<p>The airlines do it, and the airlines also give preferential treatment to those who fly more often. </p>
<p>Re the argument that the less prestigious college near the Ivy still has the same cost of land, construction, utilities, foodservice, etc. That may be true, but there is value in brand names. That’s like arguing that every handbag manufacturer should charge the same price because the cost of the raw materials of leather and zippers and buckles is only $X. That may be true, but some charge a lot more for a designer name and styling, and either people are willing to pay that or they aren’t. If it wasn’t worth it, then people wouldn’t pay the extra whatever for Harvard. Clearly in the marketplace it’s worth it.</p>
<p>My family is full pay – because we live frugally and my parents save their money. When compared to a family that lives in a bigger house, goes on expensive vacations and doesn’t save, this is where financial aid gets unethical to me. I really don’t mind subsidizing the education of really low income, at risk, bright kids.</p>
<p>But it doesn’t matter, because either way I’m 99% sure I’m not going to a 50k/year school because of money.</p>
<p>Btw, am I the only one shocked that that girl in the article turned down a full ride to Vanderbilt to pay almost full price at Georgetown? And then justified that Georgetown had the “brand name” while Vanderbilt doesn’t? What?!</p>
<p>It would be interesting to see the difference between high income minimal investments and lower income and proportionately higher investments financial aid plans. I sometimes wonder if it isn’t urban myth. If you have the income level to have a big house, new vehicles, vacations then you are dinged on the EFC for the higher income level. If you have lower disposable income but are a frugal saver you get dinged on the EFC for the investment valuations. Either way it seems to me that both families would generate approximately the same financial picture except that the spend it while you’ve got it family has less cash flow which is not a consideration in financial aid? The lower income saver family has more cash flow options. But I have difficulty with the claims that the high income families pay “less.” I don’t have the energy or stamina to run various scenarios through the calculators but my gut says income might have less protection which theoretically wouldn’t help the spend it while you’ve got it families who haven’t saved in non-retirement type accounts. Also we are terribly “brand aware” in this country, I’m sure there are many kids who think A is better than B because of brand attributes they have mentally given to their preferred brand.</p>
<p>When compared to a family that lives in a bigger house, goes on expensive vacations and doesn’t save, this is where financial aid gets unethical to me.</p>
<p>Need based aid is taking current income, savings and future income into account.
Income and # of dependents, seem to be the strongest criteria. If two families have same income, one spends and one saves, they are going to have similar EFCs.</p>
<p>Colleges that meet 100% of need, usually use grants, loans and work study to meet need. Most schools don’t meet 100% of need, schools that don’t use loans for need are targeting defined lower income populations.</p>
<p>Where is all of the supposed excess money paid for tuition going? The “profits” from “overcharging” should show up somewhere. Where I would really like to see complaints is in the entertainment industry- sports and music. Why do some people get multmillion dollar salaries for nonessential work, through high prices people willingly pay (think Super Bowl ticket prices) and professors get a lot less? In these economic hard times people are seeing how much subsidy there has been of public schools via their taxes. “Fair” tuition prices would put college out of the question for all but very few- creating a far less egalitarian society.</p>
<p>Berryberry, do you find it unethical for for full pay students to subsidize those on athletic, music and other scholarships, or just those on need based scholarships?</p>
<p>With need-based aid (which neither I nor my kids received) colleges have decided (to varying degrees) is that the best college student body and college experience is not going to school only with affluent kids–especially affluent kids who would not be admitted on the merits in place of less affluent kids. You may feel otherwise, but I can tell you that the 2 Ivies I went to were better places because they admitted lots of very smart, very driven kids on scholarship instead of just rich kids, some of whom were very smart but very lazy.</p>
<p>Do you think it fair that childless people in your town subsidized your children’s education through taxes and that those in more expensive houses paid more real estate taxes than you did?</p>
<p>Having often heard that living frugally, as we do, hurt you when it came to need aid, I was surprised to learn that the need process was often or usually much less savings oriented than income oriented. This seems to be unknown to many who complain about need aid.</p>
