Comment and analysis on all things Charlotte

Private college price cuts

Many of the big issues facing American higher education today come from the misdefinition of university and college quality. The Associated Press, with additional reporting from the Charlotte Observer, showcases one aspect of the problem:

For decades, most private college pricing has reflected the Chivas Regal effect – the notion that, whether in a Scotch or a school, a higher price indicates higher quality.

“Schools wanted a high tuition on the assumption that families would say that if they’re charging that high tuition, they must be right up there with the Ivies,” said David L. Warren, president of the National Association of Independent Colleges and Universities. “So schools would set a high tuition, then discount it. But when the schools in your peer group all have discounts, it becomes an untenable competition for students, with everyone having to increase their discounts.”

In other words, pricing at many private schools was a lie. There was a high stickler price that very few students actually paid. Those that did were the spawn of well-to-do families that either absolutely loved the place or were happy to get in because it represented the best school that would accept them. Everyone else got a discount, often a big discount, to bring the outrageously high sticker price down to a level that a middle-class family count (somewhat) afford. The problem is that the high sticker price drives many potential applicants away.

Now comes word that several school, including Converse College in Spartanburg and Belmont Abbey College, are reducing their nominal tuition amount substantially, without a drop in the amount of money they actually take in. Other schools are fixing the price students pay per year for their time there.

Roger Williams University in Rhode Island turned to fixed-rate tuition after some market research.

“When I got here in June 2011, there were so few people paying full price that one wondered why we bothered,” said Donald Farish, the university’s president. “If everybody’s getting a discount, the notion that there is a full price is almost meaningless. It’s a model that makes no sense and makes you feel like you’re in a Middle Eastern souk bargaining with the tourists who just arrived.”

Such pricing changes are most welcome and a step towards a more rational higher education system.

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