Colleges Face Challenge of the Class Divide

Parents Forum
341

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It doesn't necessarily follow that the larger the subsidy per student, the better the education.

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<p>I've never said the bigger the subsidy, the better the eductation. Just like I've never said the fancier the leather seats, the better the car.</p>

<p>I've only said that the bigger the subsidy, the bigger the consumer demand (i.e. acceptance rates, USNEWS rankings, etc.). Just like free leather seats drives buyers into car showrooms, whether the car is any good or not.</p>

<p>All things being equal, if I'm choosing between two colleges that fit equally well and I'm ready to flip a coin, go to the school with the bigger per student subsidy. It's probably going to have fewer roof leaks and more faculty and longer health center hours over the next four years.</p>

342

<p>Well I agree with mini that the education is "worth" it to the folks who go there else they wouldn't go there. Worth is a pretty subjective thing and as dstark's little video shows you can believe me or your own lying eyes when it comes to subsidies and such. All I know is no matter how you compute, how you figure it, or how cleverly you hide it in the books there is no such thing as a free lunch. You cannot sell a $75,000 product for $30,000 indefinitely and if you say you are doing that then David Fastow or Arthur Anderson are cooking your books. More likely you have multiple and codependent revenue streams probably made possible by some limtations in the free operation of markets.</p>

343

<p>It's not a free lunch. The lunch is paid for by the investment return from a huge endowment. It's not a hard concept to understand. There is a "trust fund" of $800,000 for each and every student, throwing off spendable cash of $36,000 per student per year. Add that to the $29,000 per year each student kicks in (on average), plus another $8,000 per year per student in grants and gifts and miscellaneous revenue. Voila. Money to cover $73,000 per student in operating expense.</p>

<p>There's nothing to "hide in the books". It's pretty straight foward. Net student charges plus endowment return plus annual gifts/grants plus state appropriations (for public universities) equals operating revenues. For the most part, colleges spend to the level of their operating revenues.</p>

<p>The size of the operating revenues and how the college decides to spend to the level of the operating revenues is what makes one college different from another. For example, Oberlin and Berea have roughly the same per student operating budgets, but they choose to spend to that level in two very different ways, thus making the two schools extremely dissimilar. An individual student might find that one school's spending priorities are a better match. </p>

<p>In some cases, specific spending priorities can trump higher spending levels that don't match the student's interest. This would describe Mini's situtation. His daughter had choices on the table of schools that spend more per student even than the extremely wealthy school she chose. But, the bigger spending schools' priorities didn't match her rather specific interests. Hence, she made a rational individual consumer choice made easier by a terrific scholarship/aid package designed to induce her to enroll.</p>

344

<p>"It is also quite a bit more selective in reality than Swat, Williams, or Amherst, since they only accept about 25% of applicants"</p>

<p>That is incorrect, at least in the cases of Williams and Amherst -- their rates of acceptance both stand at 19%.</p>

345

<p>Right. And because application at Berea is restricted to only 40% of the population, actual rates at Berea, relative to the restriction as to who can apply, are lower than 10%. (actually, even lower, because there is a premium on applicants from Appalachia.) </p>

<p>Re: sudsidy, per student endowment, and "faculty value":</p>

<p>About 60% of the cost, and hence 60% of the subsidy (if there is one) goes into faculty expenses. Since I attended a small college, a large research university with a significant undergraduate emphasis (Oxford), and a medium-size prestige university for graduate school (Chicago), and have taught at the college level, I think I can offer a few (challengeable) reflections on the "value" of the subsidy, relative to the size of the institution, and faculty involvement:</p>

<p>If an institution has Oxford-style tutorials: 2 students per tutorial is definitely better than four.</p>

<p>If, on the other hand, I teach a seminar, 5-6 students per is definitiely better than two or three.</p>

<p>If I am advising students (and do this year after year): having four students to advise is definitely better than having eight. HOWEVER, having four is also definitely better than having just one (or two). I will have more experience in helping different students navigate different career goals and situations.</p>

<p>For lecture classes, having 25 students where I know each one by name is definitely better than having 50 where I don't. However, once I cross that magic threshold where I don't know the students (I think that is around 50-60), it makes no difference. There is no less value in a lecture class with a thousand students than there is with 100.</p>

