Cost of college tuition too low?

[SAM2]

http://economix.blogs.nytimes.com/2011/01/25/is-college-tuition-too-low/

No one's going to agree with this.

[Anonymous]

Ha, the pricey schools are struggling to get the best students whose middle class parents can not pay the ridiculous tuition. I know one student who turned down Wash U and another who turned down Tulane for UMD and Virginia Tech resp.

[Anonymous]

I don't care much for this analysis for a number of reasons:

-I don't think the middle and the bottom are subsidizing the education of the top. In terms of federal taxes, the bottom half pays hardly any taxes at all (and many get a credit). While the state income tax regimens are probably more regressive, it still doesn't mean the poor are subsidizing the rich (note that I'm otherwise in favor of increasing taxes on the highest income brackets, but that's an unrelated issue).

-like any other institution (such as healthcare) in which the value received for $$ spent is very hard to measure, pricing is anything but transparent, and at least some level of third party payment is prevalent, colleges are astoundingly wasteful and inefficient at allocating resources. I question the wisdom of letting them hike prices to provide students with things like luxury accomodations, 5-star cafeteria buffet menus or junk like iPods as welcome presents (all of these examples are drawn from articles I've read in the papers in recent years). Fueling the race to Newsweek ratings prestige on the back of students and their families is not a good use or our money.

-studies have shown that the drastic rise in college tuition in recent years has fueled a much larger increase in administrative staffing (i.e. overhead) than teaching positions or course offerings. Even if course offerings are expanded, they may not be wisely expanded. I'm reminded of a course a young relative of mine took in college called "Archeology in the movies." They watched Indiana Jones and other stuff and wrote papers about the movies...fine, but not with my $$. In other words, "if you give them money, they will waste it."

I think Becker et al. are thinking like economists ("let's assume a can opener") without considering the nitty gritty, practical details of their proposition.

[Anonymous]

The economists quoted in the article don't care to reveal their number-crunching, do they? Not credible.

[Anonymous]

Since Becker is a Nobel-winning economist, I'm willing to trust his analysis of the numbers. Also, I've seen those same numbers about how huge percentages of college students come from relatively wealthy families, so I don't think they're really in dispute. Here is the key quote:

At the University of Virginia, to take an extreme example, only 8 percent of undergraduates receive Pell Grants, according to U.S. News, which means that only about 8 percent of undergraduates are in the lower half of the income distribution. In the freshman class at the University of Michigan several years ago, more students had parents making at least $200,000 a year than had parents making less than the national median of about $53,000.

As I read it, the logical argument Becker/Posner are making is that because such large numbers of students at these public schools are from families with enough wealth that they can easily afford the low tuition without financial aid, then in an economic sense, the tuition being charged is too low. Further proof of this proposition comes from the fact that among private colleges (where free market factors carry more sway) tuitions are much higher. Thus, from an economics perspective, it makes more sense to raise the tuition base at public colleges, and then use larger financial aid offsets to help out low-income students. To my mind, this really is similar to imposing a "sliding scale" tuition, which adjusts based on a pay-what-you-can-afford formula. It actually makes sense to me, but I can see why others would disagree. (Interestingly, I wonder if Becker/Posner would be opposed to a flat tax system for the same reasons ....)

BTW, I checked out the Becker/Posner blog, and they have these recent posts on legacy admissions, which people here might find interesting. (Spoiler: They both find admissions advantages for legacies offensive, and would favor eliminating them.)
http://www.becker-posner-blog.com/2011/06/legacy-admissions-to-colleges-and-universitiesposner.html
http://www.becker-posner-blog.com/2011/06/legacy-preferences-make-a-lot-of-sense-up-to-a-point-becker.html

Sam2

[Anonymous]

Read two books recently: "Crazy U" and "Higher Education?" both of which clearly state the cause of outrageous college tuition. Colleges charge what they do because they can get away with it. Tuition rises have nothing to do with inflation or the cost of education. Gilded lillies and superfluous amenities abound on today's campuses.