Imagine any other service where they demanded your bank statements before they told you what they would charge you, and the impact that would have on sticker price.
If I donated $20k to a university, I'd get to write that off as a charitable contribution in my taxes. If I pay full tuition and 1/3 of that goes to a student needing aid, I get no deduction.
France grants free museum admission to adults under 26, which strikes me as a better policy than charging the highest price to access cultural works to the people who (a) have the least earned wealth, (b) the least lifetime exposure to those things.
Same applies for theme parks, where the target audience is young adults and families with small kids.
I'm not defending any of this — just pointing out that price discrimination is sometimes about ATP, and sometimes about WTP.
"Seniors pay 20% less for movie tickets at Tuesday at 1 pm" sells tickets that few people with jobs would buy, regardless of price.
So the better question is why they don't raise prices such that the rich kids have to pay the true full price & have more money for aid for the less-rich.
If private universities are truly spending so irresponsibly and profligately that their sticker price isn't covering their expenses, then their entire administration should be thrown out and replaced. It's only incompetence or corruption that could excuse such costs.
The big problem with colleges today is they are "non-profit" in name only. Instead, of giving profits to shareholders, they are giving them to employees and insiders. This hurts students and the United States. However, colleges do not care because they, their employees, and friends benefit.
The real cause of these escalating costs is easy credit for tuition. There would simply be no big market for the current overpriced programs if people couldn't get loans regardless of outcomes. I would like creditors to have to prove how the students will pay for the median salary of a person with the same degree before loaning the money. You should not be able to borrow hundreds of thousands of dollars for stupid stuff that will never pay off.
Not only is sports usually profitable on the surface but it draws donations and new students. Administrators aren't as stupid as you think.
For those unfamiliar with American college athletics, American Football is the money maker via shared revenue from broadcasting rights and Men's Basketball can be a net cash flow positive also via broadcasting if they're an elite team. Every other sport is a net cost for the school because nobody watches all the other sports shown on ESPN Ocho.
It always amazes me that people simultaneously say that colleges are sharks when it comes to maximizing tuition and minimizing expenses, while also saying that sports are objectively a waste of money. They aren't stupid. If sports wasn't a desirable thing to invest in, they wouldn't do it. We could make the same complaint about luxury amenities too. The fact is that colleges have to compete with each other, and they charge enough to pay for everything.
Could tuition be lower if not for all of these luxuries? Maybe so. Should core education get more money? Perhaps. It certainly used to bother me that sports got more money than academics. But I really get that it's a legitimate business decision to allocate some money to sports. I don't even like sports much but I would not cut it out if I were them.
Is this based on anything at all? Any direct experience you have, any sources?
I don’t mean to be rude, and I don’t expect everyone to have expertise on something just to talk about it - but when people start using numbers as evidence for their claims, I think a higher standard is warranted.
"The Education and General budget funds the general instruction, research, and public service operations of the universities. A large portion of the system’s 2022-2023 beginning fund balance reserves ($420.8 million) is dedicated to meeting the 7% reserve requirement set forth in Section 1011.45(1) of the Florida Statutes. Additionally, millions of dollars have been reserved by the SUS to cover the costs associated with the hiring of faculty, maintenance of facilities and equipment, the maintenance of each university’s financial software system, various research enhancement programs and initiatives, and the potential for budget reduction shortfalls."
So this includes both the "actual teaching" and research and other related spending.
We can get more information on page 45, which provides a breakdown of that 35%: 61% of it (~22% of total) is "instruction and research", i.e., at most 22% of the total budget (and probably much less, since FL's public university sector is fairly research-heavy) is spent directly on instruction.
That's probably a little unfair, since instruction needs things like facilities and other admin expenses even in a system that isn't bloated, but the previous poster's 25% number passes a sanity check at least to my eye.
In case you're wondering, the other two big categories of expenses are C&G ("contracts and grants" - so more research expenditures mostly) and "local funds" (a weird mix that includes things like student activities, athletics, and financial aid).
[1] https://www.flbog.edu/wp-content/uploads/2022/12/2022-23-OB-...
I went to school as an English major. I struggle to see why the cost of tuition has gone from 6k per semester when I attended to 35k now 20 years later.
Did salaries grow 6x?
