Colleges and Universities are following the airlines in price discrimination
and self-destruction. And they price discriminate for the same reason as the
airlines -- overhead costs.
I wrote several pages on this 10 years ago which I can send to those interested.
Basically the universities keep raising tuition because they can squeeze more
dollars out of students who can pay the full price, and those who came pay
substantially close to full price. Then they discount to fill the class size
desired.
Ironically, "student aid" , to use the euphemism for a discounted
price, goes more to the higher income students rather than the neediest. This
obviously makes sense when you think about it. By discounting say 10% to
attract a more affluent prospect you are still getting 90% of the list price.
But to bring in a low-income customer you might get only 10$ or less of the
list price.
As Doug noted, the spending on amenities is up, to make the big
spenders feel they are getting a first class experience.
The airlines finally priced their 1st and business class tickets too
high and have been shrinking the fleets for several years so as to keep
airborne.
The university story I wrote about gets quite ugly. But it is just cost
structure and the business mentality. Our leader Michael wrote about this as
well in his Railroad book.
I'll send the seven pages or so to anyone requesting.
Gene Coyle
On Mar 8, 2010, at 2:45 PM, Doug Henwood wrote:
> As the wage premium for education has expanded, college has gotten a lot more
> expensive. Why, and what’s this done to access (and with it, class mobility)?
>
> From LBO #125, just posted to the web: “I’m borrowing my way through
> college..."
>
> http://www.leftbusinessobserver.com/College.html
>
> Though this sample is free, it costs money to produce LBO. If you don’t
> already subscribe, please do, and keep this sort of thing alive. It’s not
> like there’s an excess of critical economic news and analysis, is there? LBO
> subscriptions. Such a deal! Subscribe now before the price goes up in a
> couple of months!!
>
> http://www.leftbusinessobserver.com/LBO_subinfo.html
>
>
> Doug Henwood
> Left Business Observer
> 242 Greene Ave - #1C
> Brooklyn, NY 11238-1398 USA
> <[email protected]>
> <http://www.leftbusinessobserver.com>
> "blog": <http://doughenwood.wordpress.com/>
>
>
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