
Colleges lose pricing power - anigbrowl
http://online.wsj.com/article/SB10001424127887324442304578231922159602676.html?mod=WSJ_hps_LEFTTopStories
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tokenadult
From the article kindly submitted here:

"'We have a more informed class of college consumers,' said Bonnie Snyder,
founder of Kerrigan College Planning in Lancaster, Pa. 'Everyone today knows
someone who went to college and ended up with a career that didn't justify the
cost. They see college as a more risky investment.'"

Yep. More and more of us know more and more examples of college graduates who
live in their parents' basements because they can't support themselves with
their college diploma. It's time to be more discerning consumers of higher
education.

Colleges try to confuse the issue of their value with imaginary list prices
subject to discounts ("scholarships") that mislead about what a college is
actually worth. Here's an interesting link about how colleges are advised to
set their prices by consulting firms, a link I learned about from a Harvard-
trained economist and policy analyst:

[http://www.maguireassoc.com/services-challenges/optimize-
net...](http://www.maguireassoc.com/services-challenges/optimize-net-revenue/)

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enjo
All I have to do is take one quick look at unemployment rates to understand
just how valuable college is. In the rhetoric over rising costs, the benefits
have never been more clear.

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seanmcdirmid
Could you elaborate?

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enjo
The unemployment rate for college degree holders has more or less been 50%
less than the overall rate for the last several years. College degree holders,
as a class, weathered this recession _far_ better than anyone else.

<http://www.bls.gov/news.release/empsit.a.htm>

~~~
rflrob
The real concern is not whether college degree holders, as a class, do better,
but whether a 17-19 year old would do better by entering that class. What
those statistics don't include is something for recent grads. Ideally, you'd
want to look at the unemployment rates for people approximately 24-30,
stratified by college degree or not. And even then, it wouldn't necessarily
give you a complete picture, due to all kinds of selection bias in the people
who do or do not go to college. I would predict, however, that the
unemployment rate for recent grads would be closer to the non-college graduate
rate for the same age than to the all-ages college graduate rate.

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ArchD
"18% of 165 private universities and 15% of 127 public universities project a
decline in net tuition revenue"

What about the remaining 82% and 85%? What fraction of these project an
increase? It's not mentioned, so perhaps there's also been a similar rise in
the fraction that projected an increase, and all you can say then is that
there's increased variance in projected revenue change, not that universities
on average are facing projected revenue decrease.

~~~
niggler
Those that project a net increase could do so by inflating the costs while
assuming the number of students remains unchanged. In context I gathered that
the schools predicting a decline saw a decline not just in per-student revenue
but also in student enrollment.

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chiph
> College officials said they need to increase net tuition revenue to keep up
> with rising expenses that include faculty benefits and salaries.

I would put forth that administrative costs are increasing faster than faculty
costs. No hard evidence to back it up, just a lifetime of studying how
organizations & bureaucracy grow.

I would also put forth that college life is increasingly cushy. The dorms at
my alma mater are amazingly nice, compared to when I went there. I lived in a
converted motel run by the university. Today's students have suites, with
kitchenettes, free cable TV, reserved parking, and a fitness center. I'm not
saying it should return to the barely-better-than-prison experience I had, but
there needs to be a limit set, because all that stuff adds to the semester's
cost.

~~~
w1ntermute
> I would also put forth that college life is increasingly cushy. The dorms at
> my alma mater are amazingly nice, compared to when I went there. I lived in
> a converted motel run by the university. Today's students have suites, with
> kitchenettes, free cable TV, reserved parking, and a fitness center. I'm not
> saying it should return to the barely-better-than-prison experience I had,
> but there needs to be a limit set, because all that stuff adds to the
> semester's cost.

How about letting the free market decide, instead of forcing students to live
on campus?

~~~
rsheridan6
Some colleges do let students live off campus. Mine did.

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hessenwolf
I'm 33, with a PhD, a full time job, a start up on the side, and I am still in
tertiary education. I'll be in the library this evening. I'm fine with this. I
think I'll do an MBA next.

