Wednesday, March 28, 2007

Private colleges may be getting it

Last week I was in full finger-wagging mode at American colleges and universities, but fair's fair: on at least one very big issue they deserve kudos.

I've remarked before that .edu-land today seems to have a perception problem: working-class American families aren't aware of the fact that the cost of going to college is now priced in an extremely (and historically-unprecedented) progressive way. In other words the better off you are the more you pay, and the well-off families paying full sticker price are subsidizing everyone else. But that reality is obscured behind a fog of complex forms and jargon, so lots of families who aren't well off and who see the newspaper headlines quoting $30,000/year sticker prices never even try.

Another sign that the institutions are grasping this comes from the excellent online journal Inside Higher Ed. They report that "several elite private universities and flagship public universities have effectively eliminated loans for students from low-income backgrounds", and that the schools are making this change public.

Other top-level private colleges have in recent years made the "pricing based on ability to pay" reality much more apparent and simpler: Harvard for example eliminated any expectation of family contribution for households earning less than $60,000/year and others are following suit.

This whole trend gets a big happy salute from me for several civic reasons that are probably obvious. It also seems wise from a strictly business point of view provided of course that a given college has a healthy-enough financial base to be not overly reliant on earned income to pay the bills.


Stephen Drone said...

It IS progressive, but I can't escape the fact that the price for this education is going up much faster than inflation, due to federal funding cuts. U of I is predicting annual 6% increases between now and the time my child would get there, 17 years from now.

Paul Botts said...

Of course what's been going up faster than inflation is the full sticker price, not necessarily the average actually paid. It's like with buying home computers, where you have to sort through all the variables like "not including monitor" in order to really compare apples to apples price-wise.

And I've yet to see any convincing data showing that federal funding cuts are the cause. Of course the colleges and universities will keep saying it for the next 30 years as they have for the past 30. Federal Pell Grants, for example, rose from $8.7 billion in 2001 to $13 billion in 2006 -- but right now in DC the college/university spokespeople are wringing their hands over the small decrease from 2005 to 2006. Guess which number will make it into the next NY Times article about rising tuitions?

Stephen Drone said...

You're right...

1. Federal funding for U of I isn't keeping up with inflation. Here's the only random article a quick search found:

2. Good point about sticker price. Thing is, of course, I have to base my savings on that sticker price. I can't predict what college will REALLY cost. Plus, if my plan works and I'm fabulously wealthy, I'll end up paying full sticker price. Heheh.

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