<p>The ** High tuition/high aid** model:
What other critical consumer product means-tests its pricing??? Even the crazy prices of airline tickets are not based on people’s income, but on their desire for flexibility. </p>
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<p>Although, the $64,000 question is, in general, “Is college really critical consumer product?” Quite sure there are serious minds on both sides of this issue. </p>
<p>Are u questioning whether it’s a product that can only be acquired by way of purchase by a consumer? </p>
<p>Or are u questioning whether it is critically needed?</p>
<p>@awcntdb </p>
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<p>64,000 question also is when will a college cost $64,000/year? Looks like Sarah Lawrence will hit that next year for total costs! Wow. But when will Columbia/Vassar/SLU reach 64,000 tuition (alone, not counting fees and room and board and books)? Based on earlier discussion should be within 8 years. Ouch</p>
<p>Just looking at the landscape and asking if the college itself is a critically-needed product.</p>
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<p>Yes. Advanced training, currently only available through college and post-college professional schools, is most clearly necessary for only a subset (which represent a minority of college graduates) - e.g Medicine, Nursing, Law, Science research (and more generally most STEM), many areas of engineering (although online coursework may reduce the absolute traditional college requirement in some narrow areas), and certain military specialities. There is presumably a pretty large subset of jobs which really shouldn’t require college (although it might help) but in practice do.</p>
<p>Obviously the list of jobs where college really is required is less than the 35% of jobs which BLS estimates required candidates to have a college degree, or the >60% of jobs that required some post High School training (which has increased significantly in my lifetime). The fastest growing segment according to the Bureau of Labor Statistics is jobs which require a master’s degree.</p>
<p>@GMTplus7 :</p>
<p>It’s just old-fashioned tiered pricing structured to capture as much consumer surplus as possible: <a href=“Price discrimination - Wikipedia”>http://en.wikipedia.org/wiki/Price_discrimination</a></p>
<p>Other industries would love to discriminate the price they charge by income as well, but in most cases, it’s just not practical (so they have to discriminate by imperfect substitutes like different classes of people or time or propensity to clip coupons or something else).</p>
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That’s for the most generous elite schools (i.e. HPS). Other Ivies and elite private schools, full pay starts with about 180K AGI.</p>
<p>Sad that the college mentioned above didn’t know that Bookshare likely had an audio version of the required novels for free for the student with a disability. The price of ignorance. </p>
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<p>Looks like I took critically-needed to have a different meaning, and I am applying a different standard. </p>
<p>If a large set of jobs do not require a college degree, which many do not, then I see that as not a critically-needed product. It is a targeted, specialized product. I did not say not necessary - sure, STEM and sciences require schooling, but that is vastly different than saying that it is critically-needed. </p>
<p>Skills that are critically-needed pay for themselves in the marketplace, e.g., STEM, medicine. The fact there are so many college students who have extreme trouble with loan payments or can never pay off their loans indicates the market for their skills is not in line with their education. This pretty says the education they received was not critically-needed based on the labor market they entered.</p>
<p>Interesting that the two fields, entrepreneurship and business, which dollar-for-dollar pays the highest return, require no college degree.</p>
<p>You start your own company without a college degree, but very few people aiming to work in management at most companies don’t have one.</p>
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<p>No, it’s not that at all. If the objective was to maximize revenue, then schools wouldn’t give FA to the needy. They would just give teaser merit aid to stroke the egos of higher revenue-generating, upper-income students. </p>
<p>The High Tuition/High Aid model is geared towards achieving **“social justice”. ** Let’s face it. The people who work in admissions are poorly paid (~$50k salaries for mid-career) and hate upper income people. They tolerate the super wealthy bcs the uber-rich buy new bldgs.</p>
<p>GMT, you have really changed in a lot of your posts recently. Really bitter and angry. Are you ok? </p>
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<p>There is a distinction I would take here - there is a huge difference between fabricated need and critical need. A college degree does very little for students going into business. The only reason they are hired more is that so many people are going to college that there is a surplus of those to be hired. </p>