<p>Small departments at schools with a small size can be problematic - both in terms of continuity of faculty, and in richness of offerings. On the whole, and with many exceptions, all things being equal (they never are), in small departments, a school with 2,500-3,000 students will have more value than one with 1,000-1,500. This, however, will not necessarily hold for the more common, mainstream offerings.</p>

<p>""All things being equal, if I'm choosing between two colleges that fit equally well and I'm ready to flip a coin, go to the school with the bigger per student subsidy."</p>

<p>Since per student endowment (and subsidy) is built on the ratio between funds spent and number of students, it becomes quickly obvious that (all other things being equal - they never are) per student is not a reliable measure of educational value, and that this might not be a good approach - you could easily argue that you should choose the school with the larger student body and more offerings.</p>

346

<p>Mini has a point about Berea's selectivity. For example, your kid, my kid, and Mini's kid could not get into Berea. It's just that Berea has different selectivity criteria than Williams, Swarthmore, or Smith....quite narrow criteria, actually.</p>

347

<p>I think I can agree with most of Interesteddad post #341, so I should probably quit this thread. :)</p>

<p>Interesteddad, which school has a larger consumer demand, UCLA or Amherst? I know there are subsets of the population that would choose Amherst, but overall, UCLA or Amherst?</p>

<p>I don't think I have an ulterior motive in asking this question :). I'm curious what your thinking is, so UCLA or Amherst?</p>

<p>Mini, you too, and anybody with an opinion, UCLA or Amherst?</p>

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<p>"Mini has a point about Berea's selectivity. For example, your kid, my kid, and Mini's kid could not get into Berea. It's just that Berea has different selectivity criteria than Williams, Swarthmore, or Smith....quite narrow criteria, actually."</p>

<p>One is selecting for relative wealth (among other criteria); the other for relative poverty. </p>

<p>"I'm curious what your thinking is, so UCLA or Amherst?:</p>

<p>Depends on the kid. My older one? UCLA? NOT! (I thought Amherst would have been a good fit; she didn't. She was recruited to and accepted at Williams, and turned them down.) My younger one? Amherst? NEVER! (But if she could get into UCLA, which she can't, AND it had a business school, she'd go in a heartbeat.)</p>

<p>For me? Probably neither.</p>

349

<p>"I disagree with the spending priorities (Williams' $6 million athletic budget)" </p>

<p>"$5,697,753 WILLIAMS COLLEGE" </p>

<p>"put it into perspective. The endowment that funds the upkeep of the 360 acres of gardens, lawns, and woods at Swarthmore is $21 million out of a total endowment of $1.25 billion. It's loose change in the sofa."</p>

<p>And because its WILLIAMS -- and NOT SWARTHMORE -- it couldn't possibly be said that $5.7 million is "loose change." Just because some people prefer physical activity to gazing at gardens doesn't mean it's any less justifiable as a priority by any institution. And since you're not (heaven forbid) on the board of trustees, your opinion really makes no difference. "Sanctimonious jerk"? I'd say pompous, bombastic, and self-righteous is closer to the mark.</p>

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<p>That was 2004-5. Williams topped the $6 million mark for 2005-06 according to their latest financial report.</p>

351

<p>Mini, I was kind of thinking of the population as a whole. If you read USNWR, you would think Harvard, Princeton, Yale etc, are the most popular schools.</p>

<p>I like your post #345.</p>

352

<p>Be fair: that $6 million is spread both among a significantly larger number of students, and a significantly larger number of athletes.</p>

353

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Interesteddad, which school has a larger consumer demand, UCLA or Amherst?

