“The pushback is beginning” on rising tuition

Parent Cafe
1

<p>Colleges</a> freeze, reduce tuition as public balks at further price hikes - U.S. News</p>

<p>(referencing The Hechinger Report)</p>

<p>
[quote]
Supply and demand have not traditionally affected the price of higher education. That’s because supply largely remained unchanged, while demand was ever-rising. But the number of high-school graduates, which peaked in 2009, is starting to decline. Enrollment fell at more than 40 percent of colleges and universities last year, according to the credit-rating firm Moody’s. At least 375 institutions still had space available for this fall when the admissions period was over, the largest number in a decade, the National Association for College Admission Counseling reports. The percentage of accepted students who actually enroll is also falling. A recent analysis of public and private nonprofit colleges by Bain & Company found that one third were on an “unsustainable financial path.”

[/quote]
</p>

<p>Logically, this trend will gradually move upward to higher-ranked schools.</p>

2

<p>The pushback is only beginning NOW?</p>

3

<p>What may be worth noting is that UC Irvine is part of the UC system, whose Blue and Gold Opportunity program tops up grant financial aid to UC systemwide fees for in-state students from households below $80,000 annual income (about the 70th percentile). This does mean that the top 30% income in-state households, plus out-of-state students, bear the burden of fee increases.</p>

<p>UC systemwide fees are currently $12,192 per academic year. Additional out-of-state tuition is $22,878 per academic year. Add about $20,000 per academic year (with some variation by campus) to get list price cost of attendance. However, an approximately 20% increase can occur mid-year, depending on the outcome of a political proposition this November.</p>

4

<p>won’t help me :(</p>

5

<p>The article claims that the UCI undergrad student nearly dropped out due to tuition increases, but then goes on to say he will attend UCI Law School in the fall. Huh? The Law School costs $44K+ per year. [UCI</a> University Registrar - School of Law Fees 2011-12](<a href=“http://reg.uci.edu/fees/2011-2012/law.html]UCI”>UCI University Registrar - School of Law Fees 2011-12)</p>

6

<p>Bay, I was wondering about that seeming paradox myself.</p>

<p>Separately, I think it is interesting that a few law schools are starting to freeze tuition as the number of overall applicants decline.</p>

7

<p>

</p>

<p>to a point, yes, but the fact is that the highest ranked schools generally have the best need-based aid. And there are still thousands of families wiling to pay full freight for the top ranked schools. HYPMS, for example, could charge $100k and easily get it.</p>

<p>and, fwiw, the UCI Law Student’s proposition has zero chance of even collecting one-quarter of the signatures needed to qualify for the ballot. (Looking at the fine print in the LA Times, he has <10% of the signatures needed, and they are due next month.) While the idea makes for good (stupid) journalism, Christopher’s is not a story worth writing about. But never let facts get in the way of a ‘good’ journalism piece. :)</p>

8

<p>

</p>

<p>I’m sure they could fill their seats with those paying 100K, but they couldn’t keep the same caliber of students. Consider a wealthy but not ultra-rich family (say family of 4, 1 in college, pre-tax income 250-500K/year, assets of under 3M). That family is unlikely to pay 100K for HYPSM over 16K (my guess at the average tuition) at schools like Berkeley, Michigan, OSU, UIUC, UT, UVA, UNC, or GT. They may however be willing to pay 45K for HYPSM over 16K at those top publics. That socioeconomic demographic I described contains a very large portion of students at those top schools. If you cut them out from HYPSM than you are going to greatly reduce the selectivity and student quality at those schools.</p>

<p>Also worth mentioning, the states those schools cover contain about 40% of the population of the US and probably a greater proportion of the “wealthy but not ultra-rich” families in the US.</p>

9

<p>

</p>

<p>Sure they could. Don’t they already say that they reject just as many qualified as they accept? And don’t forget internationals, who would be lining up at the doors by the thousands. Sure, the mix would be a little different (from 50% full pay to ~90% full pay), but the caliber would not have to change. </p>

<p>

</p>

<p>I disagree. The Harvard brand is huge. There are thousands in that category who would mortgage the house for HYPSM.</p>

10

<p>

</p>

<p>This seems to say that, as I said, they could fill the seats at 100K, but the student caliber would decrease. </p>

<p>Take a school with 6.67% (nice number) acceptance with another 6.67% that are just as good as the people they accept. If they lose 1/3 of their applicant base they’re going to need to take 10% of applicants, and (assuming their losses are distributed evenly over student ability) they move from 13.33% qualified to 8.89% qualified. Now they’ve deemed 12.5% of their admitted students unqualified in order to fill their seats. If they lose 1/2 that 12.5% becomes 50%. And it’s a snowballing effect. It lowers their prestige and the “value” of a HYPSM degree becomes even less.</p>

