Wednesday, January 23, 2013


But Wait! There’s More!

My Dad used to teach courses on advertising, which was how he justified his weird attention to commercials.  He used to pick up on odd turns of phrase from locally produced ads -- anyone who lived in Rochester circa 1980 will remember those awful/great Hill T.V. ads, with Dick and Linda Hill -- or anything by Ronco.  Three easy payments!  But wait, there’s more!  Now how much would you pay?  If you act now...

He may have been ahead of his time.

The kind of payment gimmicks that used to be restricted to the appliance or pocket fisherman biz are finding their way into higher education.  

Last week, Union College (KY) announced that it would allow students to take their last semester for free if they got good grades and engaged in campus life.  The idea was to offer a tangible reward for sticking around and doing well.

This week, Cleveland State, Florida International, Lamar and Utah State Universities and the Universities of Arkansas, Cincinnati, Texas at Arlington and West Florida agreed to offer a first course free in the MOOC format, as a way of enticing students to stick around after the freebie is done.  

(If memory serves, a certain blogger suggested a deposit refundable upon graduation in these very pages back in 2010.  Just sayin’.)

Higher ed pricing is usually somewhere between obscure and opaque.  There’s a “sticker price,” sort of, that covers the basics.  (It’s usually called tuition.)  There are fees for various purposes -- lab courses, technology, high-cost programs, student life, or even, in the case of Worcester State, walking (!).  For residential colleges, add room and board.  Then start subtracting.  “High tuition/high aid” colleges live and die by the “discount rate,” or the amount that they’re willing to discount (“presidential scholarship”) the sticker price for various students.  Financial aid in various forms, scholarships of all shapes and sizes, and both need- and merit- based programs affect how much a student actually has to pony up.  

The advantage of the complexity of higher ed pricing is that it supports the kind of institution-based redistribution that allows students from economically modest backgrounds to get far more than they could ever pay for.  There’s real virtue in that.  It also tends to tamp down competition on price, directing competition instead towards perceived quality and various amenities.  While there’s plenty of noise in the ways people perceive quality, there’s a valid argument to the effect that maintaining some sort of meaningful standards for higher education is a real public good.  

But when complexity starts to become opacity, especially in the face of faster-than-inflation increases over time, some potential students probably get discouraged.  And that’s where the radical simplicity of the “free semester as a senior” model can cut through the noise.  

Admittedly, it’s a little jarring to hear “the first one is free” coming from people who sell intellectual growth rather than, say, crystal meth.  But there’s no principled reason that the “loss leader” model couldn’t work for colleges too.

My fear is that we’re inadvertently replaying the old airline model from the 1970’s.  When fares were regulated, airlines competed on amenities.  When price competition became viable, a sort of race to the bottom ensued; now airlines compete almost entirely on price (and hidden fees), and they pass the savings on to you by making flying as unpleasant as humanly possible.  Any pretense of luxury is long gone; now you’re lucky to get a bag of peanuts, and legroom for anyone over about five foot ten is a distant dream.

That’s not entirely bad, except for the legroom.  Flights are usually pretty brief, in the grand scheme of things, and some brief unpleasantness may be a fair trade for a lower price.  If you get from point A to point B safely and affordably, the flight has done what it set out to do; you can accept the take-off-your-shoes ritual as a cost of doing business.

But college isn’t like that, and shouldn’t be.  Real education takes time and investment.  I don’t think our current methods are the only possible methods, heaven knows, but I’d hate to see us race to the bottom.  

If we want to avoid falling into the same category as the inside-the-egg-scrambler, we need as a sector to give some conscious and deliberate thought to how to blend quality and economic sustainability.  That will probably require some pretty significant changes.  We can’t rely on the old Pan Am model forever.  The world is changing whether we give it permission or not.  Colleges starting to adopt the marketing tactics of cheesy television commercials may be understandable and even sort of refreshing, but it probably doesn’t lead anywhere we want to go.  

If we don’t do our homework in a serious way, that’s where we’re heading.  Now how much would you pay?

You shouldn't have mentioned Pan Am, since that reminded me that airlines have worked around Baumol's Cost Disease by moving from the DC3 to the 747 and other "wide bodies". More passengers per pilot, and cheaper pilots on feeder routes as well.

The giant lecture hall / TV classes / community college / MOOC solution.

Now as you note, the giant planes (like the giant classrooms) come with some discomfort. Some airlines now remind me of the one time I took Greyhound between two major cities. However, the latest solutions are putting TV and internet in every seat to help pass the time, with actual legroom or buttroom offered as an upgrade.

Is that the next breakout idea for higher ed, keeping the customer entertained in a comfy seat, complete with a frequent student rewards program like you mention? Or perhaps they get a free movie with every MOOC session they complete, or a "free" MOOC session with every program they buy on-demand from their college/cable provider. The possibilities really are endless.
Deregulation made air transportation accessible to many persons who previously could not afford it. When I was a kid, the first adult was full fare, the spouse was 2/3, and each kid was 1/3. That kind of price discrimination ended with deregulation.

How much would I pay? The total expense of my 4 years of undergraduate education was equal to about three times my salary for the first year out of college. That ratio seems about right to me.

But the ratio fails when there are no jobs for college grads.

I expect that pricing gimmicks will not work in the long run. The survivors are going to have more transparent and everyday lower prices, along the lines of Southwest.

On a non-educational topic: regarding television ads of the early eighties, here's a series of names for you: Slim Whitman. Boxcar Willie. Zamfir. For the Rochester-specific: the Great, Great House of Guitars. ("Hop hop. I'm the Easter bunny. Hop hop.") Memories flood back, don't they?

I'd bet a hundred dollars that the House of Guitars still has that Yngwie Malmsteen 1985 World Tour t-shirt stapled to the ceiling above the register.

I don't miss Rochester, but I do miss the House of Guitars. Perhaps nowhere in modern capitalism does the phrase "inmates running the asylum" fit more aptly.
CCPhysicist, cheaper pilots are key. There aren't that many 747s flying on domestic routes in the US. But feeder airlines are very much like adjuncting, especially in terms of pilot salary. There are a lot of flights operated by feeder airlines, often on regional jets or turboprops.
Or, you can opt out of flying (or at least use alternative transoportation as much as possible. Greyhound isn't actually bad). What you get is guaranteed avoidance of getting stranded in an airport for 3 days (true story). The Higher Ed equivalent will be, I suspect, growing numbers of students figuring out alternate ways to their desired occupations. It will be only the brave and the broke to begin with, but I am sure it will spread.
Can I predict that DD aka MR might blog about a study on the cost-effectiveness of private liberal arts colleges presented at the AACU conference in Atlanta? Extremely thought provoking, particularly in the context of this particular blog entry.

However, I'll also note that the study provides more evidence of a pay and work-load source for high cost than a BCD infection.

BTW, it is sad and pathetic that I have to confess that I first saw the article at "College Misery" (where I have also seen allusions to the Nothing Special College) rather than at IHE. Must be behind in my reading. Or grading. Something like that.
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