Sunday, August 10, 2014
Two Conflicting Ideas at the Same Time
At the same time, though, like you I wonder if Idea One is really true since the for-profits have been able to eat the lunch of much less expensive alternatives, among a segment of the public you wouldn't think is savvy about discounting practices.
For example, I teach at a four-year institution where the semi-mythical "$10,000 degree" is actually something close to reality (with book rental we're probably closer to $12k over four years), yet I know there are lots of for-profits that are somehow attracting students who could be here paying a lot less money, not to mention local private alternatives whose post-discount pricing is still much more than ours for no real gain in instructional quality.
My gut feeling is that to the extent people pay attention to pricing, they see it as a proxy for quality, just like why people will pay $4 for a box of Cheerios rather than $2 for a box of Kroger Oaty-Ohs (or whatever Kroger's Cheerios knockoff is called); if you have a $1 coupon for the Cheerios, even better.
As a parent of a student about to start as a freshman, I can say that it is d*** difficult to figure out how much college will really cost. The net price calculators want detailed financial records from you, and then give misleading answers.
Colleges are about the only business I know that requires detailed financial information from their customers before they'll set the price. And charges you to provide that information to them. And then decides they don't want to sell to you anyway.
It is no wonder that people are confused about college pricing schemes (and I use "schemes" in its most negative sense).
Personally, I've always felt that the high price-high aid model was flawed. Colleges should set one honest price, and financial aid should be an independent deal that does not come out of tuition, but only from endowments or government aid specifically intended for financial aid. The pricing would be a lot easier to understand then.
Community colleges, at least in California, have followed a simple pricing scheme that does not include high price or high aid. I wish I could say the same of UC, where over 1/3 of every new tuition hike is earmarked for "return-to-aid", so that the net gain from a tuition hike is only about 65% of what the hike is.
But a well-defined price with scholarships, that is a clearer picture no matter where the money comes from. The difference between the latest round of for-profit ads and what happens at my college is that the former offers a scholarship to everyone!
But the real marketing trick is bottom line pricing. "What will it take to get you in this car today?" The focus is cash out of your pocket today, not the actual cost -- let alone the cost after interest is included. Did your college used to quote the price after scholarships, or include loans as if they were "aid"? I think everyone did the latter until the forms changed.
It is only here and there during certain advising periods, but I've noticed some new students and quite a few returning students who were very much aware of the difference between loans and scholarships.
PS - Just like GSwoP above, in another state, my CC has been forced by the legislature to use part of each tuition increase for need-based scholarships. It's almost as if all of those lawyers in the legislature went to selective professional schools that used that model.
The result of increased fees was a one-year stall in enrolment, followed by increased application in future years.
As for Idea Two, the appeal of scholarships comes from the time delay between finding out what your tuition is and finding out what scholarships you'll get. When you register at a college, you sign up to the sticker price and you've committed yourself to that price. After committing to the sticker price, any and all scholarships you get are discounts and never fail to make you feel really good about being at college X. If the scholarship announcements arrived at the same time as the tuition announcement (not tuition due date, but the day you find out what your tuition will be), then it would be a simple matter of subtraction, and scholarships would lose much of their psychological impact.
Mind you, at my uni's, most of my scholarship arrived after the semester started, not before. My experience and opinions are shaped by that time delay.
Some more food for thought on tuition and aid: