Monday, June 28, 2004

Raise price, give more scholarships, whistle to the bank 

David Wall comments in my post last week on the costs of education at SCSU that higher tuition might be driving down enrollment, if the number of eligible high schoolers are rising faster than our own enrollment. He also wonders if students are switching to public from private schools. A couple of points:
  1. The rate of increase in MnSCU of about 15% exceeds the rate in private schools, at about 6%. So the relative price of private school to public has diminished, which should encourage shifting AWAY from private public schools, all other things equal. But...
  2. All other things aren't equal, because as today's USA Today notes, the real price of tuition -- that which is actually paid by the student or parents -- has fallen by a third.
    What made the difference: a $22 billion annual increase in grants and tax breaks since 1998.

    That 80% jump in financial aid � targeting middle-class families earning $40,000 to $100,000 a year � has more than offset dramatic increases in tuition prices.

    "College still takes a big chunk out of most families' income. But the average student is much better off today than headlines would have you believe," says Sandy Baum, an economist who co-authors an annual report on college costs for the College Board, which oversees college entrance exams.
    Interestingly, a good bit of this money is coming from merit awards modeled on Georgia's HOPE program. As I suggested months ago, schools are getting better at the price discrimination game.
    Alexander estimates that 28% of the 10,000 students at his public university in Murray, Ky., would get more aid if it raised its official tuition price and then gave scholarships as discounts.
    And I'll bet his tuition revenue goes up, too.
UPDATE (1:30pm): Phil's right; I typed that the substitution should be to public schools when it should be to private schools. I shouldn't blog so close to class time.