Friday, May 19, 2006


Sunk Cost as a Motivator?

I heard an idea yesterday that gave me pause. We were discussing ways to improve enrollments and retention, again, when a professor suggested charging higher tuition in a student’s first semester, and lowering it each subsequent semester. The idea is to reward persistence, such that a student’s final semester before graduating would be nearly free.

Example (drawing on yesterday’s algebra discussion): if current full-time tuition for a semester equals x:

1st semester: 1.75x

2nd semester: 1.25x

3rd semester: .75 x

4th semester: .25 x

Or something like that. For part-time students, just pro-rate by credit hours. Use the ‘sunk cost’ fallacy to goad students to graduate.

I have to admit, I’d never thought of that.

Someone else had a variation on it: a graduation deposit. Have each new student put a chunk of money down as a graduation deposit, refundable with interest upon graduation. Sort of an incentive to stay the course. That one bothers me more, since it seems to create a perverse incentive for the institution.

Oh, wise and generous readers: what do you think? Would the sunk cost approach work, or would it just scare students away upfront? Would students just transfer in their first semester of coursework and screw us that way? The idea is just cool enough that I don’t want to discard it without batting it around first.

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