<p>Pizzagirl, my noting that, say, St. Josephs and nearby Penn have similar fixed costs was not meant to say that Penn was not worth more for its brand, but to explain why St. Josephs and other less prestigious schools need to charge prices which reflect their high cost environments.</p>
<p>In my perfect world, all aid would be eliminated - and the cost of education significantly reduced so everyone pays the same, lower flat rate. So yes, in that respect I do believe it is unethical to charge huigher prices for full pay students so they can subsidize those on athletic, music and other scholarships including need based scholarships</p>
<p>
</p>
<p>Thats all well and good but don’t do it with other people’s money. If a full pay parent wanted to subsidize socio-economic diversity, they can do so via charitable donations to the college their child is attending (and get a tax writeoff for doing so). But to overcharge them to subsidize someone else is unethical</p>
<p>
</p>
<p>Nope not fair at all. I would also change how PK-12 schools are funded :)</p>
<p>bb61, I can see you feel very strongly about this. The solution? Don’t support such a system. Gather people to your cause. A college Tea Party Movement. Grab a soapbox and head to the park. Don’t bend your principles. Refuse to send in apps to schools engaging in such despicable actions. Draw a line in the sand. Stay strong. Stay true. </p>
<p>For the rest of us, we’ll just have to find a way to go on without you.</p>
<p>With all due respect to those of you who wish that it weren’t so (e.g., yabeyabe and applicanot), what colleges do is pretty close to illegal discriminatory pricing. So close (for those who think that I was whining), in fact that the Department of Justice investigated a group of Northeastern Colleges for just this and the colleges have changed how they do things to make a formal anti-trust violation less likely. This is from an academic paper analyzing this and the effects on subsequent choices by these colleges. </p>
<p>
</p>
<p>Note that the colleges appear to have lost in the first round and won on appeal. That is pretty close.</p>
<p>As someone pointed out, we have price discrimination in airline pricing, but based upon willingness to accept various restrictions. </p>
<p>I think we have a near cartel in university prices with tuition set at an inflated price and then they use price discrimination to pick off customers in effect at their willingness to pay. Here’s the correct analogy. If a car cost $40,000 to build but was priced at $80,000 and then they gave discounts so that the price went from $20K to $80K depending upon the consumer, then they would be engaged in discriminatory pricing. As I understand it, whether it is illegal or not depends on the effect with respect to restraining competition. Harvard could charge $80K tuition if they wanted to and fill their class with smart kids. They choose not to in part because this would create political problems for them and in part because of a real but related sense of social obligation (they don’t want Harvard only to be an institution for the upper classes but want to use it to build a broader elite).</p>
<p>The fact that it costs a lot to run a college is true. But, for businesses and non-profits, organizations with high cost but less desirable products have to figure out how to cut costs, produce better products, or go out of business unless the industry is engaged in price-fixing. Over the next decade, I’d guess that colleges that can’t improve their product at comparable cost or reduce costs without damaging the product will go out of business.</p>
<p>My contention is not that colleges shouldn’t do social engineering but that the mechanism for funding it should be different. I think that ensuring socio-economic diversity is a good thing, unlike athletic scholarships to the extent that these are not funded by the business arm of the college (e.g., money-making sports). If this is a societal goal, we as taxpayers should pay for it. If greater socio-economic diversity is not a societal goal (which we would learn if we vote against taxing for it), it could still be an institutional goal, but I’d love the institutions to be upfront about what they are doing, e.g., “Our net charge this year to students will be $25K. We will do this by charging $50K to those who can pay the full amount and having a sliding scale based upon income. Thus, we will be redistributing family incomes to produce a more diverse educational experience.” That would be honest and, in fact, a correct description of what they are doing. I feel the same way about global warming. If you think that global warming or climate change or nom du jour is occuring as I do, then you and I as a society should vote to pay for it. I’m in favor of a carbon tax that directly effects activity rather than cap-and-trade, whose biggest benefit is to hide the fact that we are trying to tax carbon with a complex trading mechanism (there are other benefits, but let’s not worry about that here). I’d like our society and elite/political classes to be honest about what we’re doing. Unlike BerryBerry, I favor progressive taxation. But, if we want to have an additional progressive tax for tuition, let’s just be honest about it.</p>
