the University of Texas at Permian-Basin, Angelo State University in San Angelo, and Sul Ross State University Rio Grande College in Alpine, Texas, have signed on.

Dr. Brian May, president of Angelo State, says the school's $10,000 degree in interdisciplinary studies is only available to top students – in-state residents with high GPAs and impressive SAT or ACT scores. The degree is a valuable tool for keeping classrooms full, and he hopes recruiting top-notch students may translate to increased state education budgets further down the road.

"There's a lot of discussion at the state level about having what's known as outcomes-based funding," he says, which would tie state funding to graduation rates. "Having a $10,000 degree can help you recruit good students."