Wednesday, January 26, 2005

Pricing By Major

A moment of heresy…

What if tuition for different majors was priced according to what it cost to run them? Right now, most colleges charge a flat tuition rate for full-time students, regardless of their course of study. (To be fair, sometimes there are ‘lab fees,’ but these don’t even begin to approach paying for the cost differential.)

Some majors require a great deal of money – nursing, for example, or music. Both require low student/teacher ratios, lots of expensive equipment, and a surprising amount of dedicated space. Other majors – history, English, math – are almost entirely “chalk and talk” classes, which allow for higher student/teacher ratios, and which require almost no dedicated equipment. As it stands, the history majors are effectively subsidizing the nursing majors. (In fact, the college is breaking even on the history majors and losing money on the nurses.)

As a consequence, we have a constant backlog of students for the nursing and music programs, with plenty of good seats still available in the chalk-and-talk majors.

What if…we priced tuition differently by major? If you want a plain-vanilla degree just to get ahead at work, psychology or history should work just fine. If you want one of the boutique majors, pay a boutique price. As long as the financial aid people don’t choke on it, we wouldn’t really be limiting access; we’d simply be harnessing market forces to settle an allocation problem, which is one thing market forces do very, very well.

Would more students rush into the cheaper majors? Probably, but that’s not necessarily a bad thing. I’d rather a student complete a history major than take two semesters of nursing and drop out. Leave the boutique courses to the truly dedicated. The beauty of pricing is that it’s adjustable; if too many students are scared away, the premium could always be reduced.

The same principle could be applied to ‘honors’ degrees. Since honors sections run much smaller than regular sections, charging extra seems reasonable. Again, we’d have to make sure the financial aid people don’t have an issue, but those students who qualify academically and are willing to pay extra should have the option for, well, premium service.

Thinking ahead, this may not be a bad way to entice the upper-middle classes to take a fresh look at community colleges for their less-ambitious offspring. If Buffy doesn’t know what she wants to be, but doesn’t want to miss out on small classes, she suddenly has an option. The extra income for the community college could help with the chronic budget issues. Hmm…

I know it’s heresy, since community colleges are supposed to focus single-mindedly on lower-income students, but I’ve noticed that the public services used by the middle and upper classes tend to get better budgets than those reserved for the poor. If we want to provide the best possible service to the poor, we may need to attract some of the better-off to pay for it.

Just a thought…