<p>They argue, as I mentioned previously, that an important reason for the cost of higher ed rising faster than inflation is the fact that it’s a service industry that’s provided by a highly educated labor force. They give other reasons that you can read from the extended summary.</p>
<p>“Regardless of how high tuition rates are, I think the opacity of tuition rates borders on deceptive and in some ways could be regarded as unethical or even immoral.
I sometimes think there should be some kind of “truth in tuition & fees” act ( and then I go lie down until the thought passes because that would probably raise their costs too).
Nonetheless I would like to know how much of each tuition dollar goes to actually educating the student, hiw much goes to subsidizing another student, and how much goes to other things ( like chasing prestige via huge speaker fees to big name speakers)”</p>
<p>A big-name speaker coming to campus IS part of the value of the education. </p>
<p>So then don’t play. Send your kid to the state flagship. Good lord. It’s fascinating how here in the midwest plenty of families figure “I’ll send my kid to state flagship”, they go ahead and do, and they don’t spend one minute’s worth of time agonizing that the kid isn’t at Harvard as if Harvard is the key to life success, because they know a smart, motivated kid will do just fine. If you can’t afford something, you can’t afford something. Oh well. Such is life. Move on. </p>
<p>Although there is a wide amount of information about the cause of rising college costs readily available on the internet and the distribution of net price across income levels at various colleges, from across the political spectrum, it’s disappointing that the discussion of rising college costs is full of myths, half-truths, evidence based on anecdote and hearsay, faulty reasoning, and the reliance on overly simplistic models.</p>
<p>And at least in this discussion, and in many discussions of cost on CC, with respect to costs and the ‘doughnut hole’ family, I don’t think I’ve ever seen one of these families say that they could not afford a four year education for their child. </p>
<p>The elimination of (federal) financial aid will not affect the opportunities for students from these families to pursue a degree from some four year institution, whether these students are meritorious or not. And I doubt that the elimination of aid will actually lower the price significantly at elite colleges, where most of the outrage is directed.</p>
<p>But the elimination of aid will certainly affect access to a four year degree for families of lower incomes. And so far, I’m not convinced that the elimination of aid will lower college cost enough or at all to keep it accessible. </p>
<p>Maybe at some point Kiplinger or wsj or some other financial publication will take that cost/spending info and start ranking schools on fiscal responsibility. I wonder if that would bring any pressure on schools to start competing in price.</p>
<p>This is amusing. Is there a parent on here who cannot look at the school’s list price, run the online financial aid calculator, and then decide if the price/value ratio works for their family? Exactly what kind of transparency are you looking for?</p>
<p>I see families who pay (within a few thousand dollars) the same price for Hofstra, Adelphi, Fairfield U, as they do for Harvard or MIT. I know families whose kids do not get into Notre Dame or Georgetown but who pay full freight for a third tier Catholic college rather than send them to the State flagship or a merit school which would cost less. Their choice, not my kid and not my money. But the issue has nothing to do with transparency. Anyone who can read the website sees what the costs will be. You don’t like it, find a cheaper alternative (or join ROTC).</p>
<p>It’s just crazy to claim that there is no transparency. I see the transparency for my state’s flagship. I don’t like it- the bond issues for new sports facilities, the new dorms are nicer than a hotel, the student center looks like the lobby of the Westin. I wish they’d put the money into instruction, labs, endowed faculty chairs. But that’s me. But certainly they’ve got the transparency issue fixed- our friend Google can tell you what they’ve spent on capital improvements, what the latest bond rating was and why, if Moody’s is concerned about cash flow and where it’s going, etc.</p>
<p>Oh c’mon…fiscal responsibility??? So Alabama gives out an iPad to students who are National Merit Finalists–with 240 NMF, that’s probably close to 100K on ipads. Another school spends 100K on a speaker fee. Which school is more fiscally responsible??? How would you even determine that?</p>
<p>Do we really need another ranking system to add to USNews, Money, Forbes, Washington Monthly, Times Higher Ed World Ranking, etc. </p>
<p>@Pizzagirl You are completely missing the point. Financial aid doesn’t just come out of the blue. Colleges lose money when students don’t get aid. If they make the price what the average student pays, then they NO LONGER have to spend from their endowment. That money that they WOULDVE spent is not being put towards other things. It costs the same to educate two students. But the college has to pick up the cost to educate a student who still needs aid.</p>
<p>However, the incomes of the top ~5% percent have also increased by a lot more than the CPI inflation rate. Perhaps the elite colleges, knowing that about half of their students come from the top ~5% percent income families, are just raising list prices to capture part of these income gains, which the top ~5% percent income families have shown willingness to pay so far (despite the incessant complaining here). They then have financial aid policies to allow them to still admit and enroll students that they like from the other ~95% of the family income scale. Of course, many of them have top-end economics departments that they can consult for advice on applying economic principles of price discrimination, behavioral economics, and the like to their pricing strategy.</p>