<p>So, to the OP’s question, I think some of the reasons for providing tuition discounts are appropriate (socio-economic diversity and very targeted affirmative action) and some seem relatively less legitimate. But, I think we should be honest about what our policy is and I would prefer a much different method of funding it.</p>
<p>curmudgeon - living up to your screen name I see. </p>
<p>Yes, I do indeed feel strongly about this and I am sharing my opinions, just like everyone else. Nothing wrong with that. Furthermore, I do indeed intend not to support such a system - as my d will go to a college that doesn’t play this game (instead it keeps tuition reasonable for all) or one that does the high cost - lots of merit aid as part of their marketing and not part of redistributing income.</p>
<p>I am not sure if you fall into the full pay or getting need based aid category. If its the former - hey, if you are happy having the colleges tell you each year to bend over and like it - so be it, who am I to interfere. If it is the former, well then that puts your comments in perspective</p>
<p>My family is upper middle class, my mom is an elementary school teacher and my dad is a small business owner. They put away 150k for me and have been saving for my and my sisters’ college tution since they were first married. We do not live lavishly, we get 0 need-based aid. My friend who drives a BMW and whose dad is a cardiologist gets financial aid. This makes me angry. I am glad to give students who truly don’t have the means to pay for college that opprotunity, but for wealthy people who spend their money foolishly, I get frustrated that they are given assistance and I’m not. My family could really benefity from financial aid.</p>
<p>I think there is a market for a college that rejects need-based aid and a place in the world for parents and students who want that environment. It appears that there is a market right here on cc.</p>
<p>shawbridge, maybe I’m misunderstanding–this is a little out of my sweet spot, I’m a humanities guy. But aren’t you conflating two separate issues here–price fixing and selective discounting? Seems to me in the suit you alluded to, the issue was that colleges were colluding to set the level of their discounting, not the fact that they were discounting at all.</p>
<p>Learning not to count other people’s money is an important life skill. Why would you even know what your friend’s family gets and doesn’t get? It’s not your business. You also don’t know what your friend’s family’s true financial situation is. Maybe they are supporting elderly relatives, or have health bills you don’t know about.</p>
<p>She openly disclosed the info to me. She’s the seemingly wealthiest person at my school. If she has ailing relatives or huge medical expenses, why would they live so lavishly?</p>
<p>nightchef, you are correct, but the issues are not unrelated. The DOJ was concerned that they were coordinating to suppressing competition. It is harder, but not impossible, to collude tacitly, which is why they don’t meet. Price discrimination appears to be legal if by doing so you are not suppressing competition. In this case, the DOJ was not alleging that the price discrimination in which they were engaged suppressed competition, just that they were suppressing competition in the way they did the price discrimination. </p>
<p>Interestingly, the admissions offices were engaged in a game in which they each wanted to attract the best kids and not pay too much for doing that (by way of tuition discount). This kind of game likely has an equilibrium in which the schools on average pay more than they need to for the same distribution of kids to schools. In this circumstance, the best solution for the school’s budgets is to collude. The DOJ squashed that. Caroline Hoxby found that after their decision not to collude (ahem, coordinate for the greater benefit of society), financial aid packages at the schools were less tied to financial need and more to academic quality within income groups. So, financial aid became more like merit aid.</p>
<p>raiderade, I sympathize with you and your family. The current rules do discriminate against parents and kids who have saved relative to parents with the same income who have spent more. It is hard to see how this is fair, going back to the OP’s question. Any set of rules can be gamed. I have read that for people on the edge of financial aid, perhaps like your friend’s father, buying a more expensive house and cars a couple of years before applying can shift a kid from getting no financial aid to getting some financial aid because of the different ways that financial and other assets are weighted. [I’m no expert on these rules so I could be wrong there, but it does make sense that the rules would work that way.]</p>
<p>Important Life Skill: Let. It. Go. Worry about yourself, not other people. Seriously. Life will be a lot easier if you learn to let go things you can’t control.</p>