You might not even realize the infrastructure that the school uses. Those big buildings are expensive and use tens of thousands of dollars in electricity every month. If your school has shuttles to take people back and forth to the dorms or parking, that is also a constant expense. The library has to pay tens of thousands of dollars for access to academic databases. Computer labs, printing, internet, security, and so on. It all adds up quick.
If you want more honest numbers, try https://www.shadowstats.com/alternate_data/inflation-charts
Realistically, prices are up 40% since the pandemic alone. That's a lot less than 20 years.
Not to be an ass, but if you weren't an adult in 2004, your opinion on this is going to be unduely skewed by propaganda I'm afraid. Not every old person has such a clear view of things either but having lived back then sure makes a big difference in perspective. Idk how anyone with basic number sense who has shopped for anything like a normal person can think inflation is less than 10% per year.
It lists cumulative inflation at 64.x% for that year range.
For what I could buy for $1 in 2004
It would now cost me $1.64 in 2024.
I misunderstood your comment.
When I originally read it, I for some reason thought you were saying that… well essentially the opposite of what you are saying.
I don't like the CEO of global corp making a billion dollars, but it's still part of the price of the globowidgets that I buy.
At expensive schools, those large classes are usually much smaller.
Indeed. Go check the trends on the ratio of non-teaching staff to students at these major name colleges.
https://www.mindingthecampus.org/2023/01/05/more-employees-t...
Tuition at my partner's New York private high school (she graduated 35 years ago) just hit $61K. OTOH my own high school (also private) spends over 70K/student and charges 20K tuition, though tuition revenue/student is under 10K. This might be an example of the subsidy.
When the marginal cost of each student is probably $20K, anything over that is awesome. So even if you give a $30k "merit scholarship" to a full pay student you are making bank, as you are still clearing $50K+ as a university.
Perverse outcome of this is that the richer students will get more "merit aid."
Also, Ivy leagues + Stanford and MIT are a cartel, and don't give merit aid. So they use the "need based" aid system to even more increase their price realization from the richest folks.
(Ask me how I know: parent who went way too deep on this, and is now stroking a $85K check to an ivy.... lol.)
> When the marginal cost of each student is probably $20K
A lot of the expensive universities operate near capacity, where capacity is limited by housing, zoning, lecture hall space, capacity of the departments, etc. They have costs that look marginal (housing, teaching, food) and costs that look fixed (administration, management, some IT expenses, libraries). But, due to the approximately fixed class sizes, this whole breakdown seems a bit fictional.
Income-based billing is rife for abuse!
1. It's extremely unfair
2. It punishes those working to get ahead
3. It creates 'welfare cliffs' where people become worse off for getting jobs. Losing Medicaid is the best example of this.
4. It makes the program exponentially more expensive to maintain because you have to hire people to track who gets it and who doesn't, look for fraud, monitor for when the income threshold needs changed, etc..
It's just terrible policy all around. We learned this during covid. It's so much easier to write people a check and tax the the high earners more to make up for them getting a check.
>It makes the program exponentially more expensive to maintain because you have to hire people to track who gets it and who doesn't, look for fraud, monitor for when the income threshold needs changed, etc..
We already have a system for that. It's called the IRS. The cost of a basic fraud detection system is less than the actual fraud would be of course. They have to worry about things like people enrolling and never going to class.
>It's just terrible policy all around. We learned this during covid. It's so much easier to write people a check and tax the the high earners more to make up for them getting a check.
It isn't easier or fairer to write everyone a check, because quite a lot of people don't need any help. The average wagie is not going to seriously be disincentivized from working a meaningful way because it might disqualify their kid from certain financial aid. The whole point of financial aid is to give hope to the hopeless and help the struggling, not give everyone benefits whether they need it or not. Taxing people who don't have kids to pay for people who can afford to pay their kids' tuition seems wrong all around.
If you have a large family losing Medicaid is easily thousands of dollars added to your new budget, and that's just counting out of pocket costs towards the massive deductible most healthcare care plans have now. You add the premium costs it is an obscenely a lot more money you are paying for what is free if with medicare
There may be some people who believe they will lose money overall by working, but they're usually wrong. Do taxes and losses of freebies reduce the marginal benefit of working more? I'd say so. But in most cases it is still a net benefit to work more.