<p>Going to a list price of $40,000 or so with no discounts from financial aid or scholarships would limit them to taking students from the top ~10-15% of the family income scale, which is probably not what they want.</p>
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<p>Most college students today commute to the local university or community college. If there is such an “entitlement”, it has not really had much effect. Indeed, the financial aid policies of most colleges mean that this claimed “entitlement” does not exist at most colleges. If you are referring to elite colleges giving financial aid to cover room and board, that is probably in their interest to keep their students on campus as a cohesive campus community, rather than have a large percentage of commuters (and limiting their admissions and enrollment of bottom ~95% family income students to local ones).</p>
<p>@AnnieBeats
I still don’t understand your point. Please (re)read post 198 from @apprenticeprof. </p>
<p>I’ll try to explain the same point as (s)he does in a slightly different way. Let’s simplify the discussion and say that the amount of tuition generated plus money from the endowment covers the cost of education.</p>
<p>I’ll also simplify the discussion by having only 3 students at the university, with a full cost of 60K and money from the endowment also at 60K.</p>
<p>So with these three students, you have one who is full pay (60K), one who is half pay (30K) and one who pays nothing (0K). The school generates 90K in tuition, plus 60K from the endowment,for a total of 150K, which, by hypothesis, covers the cost to educate those 3 students.</p>
<p>Now the average price for those 3 students is 30K. If I understand your claim, you say that the college should make its price 30K and still give out aid to cover the need of the students. In this case, the family paying 60K would now pay 30K, the family paying 30K would still spend 30K and the family paying 0K would still spend 0K. That means the college would get 60K in tuition, so 30K less. Add to it the endowment spending of 60K, you get 120K, which does not cover the cost to educate those 3 students, by our initial assumption. So they would need to find an additional 30K.</p>
<p>So where is the problem in my reasoning here?</p>
<p>But… AnnieBeats, where do you think the tuition dollars are going? They are going to the college. So, if you charge full payers less, the college “saves” on endowment costs (which isn’t really a savings if the cost of educating the student remains the same), but also loses on tuition money - which means more costs, and less money to go into your endowment, or more money coming out of it to compensate for the shortfall.</p>
<p>I still don’t get how you think you are saving on the endowment by charging students less. If you owned a restaurant, and had a problem with people dining and dashing, you couldn’t solve it by reducing the price of the meal so that you were only being robbed of $50 rather than 70. You’re out the costs of the thieves’ meals either way, and in lowering the price for everyone, you’d be limiting your profits for the rest of the diners. </p>
<p>If colleges want to charge less for everyone, they are going to have to cut costs in some way. That could be by limiting FA, or it could be by curtailing amenities. You can’t start charging less without accepting that there will be consequences. </p>
<p>With respect to the claim that elite colleges have a problem with a ‘doughnut hole’, here’s some statistics from Yale.</p>
<p>There are 667 families who make less than 65K who pay 0, and another 154 families from the same income range who do not qualify for the 0 parental contribution, for a total of 821 families. There are 511 families in the 65-100K range, 758 families in the 100-150K range, and 448 families in the 150K-200K range. </p>
<p>They don’t give numbers of families above 200K, but given that there are 5430 undergraduates, with 2538 families making below 200K, so 2892 families making over 200K.</p>
<p>The net price for those families in the 150-200K range is 25,600.</p>
<p>So there really is no ‘doughnut hole’–though you may claim that there are about 1.8 many students below 65K than at the sweet spot of ‘too rich to afford the net price, too poor to get significant aid’ and certainly many more students above 200K, the 150K-200K captures about 4% of the population, while 65K and below captures about 40% of the population.</p>
<p>‘Doughnut hole’ families and still well represented among elite schools and certainly more than their share of the total population. And at 200K, you are capturing the top 5% of wage earners, which represents slightly over half the student population at Yale.</p>
<p>OK, so the Yale facts I referenced in a previous post states that the average net price for a family making 150K-200K is 25,600K. So the net price has kept fairly consistent with inflation. What’s the problem? Families are paying more, but it’s consistent with the CPI rate.</p>
<p>I’m sure families are the very upper end are paying significantly more than CPI. But as @ucbalumnus has stated, it is these families in the top 1% or greater than have seen significantly more of the wealth gains as well.</p>
<p>The fact that there are so many different theories and studies on why tuition rates have risen astronomically shows that there is lack of transparency. This is accounting, not nuclear physics.</p>
<p>@skrlvr @apprenticeprof Okay, let me try to simplify this for you. What is the point of charging someone $60K for something when they can only afford half of that? You would have to pick up the cost of the bill thus, spending more of your personal money. If you would charge what that person can actually afford, you wouldn’t have to spend to make up the costs. Yes, you will technically be receiving less in tuition. But that is only because you will be switching from charging the inflated value of an item to the actual cost.</p>