<p>Even students in business are having a hard time paying off college loans, as they are not making the money they thought they would. This is because the jobs are still geared toward people who did not need a college degree, but many students have been sold a bill of goods that they need to go into $50-100K debt to get a good job.</p>
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<p>That is the basic economic reason.</p>
<p>However, the other economic reason is the colleges are not really giving anything away or losing anything; they are only shifting a bit who benefits from the money they get. Whenever a third party (government in this case) subsidizes a purchase, the producer loses nothing by raising the price for any group, which can afford the increase, because any loans the college gives are guaranteed to be paid to the college. </p>
<p>None of this FA would exist like this if the government did not guarantee loans. Prices would not have risen as much either because not as many would qualify for the loans to pay the higher prices. But with the government paying the freight upfront and the student getting the bill on the backend, raising prices is not a problem. In reality, only an idiot would not raise prices if the guarantor of the loans has a money printer. Take away the money printer and take a guess what would happen to prices for the exact same education?</p>
<p>Put a third party between the consumer and the producer and there is nothing else that can happen other than artificially increased prices. </p>
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<p>I think a lot of families in the financial “donut hole” between qualifying for FA and being wealthy are frustrated.</p>
<p>@awcntdb:</p>
<p>Federal direct loan amounts have not increased in at least 20 years. Usage of parent loans have, but the full-need schools aren’t relying on them. They’re pulling from their coffers to make up the difference in fin aid. So saying that federal loans are driving tuition increases fails that logic test.</p>
<p>@GMTplus7:
You’re right, I should add the clause “while trying to pull in the best student body possible.” If you are trying to maximize revenue while also trying to pull in the best student body possible, you go with the high list price+full need model.</p>
<p>@GMTplus7 “Donut hole” is apt. I received my first FA prediction letter from an elite college - 0 grant/scholarship, 0 loan, 0 student work. Estimate: $63,000. So round it to a quarter million per kid for four years. To give the three kids the opportunity I could burn through savings and give each kid a $100,000 loan. My feelings vary. I’m mad at myself for not saving more, for not being more aggressive on the career striving. I’m sad I probably can’t let the kiddos experience the dream school I loved at that time of my life. I don’t feel good at my donations to the _____ fund. I feel embarrassed bringing it up even in this anonymous forum. I’d feel really embarrassed bringing it up with my classmates as some have gone on to become executives and lawyers and what-not. I’m frustrated and mad that it seems the cost have spiraled up so far. I’m frustrated seeing some families pay nothing. Some days I feel like I should just go to Camp Quitchabitchin. Other days it seems like something went seriously wrong. The feeling is I’m being penalized for being a minor success. I appreciate everyone’s comments. It’s therapeutic if nothing else!</p>
<p>@patertrium,
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<p>Something did go seriously wrong. If college costs had just risen with the cost of living, I would just shut up and pay. But it’s risen 3x the rate.
<a href=“http://satyagraha.files.■■■■■■■■■■■■■/2009/07/inflation-factors-2.jpg”>http://satyagraha.files.■■■■■■■■■■■■■/2009/07/inflation-factors-2.jpg</a>
I can’t justify paying a half a million dollars, net of taxes, to send 2 kids to undergrad school, w the add’l cost of professional school looming after that. I’d have to work to age 90. </p>
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A friend of ours keeps bugging us to have our kids apply to Yale (where she went) because Yale gave her such generous FA. When I mentioned a slate of prospective solid schools that offer merit money (Duke, Vandy etc), she derisively referred to them as schools for dumb, rich kids. It was really hard not to punch her.</p>
<p>@Pizzagirl asked why I’m so cranky these days; that’s why.</p>
<p>@patertrium:</p>
<p>Yes, that is not a great situation to be in, but no need to feel embarrassed. BTW, how far apart are the kids? If they overlap, you may get some fin aid. What state are you in? Also, any ideas on career goals yet? For some career paths, some of the cheaper schools (or where you can get merit aid) are as good or better.</p>
<p>Oh, and most lawyers hate their lives, so no need to feel jealous of those folks.</p>