Premiums alone could be close to a 1k a month for a family plan. At best you're paying 500 a month in premiums, and that is guaranteed to have a 5k+10k deductible before anything is covered by insurance. Then you will probably still have a co-insurance.
The notion that Medicaid is so crappy is some terrible insurance is propaganda. Free vs paying tens of thousands of dollars, and still be flooded with medical bills, is all you need to know which one is better.
I know dozens of people with medicaid and they absolutely refuse to lose it, especially the ones with large families. If you, or someone in your family, have chronic health issues then you are basically guaranteed to be paying 10k in healthcare premiums and deductibles when you lose Medicaid and get private insurance.
>There is no way to say this without sounding rude, but you clearly don't understand how insane healthcare costs are when you have kids.
I know how expensive the extremes are. Most kids don't need much healthcare. I'm not interested in arguing that with you. If you know, you know.
>Premiums alone could be close to a 1k a month for a family plan. At best you're paying 500 a month in premiums, and that is guaranteed to have a 5k+10k deductible before anything is covered by insurance. Then you will probably still have a co-insurance.
This is because people have "insurance" that pays for basic routine things. It's more like a price-gouging payment plan or a security blanket. If you got insurance only for severe situations with a high deductible, and paid for routine stuff out of pocket, you'd come out ahead I think. I happen to have a pretty good insurance plan with a low deductible but I didn't have one until I was almost 30. Nor did I qualify for Medicaid or anything else.
The free health care is not actually free. We all pay for it. Even poor people's taxes go toward healthcare that they might not use. Secondly, your choices on this "free" healthcare are somewhat limited. Good luck finding a doctor and getting an appointment in a timely fashion. And some of these doctors specifically maximize services and visits to milk the government for as much as they can.
>I know dozens of people with medicaid and they absolutely refuse to lose it, especially the ones with large families. If you, or someone in your family, have chronic health issues then you are basically guaranteed to be paying 10k in healthcare premiums and deductibles when you lose Medicaid and get private insurance.
Again I say, if you are poor you should not go out and start a large family. People who have expensive chronic conditions they can't help, or have like 1 kid with that, are kind of an exception.
Back to the original point. I think not working more because of Medicaid eligibility is stupid. If we're talking about the difference between working 5% more hours at the same job and not, then I get it. But we aren't gonna see people give up $40k+ jobs just so they can get Medicaid. Even if they were, it's not a problem with means testing in principle. Each person's circumstances are unique, and the system needs to make people pay when they can. Even as shitty as the system is, we can't afford it. It's on track to be in the red by tens of trillions of dollars. By the time all the bills come due, it might be quadrillions of dollars, due to inflation. I'm not even joking...
Is this some kind of joke? You pay taxes on that check, which means you effectively get less money as you earn more. Do people really not understand how negative income taxes work? The system is the same in terms of net payouts compared to any means tested scheme, because you can turn the knobs any way you like.
Whether you pay taxes on the check itself that 100% comes from taxes is kind of a separate issue. Unemployment benefits are like that and it's stupid. In some situations, Social Security gets taxed or reduced too.
It would not make sense to send a check to a middle class family because they don't need it. People of means who don't have kids and never set foot in a college also should not have to pay extra so that families that don't need help can get kickbacks on college expenses.
>The system is the same in terms of net payouts compared to any means tested scheme, because you can turn the knobs any way you like.
Ok, if you're proposing a means-tested scheme that's different from what I responded to. The other comment suggested sending a check to everyone. These are two entirely different plans. If you pay people who don't need it, you also have to tax them more. And those extra taxes would be unfair to some people. The right thing is to make people pay more for their own expenses when they can afford more, but on a sliding scale.
Why not? If you give everyone the same subsidy and adjust taxes accordingly, then the welfare cliff disappears, a marginal dollar of income is genuinely valuable, and a screwup in how someone’s need is measured doesn’t matter so much. As an added bonus, wealthier and more influential people might use more social benefits and thus apply pressure to make them better.
> Taxing people who don't have kids to pay for people who can afford to pay their kids' tuition seems wrong all around.
Why not? Healthy, well educated are a massive, and even essential, benefit to society. If nothing else, they’re the future taxpayers! Why, exactly, should their parents be the ones to bear almost all of the cost of producing them?
