<p>I love the quote from David Breneman when commenting on the fact that competition among the many private LAC's in the Philadelphia area doesn't result in lower tuition:</p>
<p>"This is a weird industry. Competition tends to drive prices up, not down." </p>
<p>Weird industry indeed, couldn't have said it better myself.</p>
<p>"The area's abundance of small liberal-arts schools, such as Swarthmore, Bryn Mawr, Haverford and Ursinus Colleges, partly explains why local tuition is so high. With high teacher-to-student ratios, and minimal economies of scale, those schools have far higher per-student costs than larger institutions."</p>
<p>Yup. And these are quality institutions. There is no reason they should charge less! But this is a wierd industry for sure.</p>
<p>Quality is not what establishes the final tuition price. There is very little relation between the cost of providing the education and the price sticker. The true COST of providing a $30,000 (tuition only) education may very well be between 150 and 300% of that figure. </p>
<p>The real competition is among the students who jockey for a prized slot at the schools. With the unabated demand for the elite schools, one should not expect reduction in tuition rates anytime soon. </p>
<p>Let's also point out that rankings such as USNEWS reward greatly the schools that spend lavishly. Spending like a drunken sailor will only result in a greater number of students who would do anything to attend a highly ranking school and pay full fare. </p>
<p>However, the situation does change rather quickly as soon as you drop outside the top one or half of one percent of the schools. Schools such as Mt Holyoke are facing huge difficulties in filling their classes with acadmically or financially qualified students and in avoiding sinking like a massive anchor in the selectivity rankings. They currently HAVE to rebate their sticker price by a whopping 45% percent, play the fairtest SAT game, and spend a small fortune in countless marketing studies to identify the gimmicks that will ensure to maintain an aura of respectability and ... a place in the first page of USNEWS. </p>
<p>It is a weird industry but not entirely foreign to the market dynamics of other industries. While GM has to offer employee discounts to everyone, Lexus, BMW, and Mercedes have only to look at one another to establish next year price hikes.</p>
<p>I am also reminded of a classic series in the New Yorker Magazine, called "Bow-Wow" - about the dog food industry. It seems upscale people feel the same way about their dogs as they do about their children. Market tests showed that if prices were reduced, demand would decline! Buyers assumed that price was a marker for quality, and they refused to go down-market. Nothing but the best for Fido!</p>
<p>Very funny, Byerly. I just read the article, expecting the usual newspaper crap, and thought it was pretty good. Along with the remark quoted by the o.p. (thanks for posting it), about competition paradoxically driving prices up (would it were true of my industry), I thought the Dickinson guy's comment that in the northeast "a large pool of wealthy and sophisticated students tend to be more impressed with state-of-the-art facilities than with tuition bargains" was funny and true.</p>
<p>I have a relative who is a cardiologist. Two of his patients asked for a meeting. At the meeting they apologized, but said they had to ask if he was as good as a doctor as a physician in another nearby town. He asked what occasioned their question. They said they had been discussing doctors with their friends at the country club and the doctor in the nearby town charged so much more than he did they were concerned my relative was not as good!</p>
<p>I am reminded of the definition of a yuppie, in vogue in Boston when Dukakis, famous for buying his suits in Filene's Basement, was governor: "A Yuppie is someone who looks to buy at above list price."</p>
<p>I am not sure if it is a trend, but the high cost of the public universities in Pennsylvania is definitely having an effect on my family. I have a strong enough income that I would not get much financial aid at a private university, but the cost of an in-state education at Penn State is fairly expensive (something like $18,000 or so per year last year). While this is obviously a small fraction of the cost of a private college, if you factor in the BAD financial aid (according to USNews, they only meet 67% of financial need), it is LESS EXPENSIVE for many children to go to an out of state private school, where they can get merit aid. </p>
<p>My kids are at the level where they would be accepted at an IVY, but I am in the process of starting a business and am trying to save for their grad schools. We wouldn't get much aid, and I cannot afford to pay our entire EFC. I had attended my state university as an undergrad and had assumed my kids would do the same. Obviously, a state university may well lose the very top students of their state to some private universities, but I think Pennsylvania is driving even more of their students away. The only students who save money by going to Penn State rather than an out of state institution are those with EFC's significantly above $20,000, but who are not bright enough to obtain significant merit aid at out of state schools. Hence, by raising the prices so much, they are (at least for my four kids) driving some of the top students out of state.</p>
<p>On the "state of the art facilities" comment, I recall a comment by my son on a college visit to a very fine and ancient LAC. Both my wife and I were very much taken by the slightly out-at-elbow, otherworldly look of the place, which recalled the look of many of the best colleges in our day, and so few of the colleges we had recently visited, which looked like country clubs. Driving away:</p>
<p>Me: didn't you like the look of the place, so much like a seat of higher
learning?
Son: I like a place with a more resources.
Me: You mean money?
Son: I like to call it "resources."</p>
<p>Here is a long, facinating June 24 article from Bloomberg about the pressure on schools to offer fancy, non-educational "resources":</p>
<p>"U.S. Colleges Get Swanky: Golf Courses, Climbing Walls, Saunas"</p>
<p>... <code>Colleges feel they must market the tangible products that are readily available to the student,'' she says.</code>Fancy new dorms with suite configurations, the newest toys, airy student centers with Starbucks and science labs that are cutting edge. If they don't have these things, it puts them at a disadvantage in the marketplace.''</p>
<p>I don't think that rising tuition trends is limited only to the schools in Pennsylvania. I know that my school (the University of Michigan) is raising the tuition for me 12.3% for next year. Bleh! That's very unwelcome news for me.</p>
<p>Byerly - Didn't Duke give out free iPods to its incoming freshmen a while back? LOL. Even though they should be working more so on improving their campus, etc., I have to admit that a free iPod is an awesome gift. However, I don't think they have to do very much to attract the best students in the first place though they do have more competition with other highly ranked schools that want those same students to maltriculate to their schools. (This kind of applies to all schools and not just Duke.)</p>
<p>Many of the Pa schools will find a way to give you some money. Places like Dickinson, Gettysburg, Muhlenberg all compete for the kid who can go to PSU for under 20. Most of the PA LACS are going to cost a good student only slightly more than PSU. The problem with the PA lacs is not so much money, but a sameness and prep conformity that dominates the PA LAC scene. If youre looking for bargains, the lower level of PA state colleges - West Chester, Bloomsburg, ec offer Honors Programs for the better students - at less than 10 grand a year including room and board. Temple is also a great deal, tons of good programs and a very diverse student body.</p>
<p>penn state is seperate from the PA state school system. they have campuses all over the state though. It was actually cheaper for me to attend York then it would of been to attend Penn State.. and that's a Private LAC. (i believe tuition is 8600/year)</p>