Friday, February 23, 2007


Ask the Administrator: Different Prices for Different Majors

A new correspondent writes:

The Faculty Senate here has gone on record as opposing a proposal to base student tuition and fees on the academic program under which they (students) seek their degree.

The Senate gives 4 reasons for opposing differential tuition (I paraphrase those reasons here).

1) We don’t want to encourage or force students to choose among academic programs for economic rather than for educational reasons.
2) We don’t want to add the new layer of administrative bureaucracy that would probably accompany differential tuition.
3) We don’t want to add another layer of complexity to students’ academic decisions.
4) We don’t want to quantify the difference among academic programs in dollar terms. This would “demean faculty and students.”

I know you’ve written on similar topics in the past. Any reaction to this set of arguments?

I've addressed the topic before in the context of cc's, back when I was a wet-behind-the-ears blogger. The correspondent was writing from a comprehensive university, though, and included several arguments against differential pricing, so a fresh look seems in order.

First, some background. There is ample precedent for lab fees or materials fees, which add to student costs in some areas and not in others. (Intro to Chemistry usually has a fee; Intro to Sociology usually doesn't.) Textbook costs also vary by discipline – typically, the physical sciences get badly hosed, but the folks taking “intro to the novel” get off light. Financial aid is based on demonstrated need, so students with more need can (ideally) get more aid. And it's absolutely true that different majors cost the college different amounts, depending on such variables as class size, facilities, liability, materials, and the going rate for instructors. “Chalk and talk” classes are usually profit centers, which are used to offset the losses taken on, say, Nursing clinicals.

It's also true that employability varies considerably by major, though not often as predictably as students think. (A few years ago, CIS grads could write their own tickets. Now, those tickets had better be to Bangalore.)

To address the Senate's arguments, in order, as presented here:

A while back, when I wrote about the U of Florida's plan (since scuttled) to reduce its number of graduate students in English (a plan I supported), several commenters responded that yes, they should take fewer students, but they shouldn't cut the budget, since budgets are symbolic and that would send a negative message.

The objection was so breathtakingly stupid that I didn't even bother responding to it. Budgets are more than symbolic. They buy stuff. If you need less stuff, your budget should be cut, so areas that need more can buy more. If that wounds your fragile ego, you need a thicker skin.

Colleges and universities currently go to great lengths to hide different costs of different programs through a series of behind-the-scenes cross-subsidies. (If you think that doesn't involve administrative costs, I want what you're smoking.) The problem, of course, is that there's never quite enough money to go around. The 'cash cow' departments know the score, and frequently become hotbeds of discontent and union leadership. The 'fiscal sinkhole' departments also know the score, but argue – with some justification – that the costs of doing business are the costs of doing business.

In most other industries, prices usually bear some relation to the cost of production, at least on the low end. If the producer can't get a price that makes production worthwhile, it stops producing. (If they can go way higher, of course, they do.) Colleges and universities generally don't operate by that logic. We run programs on which we know we'll lose money, out of a sense of mission. Then we scurry behind the scenes to minimize the damage.

I'd like to see what would happen if a college set different prices by major, to reflect (broadly) their actual costs. (Since tuition doesn't cover the full budget of most institutions, it would have to be done on a percentage basis. Let tuition cover, say, 50 percent of the cost of instruction of any given major.) My guess is that students would sort somewhat differently than they do now, but I'm not sure just how. (The social scientist in me sees it as a nifty experiment.) It may be that the areas that are currently objecting on the grounds of feeling devalued would actually experience enrollment booms, since students who just need a degree – and don't much care what it's in – would presumably take the cheaper majors. Econ 101 teaches us that anything underpriced will be overused, so it may be that adjusting prices to reflect costs would actually be a boon for the liberal arts and a bane for the boutique majors.

In fact, the most reasonable objection I could see to this rests on a recognition that some of the majors most likely to lose enrollment would be the ones that the country needs the most. Raising tuition for Nursing would only exacerbate the shortage of nurses, for example. But that strikes me as an argument for a more robust financial aid system (and/or more robust philanthropy), rather than an argument for continuing to milk the liberal arts cash cow. We have a better shot at getting the funding right if we can get the costs right, which involves getting the prices right. I say, give it a shot.

Wise and worldly readers – your thoughts?

Have a question? Ask the Administrator at ccdean (at) myway (dot) com.

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