There's no such thing as a perfect calculation for this. There is essentially no welfare cliff now. What you're proposing is to tax "wealthy" people so much that they have no choice but to lean on social benefits, and expect them to be thankful for the opportunity to participate in the welfare system. You say it very optimistically but it is actually an awful thing.
>Why not? Healthy, well educated are a massive, and even essential, benefit to society. If nothing else, they’re the future taxpayers! Why, exactly, should their parents be the ones to bear almost all of the cost of producing them?
Parents of kids get most of the benefits of having those kids. That's why they bear the cost of it. I can't believe I have to explain this... Other people's kids will not help me with my bills or tend to me when I'm sick. If they are somehow taxed to pay for my existence, I expect them to avoid that as much as possible. My own kids on the other hand might actually care about me, even with all the moral decline we have seen in out culture.
And what we learned from taxing high earners is that the highest earners hide their money and don't pay the expected taxes.
Huh? I'm out of the loop on this.
“We estimate that SBA disbursed over $200 billion in potentially fraudulent COVID-19 EIDLs, EIDL Targeted Advances, Supplemental Targeted Advances, and PPP loans. This means at least 17 percent of all COVID-19 EIDL and PPP funds were disbursed to potentially fraudulent actors.”
https://www.sba.gov/document/report-23-09-covid-19-pandemic-...
IRS also covered some:
https://www.irs.gov/newsroom/irs-criminal-investigation-rele...
I think means tested welfare can backfire a lot in ways that locks people into dependency on the welfare and not look for a higher paying job.
https://www.npr.org/2022/10/18/1128561539/pandemic-fraud-bil...
What exactly is unfair about the process?
1. The colleges which most heavily implement price discrimination are the most desirable to attend and also tend to accept large portions of their student body through Early Decision applications that don't allow apply to most (not all) of the other most desirable colleges. This means that accepted ED applicants have no recourse beyond either accepting or rejecting the proposed "aid package".
2. Highly desirable colleges aim for high applicant "yield" for rankings/planning, which in aggregate makes it so most of their accepted students only get into one highly desirable college. Even outside of early decision applicants, this puts applicants in a bad bargaining position - they must choose between either paying more for the ~single highly desirable college they got into or less for a less desirable college.
3. You cannot generally bid between colleges even if you got into comparably desirable/expensive desirable colleges (you can't tell Dartmouth and Brown that each is proposing a cost of $40k/y and have them bid against each other). This is because they essentially operate as a cartel. This limits downward pressure on prices.
4. The application process operates in rounds with fixed dates, there aren't really do-overs within a given year, and waiting for the next year changes the process (you're either a transfer or gap year applicant). This puts a lot of pressure on applicants to accept the least-worst option and doesn't give them the ability to react to a bad outcome by eg applying to more places after the fact.
5. The acceptance criteria are opaque and in many cases subjective (eg your application essays). Applicants need to hedge their bets and deal with a lot of uncertainty. Any accepted offer from a highly desirable college then feels like a gift and not worth squandering/negotiating.
6. As you mention, colleges know exactly how well you'll be able to pay, and because they act as a cartel that disallows bidding wars or negotiation + all the other forced scarcity/time pressure I mentioned, they can essentially extract as much from applicants as they want, up to their sticker price.
It's worth mentioning that not all competitive colleges participate in the cartel to the same degree as the Ivy League. When I was applying to colleges, I remember MIT and Caltech had Early Application (not Early Decision) processes, didn't make applying in those rounds as beneficial as ED colleges, and didn't have as many athlete/legacy "backdoors" as the Ivy League.
I also remember that Duke and Vanderbilt offered full merit scholarships to some students who might've received no need-based aid, which I was fortunate enough to benefit from and am extremely grateful for, even if it was probably a self-serving policy to poach applicants away from the Ivy League/improve yield.
There's advertising/marketing incentive to make the college experience like a resort on campus. There's bureaucracy in administration that just grows because it's in the interest of each department lead to manage more people under themselves (think office politiking).
There's perceived prestige of the students from brand name colleges similar to Veblen good (https://en.wikipedia.org/wiki/Veblen_good) which makes charging more acceptable.
College shouldn't be structured like a punitive sacrifice for poor behavior
Imagine any other service where they demanded your bank statements