Friday, June 25, 2004

The increases in tuition will continue until elasticity improves 

The student newspaper has some interesting quotes from our enrollment management officer:
"There is no doubt tuition increases will have an impact on enrollment," Saffari said.

Although there is a correlation between enrollment and tuition, Saffari said it is hard to say just how strong it is. He said high school graduates are applying at many more colleges than they have in the past with the help of the Internet. He said many colleges are experiencing higher numbers of applications that never translate into higher enrollments. He also said applicants take a longer time to decide which college they would like to attend.

"(Tuition) has become more of a contributing and influential factor in that decision," Saffari said.
The accompanying editorial -- you had to know there'd be one -- does a little math for us.
Since 2001, tuition at SCSU has increased by a total of more than $1,000 for a full-time student. That means that a student who began their studies in 2001 would have payed a total of $9,495 in tuition through the 2004-05 academic year if there were no tuition increases.

In reality, however, the same student has payed $11,722 in tuition since 2001.
So Dr. Saffari is saying that there will be an impact, and that because students can shop more easily they are more responsive to tuition changes than before. In economics, we would say demand became more elastic. But the calculation made here is as if nobody ever changes their demand. Now it is certainly true that students already here for a couple of years have more inelastic demand, which would argue for charging them a higher price, but that's like any other subscription service ("Hey freshman! Enroll now and get this special introductory rate!")

It's just that before, it was done more via financial aid.

There's no sign that enrollments are actually falling -- enrollment projections are for an increase of 3% -- so the increases in tuition are quite rational.