How Private Colleges Are Like Cheap Sushi | Hacker News Reader

How Private Colleges Are Like Cheap Sushi

npr.org

38 pointstokenadult17 comments

The main idea of this story is that private colleges are like used cars: They've got a high sticker price that's almost always haggled down "because you're not just any student/customer." The resulting anchoring effect makes people more likely to see private college tuition as a value.

Here's my contribution to the discussion: The article interviews a professor at Wharton (that's part of UPenn, a private college), and one at UMinnesota (a public college) who's advising the college administration to start following the private college model. I did a little snooping, and found out that the author is a Yale graduate. So this is similar to some used car owners (and someone who thinks his dealership should get into used cars) talking about how used car dealerships are deceptive about their pricing.

Edit: I thought a little more about this, and I've decided that this is a pattern caused by information asymmetry. The whole price negotiation game with used car dealerships really stopped being super profitable when the internet made it easy to figure out how much a given vehicle was "supposed to" cost.

I wonder if we could do the same for college tuition...

How about we start with a law that forces Colleges/Universities to open all information regarding admissions / tuition?

My instinct is to agree with you, but I've not yet found a reasonable justification for compelling a private company to publish the set of prices with which it has transacted with each of a large number of private individuals.

There may be many reasons you want your scholarship/discount information to remain private. Perhaps you got a great deal, and you don't want your roommate to feel bad if s/he didn't? Perhaps you don't want people to know you paid full price or paid zero, thereby exposing that you are at one end of the wealth scale?

Releasing only anonymised data may help with concerns for individual privacy. Degree-granting institutions are licensed by the government, so perhaps you can argue that releasing anonymised data on this sort is a fair trade for being granted that privilege.

Well, private colleges are essentially businesses. I'm not sure if the government can mandate them to release information about their... clients?

That said, we don't need super personal data. Summary statistics would be fine.

On that note, the NPR article cites this survey[1], wherein participating private colleges contributed data that was then used to calculate aggregate statistics about students in the US in general.

What we'd want is probably more specific than that. We need per-school statistics, so that trends in how colleges charge and discount may be identified (what if colleges on the East coast are more likely to mark down tuition? What if advertised tuitions are relatively constant, but actual tuition paid varies with cost of living? these are interesting threads to explore). The difference between the average student's tuition after grants and the sticker price, along with the standard deviation of that distribution, would be a good place to start. Quantiles would be even better.

[1] http://www.nacubo.org/Documents/about/pressreleases/2013TDSP...

Sure you can, depending on how heavily the industry is regulated. Ex. SEC requires public companies to release certain financial data.

Not even the same ballpark. Releasing the total revenue and costs for a quarter is nothing like releasing the price each client paid.

It's easy to introduce a requirement that any school that wishes to enroll students backed by government student loans must publish normalized financial data on the cost of tuition. In fact, you could argue that any student loan program which doesn't try to build this understanding is foolish and a waste of money.

You can find out the real costs for most schools by using their online net price calculator. US News & World Reports has a handy page that links to the online net price calculators for the top schools: http://www.usnews.com/education/best-colleges/features/net-p...

What the article misses, though a few commenters pick it up, is that this discounting is also a form of price discrimination to maximize profits. The institution will charge each customer based on their willingness (ability) to pay. The schools are actually in a great position to do this because of the fine granularity of the grant amounts and the willingness of their customers to divulge their willingness to pay.

A counterbalance to this though is that bright students are as much the product as they are the customers, especially in elite schools, where building up networks is a key driver of demand.

I know this is completely not the point of the article, but I know exactly which sushi joint it's talking about in the beginning: http://sushiparknyc.com/. Unlike the author, I've been to it a few times. It's exactly the same as 90% of the sushi restaurants in NYC---unspectacular, but you get what you paid for.

Or maybe it's just the start of the end of the education pricing bubble, and they're trying to land gently.

Is there an existing dataset showing the mean (or, better, median) price paid (net of discounts) by students for each combination of college, course and matriculation year?

I'm really interested in this stuff, and I did some Googling along these lines. The most useful thing I've found so far is this "Common Data Set" initiative[1] that essentially has colleges fill out a form covering basic summary statistics (e.g. total dollars given in financial aid, number of students admitted, etc). You can look up "common data set [college name here]," and probably find their version of the form.

I'll try and do some more research and maybe analyze some of the CDS data tomorrow. If you find anything interesting, please post it as well!

[1] http://www.commondataset.org/

Even mean and median aren't that informative as the distribution is probably non-Gaussian. A distribution incentives or even deciles would give a much clearer picture.

I'm surprised there wasn't a tie-in to healthcare pricing.

I realise the article is about Private Colleges but it opens with some fairly odd fears about cheap sushi. The author needn't (necessarily) fear cheap sushi:

1. Sushi doesn't necessarily contain any fish and almost never contains ingredients "flown around the world". You can make a Makizushi or Futomaki roll very cheaply using vegetarian or cured ingredients. Even when it does contain fish, it could be canned tuna or processed crab sticks (less tasty than fresh but durable) or cured salmon.

2. Sushi can only really sit in a display fridge for about 8 hours before the rice dries out. At the end of the day, everything is marked down for quick sale. It's not necessarily poor quality, it just needs to be sold quickly. If you see a sign that says "All sushi, 50% off", this is probably what's going on.

I think the author might be talking about one of those Chinese eateries with a very permanent "50% off" sign attached to the store-front.

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