Ye good folk States-side need to quit slamming on 'college education' and
start complaining about the 'costs of education'. Education is just learning.
Maybe some sources of education are better than others, and in particular for
some fields, but you shouldn't throw the baby out with the bathwater, and keep
railing against university, which really just opens up opportunities, and lets
somebody who knows more than you choose what you should learn.

Although, to qualify, I choose graded self-study courses where possible,
because I'm kinda a dick as a student.

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pedrogrande
I have trouble understanding the logic of making education so expensive. Isn't
it obvious that making education free, or at least cheap, allows the country
to grow, both economically and intellectually. Sure, have your private
universities for the elite. But the government should be subsidising education
for the rest of the population in the interest of improving the life of
everyone. In Australia it only costs about $10,000 per year and that is even
outlaid by the government and only paid back when the student is earning over
about $50,000 per year (as a small percentage added to their tax). If you
never earn over $50K, you never have to pay it back.

~~~
seanmcdirmid
And yet, America does much better at the high end of education than Australia
does. I have known a few professors who tried working on Australia for their
careers and were not very impressed by the infrastructure and opportunity of
research, nor the general caliber of students in their classes. I'm not saying
cheap education is not useful, but I don't think it is a panacea, and the
issue is much more complex than it appears.

~~~
sjg007
It depends, a lot of Americans could go to Australia for college.

~~~
seanmcdirmid
A lot of Chinese go to Australia for college. It is seen as the fourth option
if they can't afford or get into a nice school in the USA/Canada/or UK.

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huevosabio
It would be interesting to see colleges investing in people via education and
getting returns via some sort of percentage of the first years of professional
career... Say, let the university teach/prepare the kids, and then for the
first 10 years charge a 10% "income tax'(numbers would vary)... Some careers
would be quite idiotic to promote, while others very good, it would further
incentivize colleges to shape kids into productive citizens and give better
education and resources... and then people who chose crappy majors can no
longer complain about how the system sucks, because they paid little to
nothing for what they got...

~~~
chii
You then end up with little to no incentive for "non-profit" producing things,
like archeology. While it might work, it does detract from the purposes of a
university, which is to educate, not vocational training.

Its a shame that not more people opt for vocational training instead of
university, then expecting to get vocational training at a university, all the
while complaining it costs so much more.

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betterunix
Perhaps this would be a good time for schools to reevaluate the number of MBAs
they have hired. Some amount of management is clearly needed, but when a
university has as many MBAs as professors, something is very wrong. Also,
perhaps schools should stop trying to turn their campuses into the equivalent
of a suburban mall, and reconsider having students do some of the work that is
being contracted out.

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sopooneo
I am a programmer. Every day I am happy and, frankly, a little mystified to
find that I get to make a great living doing something I love. But that's why
I originally pursued it: because I loved it. Not because I was chasing a
paycheck.

I am horrified that we have so little place for others whose passion is in
other directions. Man can not live on bread alone, and society can't flourish
on software alone. It is heartbreaking that in our increasingly efficient
world, where production of food, shelter, and even medical care for all should
be trivial, they seem to be harder to reach for many.

We should have _more_ room for the humanities now, not less. It should be
possible for _more_ people to pursue philosophy and literature and theater and
art and music for the rest of us to enjoy.

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jamesaguilar
Seems a bit premature to conclude that a major shift is happening after one
year.

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ScottBurson
Ah, but things that can't go on forever, don't.

An indication that something that clearly can't go on forever is in fact
starting to come to an end is very likely to be correct.

~~~
seanmcdirmid
Things go on until they don't, so we could be experience the beginning of a
college crash, which has been predicted for awhile now given student
demographics.

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Vivtek
_"rising expenses that include faculty benefits and salaries"_

At which point I stopped reading. The WSJ is a political instrument.

~~~
hessenwolf
I second that. My immediate instinct was to assume that they were railing
against professor-salaries and health insurance.