<p>Now, if you believe that no one is going to drop their ambitions of a HYPSM degree if prices were raised to 100K, then I guess they don’t lose any of their applicant base and this doesn’t occur. I simply don’t believe that though.</p>

11

<p>

</p>

<p>Even if HYPMS won’t have a problem because they’ll always be able to subsidize middle and lower class enrollees, what about other top 20 schools, most of which don’t have such relatively large endowments?</p>

12

<p>The other top ~20 will be fine. There is no reason to believe otherwise. </p>

<p>It’s is the colleges below the top 20-30 (wherever we want to draw a line), that have been discounting tuition for a long time. That ain’t gonna change. NYU, GW, Tulane and Miami (none of which meet full need), for example, have long offered huge tuition discounts (aka ‘merit schollies’) for kids with good numbers. But yet they have no problem filling the bottom xx of their class with full pays.</p>

<p>Over a generation, Cal-Berkeley & UCLA has gone from essentially free (no tuition/fees), to a COA of $35k. No fall off in applications, or willing folks to attend. Indeed, just the opposite. UCLA sets records every year for the number of apps.</p>

13

<p>

</p>

<p>A generation ago, COA was probably around (CPI-inflation-adjusted) $14,000 per year for in-state. Add another (CPI-inflation-adjusted) $4,000 or $5,000 for out-of-state.</p>

14

<p>I think it is unrealistic to think that the COA can keep rising above the rate of inflation and that this won’t affect demand at even the top 20 schools, especially since technology will enable attractive lower-cost alternatives. I agree with Vladenschlutte that even if they manage to fill their slots in 10 or 20 years, the composition of the student body will lose its luster.</p>

15

<p>

</p>

<p>Maybe not. The opportunity for the uber-rich to mingle with even greater numbers of other uber-rich might actually make those colleges more appealing to them and worth the increased tuition.</p>

16

<p>

</p>

<p>Again… As you said, yes they will be able to fill their seats but will not be able to keep the same caliber of students as before. Unless you think the parent’s net worth is the only thing that makes a good student.</p>

17

<p>

</p>

<p>Depending on how far back you want to go…in the early 70’s, Cal tuition/fees were $600 per year ($636 if you count the athletic fees, which earned your a football pass) and R&B was <$7k. Throw in some books and travel, and COA was well below $10k all-in.</p>

<p>

</p>

<p>On what do you base your assumption, unless you believe that low “net worth makes a good student”?</p>

<p>

</p>

<p>Perhaps a lot of high “caliber” students don’t even apply because of that number alone. (Just speculation, of course.)</p>

18

<p>

</p>

<p>On the other hand, it is not out of the realm of imagination for a super-selective school to raise its list price, but increase financial aid in a way that families that would get financial aid now pay the same, but those who would pay today’s list price now pay the same or more, even if some of them would get some financial aid against the higher list price.</p>

<p>For example, suppose the current list price is $60,000 per year.</p>

<p>Family 1 is poor and pays $5,000 per year after financial aid.
Family 2 is moderately wealthy and pays $20,000 per year after financial aid.
Families 3 through 5 are pay list price of $60,000 per year with no financial aid.</p>

<p>Suppose the school raises its list price to $100,000 per year and adjusts financial aid accordingly.</p>

<p>Family 1 still pays $5,000 per year after financial aid.
Family 2 still pays $20,000 per year after financial aid.
Family 3 pays $60,000 per year after financial aid.
Family 4 pays $80,000 per year after financial aid.
Family 5 pays list price of $100,000 per year with no financial aid.</p>

<p>In this case, the school gains an extra $60,000 per year from families 4 and 5, but families 1, 2, and 3 do not pay more because the school does not think that they are able or willing to pay any more than they currently do.</p>

<p>Indeed, an analogous type of thing is going on already. The University of California is rapidly raising in-state fees in response to budget cuts, but its financial aid policies mean that students from the bottom 70% of household income families are not affected. Clearly, the strategy is to get more revenue from the wealthy families who are able and willing to pay (and many grumble but are willing to pay since those who pay list price will still find UC less expensive than many other schools, although a few who get into the super-selective super-generous-financial-aid schools will likely find those schools cheaper).</p>

19

<p>^^Exactly, ucb. The UC’s make clear that $1 of every $3 increase goes directly towards offsetting the increases for low income students. Quite frankly, the Occupy crowd should support this tuition increasing effort, as opposed to want to make a constitutional amendment against it.</p>

20

<p>^^But this example assumes that the school can afford to keep raising its financial aid budget, to keep pace with COA. That is not given for any school except maybe the hugely endowed ones.</p>

<p>Presumably, if the COA rises, it is not just in order to shift money to lower-income families, but rather it reflects increased operating costs.</p>