In early December, one small liberal arts school in Kentucky bet big on a new scholarship. Georgetown College, a nearly 200-year-old Christian institution, promised four years of free undergraduate tuition to students from several nearby counties if they enrolled full time and lived on campus. 

William Jones, president of Georgetown, informed an auditorium of high school students from Franklin County about the program, called the Legacy and Legends Scholarship, at a livestreamed event later that month. 

When he told them each to open an envelope to find out who among them would receive the new scholarship, the students quickly realized they all had won, making them eligible for the program if they were admitted to Georgetown. Jones described the scholarship as "the exclamation point on the beginning of our 200th anniversary."

The announcement made a splash with local media, but Georgetown is just one of many small liberal arts colleges rolling out new scholarship programs or heavily discounting their tuition. Such strategies are designed to increase enrollment, but they can cause more harm than good if they don't bring in enough additional students to make up for lost tuition revenue. 

"What's smart about (Georgetown's scholarship) is the idea of making the institution appeal to local students so that they can grab a larger share of those students," said Michael Horn, a higher education consultant and author. "But they have to figure out a piece of the revenue puzzle," he added. 

A ‘game-changer’ or a risky bet?

Local school officials and economic development groups have described the move as a "game-changer" that will boost the economy and encourage more students to attend college. But others are wondering how Georgetown, which is highly dependent on tuition revenue, plans to pay for the scholarship. 

A year of tuition at Georgetown runs full-time students about $39,810, making the overall scholarship worth roughly $160,000. Students will still have to cover their room, board and fees, which starts at $5,830 per semester — or $46,640 over four years.

Jonathan Sands Wise, Georgetown's vice president of enrollment management, expects the scholarship will bring in some 130 additional students in its first year from the four areas it covers: Franklin, Scott, Owen and Casey counties. Of the roughly 1,000 undergraduates the college enrolls, only about 82 students currently come from these regions.

Along with the expected enrollment increase, Georgetown officials plan to grow their fundraising efforts, though Sands Wise said there won’t be a public campaign in connection with the scholarship. 

The four counties were selected carefully. Officials first narrowed the pool to jurisdictions with both high-performing high schools and room for Georgetown to grow its recruiting efforts. 

"That would fit a lot of counties," Sands Wise said. "We were looking for counties that had specific historical connections that helped us tell our story of who we are." Casey County, for instance, was formerly home to a Baptist academy that sent students to Georgetown, and Scott County is where the college is located. 

If the plan delivers the anticipated outcomes, it could help Georgetown recover from enrollment declines it weathered after the Great Recession. The college’s undergraduate enrollment has hovered around 1,000 students in recent years, down from about 1,300 in 2008, according to federal data.   

Over that period, Georgetown struggled financially. In 2014, the college had a $4 million budget deficit, which it tried to make up through faculty layoffs and program cuts, the Lexington Herald-Leader reported.

Georgetown's accreditor, the Southern Association of Colleges and Schools Commission on Colleges, put it on probation for two years starting in 2016 for failing to meet financial stability standards. 

To help buoy its enrollment and finances, the college has ramped up fundraising and added new programs, such as a minor in behavioral neuroscience and an undergraduate major in health care administration, Sands Wise said. 

Enrollment in Kentucky's private nonprofit four-year colleges has surged in the last decade, growing from about 32,100 students in the 2009-10 academic year to 52,200 in 2018-19, according to data from the Kentucky Council on Postsecondary Education (KCPE). Students pursuing graduate-level degrees accounted for much of the boom.

The state's public four-year colleges, meanwhile, had slightly more students last year than they did in 2009-10, though they've experienced steady enrollment declines over the past five years. 

Colleges across the state are bracing for enrollment decreases due to an expected drop-off in the number of high school graduates. It’s a trend playing out in many parts of the country. As such, KCPE wrote in a 2019 report, the state "cannot rely on enrolling more 18-24 year olds" to meet its goal of 60% of its residents having a postsecondary credential by 2030.

Georgetown's scholarship is one way the college is preparing for that shift, Sands Wise said. Third-graders to high school seniors are eligible for the program, which stands to expand its pipeline of prospective students for the next decade.

"The reality is that we do expect (the shift) to hurt our enrollment,” he said. “It's unrealistic (when) colleges look at that and think they can stay the same or grow."

Fighting public perception

Many private colleges in Georgetown’s position are hoping to appear more affordable to prospective students, but they face a few roadblocks in doing so. 

For one, they often have higher sticker prices than public colleges. Students at private colleges usually take out twice as much in loans as those attending public colleges. However, the schools have a similar long-term return on investment for graduates, according to a recent report from Georgetown University's Center on Education and the Workforce. 

Only a quarter of Americans believe that postsecondary education is affordable to anyone who needs it, according to a Gallup poll of roughly 1,000 adults earlier this year. To fight this perception, public and private colleges alike are launching generous scholarships or free-tuition programs.

Georgetown modeled its scholarship after one offered at Bethany College, a liberal arts institution in Kansas. Bethany gives students from two nearby counties free tuition if they live on campus. It had 75 recipients in 2017, its first year. 

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"The reality is that we do expect (the shift) to hurt our enrollment. It's unrealistic (when) colleges look at that and think they can stay the same or grow."

Jonathan Sands Wise

Vice president of enrollment management, Georgetown College

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Other colleges have given more financial support to students from middle-income families. 

Rice University, in Texas, offers free tuition to students whose families earn $130,000 annually. Scholarships covering at least half of tuition are available to students from families earning up to $200,000. The university saw a 29% year-over-year increase in applications after it announced the new program in 2018. 

Colby College, in Maine, also saw an uptick in applications when it debuted a new aid policy for students from low- and middle-income families. Under its plan, which it expanded late last year, students with a family income of $65,000 or less will not have to pay anything to attend.

"We really thought that financial aid language, generally speaking, can be somewhat confusing," said Matt Proto, Colby's vice president for enrollment and communications. "We wanted a straightforward policy that we could talk about with families from all backgrounds, from all across the country."

It's too soon to know if Georgetown’s new program will lead to more interest from prospective students. But all eyes will be on it and other small liberal arts colleges as they rethink their pricing strategies in the new decade.