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<p>Another question that is too narrowly framed.</p>

<p>Obviously, UCLA has more applications: 6000 versus tens and tens of thousands. So, by that measure, UCLA has more "consumer demand".</p>

<p>However, that ignores the extremely high demand in a specific niche market that Amherst enjoys. Of students with 1500 SATS, Amherst (or let's use Duke or Stanford as closer comparisons) enjoy higher consumer demand than UCLA.</p>

<p>From an economic standpoint, I think it's useful to remember that you pay for college with two forms of currency: cash money and SAT scores. All the cash money in the world isn't enough at some schools if you don't have the SAT score currency in your pocket.</p>

<p>That's kind of the point Winston was getting at in his white paper on the most elite colleges going to a free tuition (or even a stipend) pricing model. Those colleges require being extremely "wealthy" in the alternate form of currency: SAT scores.</p>

<p>note: I'm using the term 'SAT scores' as a shorthand notation representing overall academic credentials.</p>

354

<p>"However, that ignores the extremely high demand in a specific niche market that Amherst enjoys. Of students with 1500 SATS, Amherst (or let's use Duke or Stanford as closer comparisons) enjoy higher consumer demand than UCLA."</p>

<p>Seriously, seriously doubt it. </p>

<p>"All the cash money in the world isn't enough at some schools if you don't have the SAT score currency in your pocket."</p>

<p>Interesting you didn't at least place a gloss on their convertibility (but that's for another forum. ;))</p>

355

<p>Perhaps another car example. Mercedes has less "consumer demand" than Ford. But, that is because the vast majority of consumers know that they can't buy a Mercedes because it is too expensive. It's not that they wouldn't have demand if it were plausible. For example, offer the choice of a free Mercedes or a free Ford Taurus to the first 100 shoppers at the local mall tomorrow. Which one do you think they'll choose?</p>

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Seriously, seriously doubt it.

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<p>OK, I don't have the data to address the exact issue. However, I do have the data to address this question: which is more popular with fall 2006 freshmen students who scored 700 or higher on the SAT Verbal:</p>

<p>UCLA has 921 freshmen students in that category
STANFORD had 972. When you consider that UCLA's freshman class is three time larger than Stanford's, I would say that we can fairly conclude Stanford is more popular with fall 2006 consumers looking for a California school and scoring 700 or higher on the SAT Verbal.</p>

<p>On the other hand, UCLA is almost certainly more popular with consumers looking for a university with essentially no African American students.</p>

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<p>I come to a rather different conclusion. UCLA is more popular with 700 verbal scorers who want to live in the middle of a big city, and are more likely to be poorer, and to have achieved their 700 without benefit of private schools, SAT prep, multiple takings (that would be a fun one to study), and are far more likely to be on Pell Grants. Corrected for the impact of income on SAT scores, UCLA would be far more popular for high scorers than Stanford (and Amherst).</p>

357

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Interesting you didn't at least place a gloss on their convertibility (but that's for another forum.

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<p>Cash and SAT currencies are directly convertible. That's what merit program price discounts are: a straightforward mechanism by which a school replaces the cash component with the SAT component. Actually, need-based price discounts are a conversion from cash to SAT scores, as well.</p>

<p>There are also schools that are known for specifically targeting very wealthy, underachieving customers -- converting SAT currency into additional cash payments. These are some of the most expensive schools in the country -- and, no thank you, I'm not going to name any names.</p>

<p>That's the great thing about America. There are so many schools that any given consumer can probably find something that offers the desired combination of cash and SAT payments.</p>

358

<p>But the main point is that you can "buy" a higher SAT score, and there are large, financially successful companies built upon that proveable premise.</p>

359

<p>Interesteddad, I'm curious where you got those stats about UCLA.</p>

<p>My stats are old, 2004, and I only have acceptances. In 2004, UCLA admitted 3,791 students with verbal SAT scores over 700 (6,540 applied). The school admitted 8,159 students with gpas over 4.0 (17,498 applied).</p>

360

<p>
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come to a rather different conclusion. UCLA is more popular with 700 verbal scorers who want to live in the middle of a big city, and are more likely to be poorer, and to have achieved their 700 without benefit of private schools, SAT prep, multiple takings (that would be a fun one to study), and are far more likely to be on Pell Grants. Corrected for the impact of income on SAT scores, UCLA would be far more popular for high scorers than Stanford (and Amherst).

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<p>That wasn't my premise. My premise was consumer demand among a specific niche of consumers: those scoring 1500 on the SATs. You can't correct for all the stuff you mention because then you are defining a different subset of consumers. The fact is that the niche I described consists almost entirely of affluent consumers.</p>