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Why falling demand hasn't brought down college sticker prices

hechingerreport.org

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Re: Why falling demand hasn't brought down college sticker prices

#11

Post by squozzer »

brdd wrote: post #5

I only read the article (and not the podcast, if it's different) but I think their argument misrepresents how the economics of higher education work. > "Economics 101 suggests that declining demand results in lower prices." This isn't true for college sticker prices because colleges have perfect price discrimination. Most students don't pay the sticker price; they pay exactly what they "can". In no other industry do…

Also, Econ 101 is essentially a naïve exercise in optimizing price-demand curves (find where f'(x) = 0), which assumes prices always converge on a supply-demand equilibrium point.

Another model, found in utilities, fixes the cost point, so when demand falls, prices rise. Did you ever buy into your electric company's "conservation program" and cut your consumption, only to have your rates rise?

Congrats, you just got rick-rolled by capitalism, comrade sucker.

Re: Why falling demand hasn't brought down college sticker prices

#12

Post by oflannabhra »

brdd wrote: post #5

I only read the article (and not the podcast, if it's different) but I think their argument misrepresents how the economics of higher education work. > "Economics 101 suggests that declining demand results in lower prices." This isn't true for college sticker prices because colleges have perfect price discrimination. Most students don't pay the sticker price; they pay exactly what they "can". In no other industry do…

The point of the podcast, at least, is that despite all of your points, colleges are taking on enormous amounts of debt, while enrollment is shrinking. They are losing money.

Re: Why falling demand hasn't brought down college sticker prices

#13

Post by moorhosj »

brdd wrote: post #5

I only read the article (and not the podcast, if it's different) but I think their argument misrepresents how the economics of higher education work. > "Economics 101 suggests that declining demand results in lower prices." This isn't true for college sticker prices because colleges have perfect price discrimination. Most students don't pay the sticker price; they pay exactly what they "can". In no other industry do…

Don’t other countries have similar forms of price discrimination? Are their education costs rising at the same rate?

Re: Why falling demand hasn't brought down college sticker prices

#14

Post by [deleted] »

brdd wrote: post #5

I only read the article (and not the podcast, if it's different) but I think their argument misrepresents how the economics of higher education work. > "Economics 101 suggests that declining demand results in lower prices." This isn't true for college sticker prices because colleges have perfect price discrimination. Most students don't pay the sticker price; they pay exactly what they "can". In no other industry do…

[deleted]

Re: Why falling demand hasn't brought down college sticker prices

#15

Post by moorhosj »

sp332 wrote: post #6

The article doesn't mention that middle management exploded at colleges in the last few years, and those people are going to try to hold on to their jobs no matter how low enrollment gets. http://blogs.wgbh.org/on-campus/2014/2/6/growth-nonacademic-... Also I think the part about half of tuition at one school going to "discounts and financial aid for freshmen" is misleading. That's not really costing the college mone…

It’s costs the college revenue, just as tax cuts cost the government revenue.

Re: Why falling demand hasn't brought down college sticker prices

#17

Post by killjoywashere »

spike021 wrote: post #8
larrik wrote: post #2

"Many institutions boasted, in the admission season just ended, that they had received record numbers of applications. What most very carefully didn’t say was that record numbers of applicants are lining up to be accepted." I read this like 3 times, then the article, then again, but I can't parse it. What is it really saying here?

Shotgun approach. Similar to how people apply for a bunch of software engineer positions at a plethora of companies, when they only would really want to work for maybe 1/5 of them. Back when I was a senior in high school there was a newer (at the time, I suppose) idea that college admission was a "crapshoot", so the common suggestion was to apply to a bunch of universities, even the ones you weren't very interested i…

This happened a long time ago in med school admissions. You can essentially calculate how many schools you need to apply to in order to get accepted. You will have to route d up or down given your demographics, but US News and World Reports will give you a really good guess.

Re: Why falling demand hasn't brought down college sticker prices

#18

Post by zamalek »

The first university I went to was probably suffering from all of the following:

> the number of students is actually down by 2.6 million

> they have struggled to reduce their costs

> they’ve borrowed billions of dollars to build amenities they think will attract students

After two years (2/3 of a degree in South Africa) I had been challenged by precisely one subject - all the while I was hemorrhaging money. The amenities were fantastic and I never once used them. Not realizing how the importance of a degree and anger from learning sweet nothing resulted in me leaving. It was an expensive degree printing press and nothing more.

Ten years later I need a degree to help with my visa. The experience is night and day. In a course that I just completed, I had to submit an assignment, and the feedback my lecturer provided was incredible: I honestly don't know how she finds the time of day if she's working that hard for all of her students. I walked away feeling as though I had learned something valuable, even though it is one of those general courses that you usually question why you have to take. These people seem to really care about furthering and imparting knowledge. It shows. The entire experience is streamlined around learning. You can't send your kids there (as they require a professional background), but I hope this catches on by the time my kids have to go to college.

If these behemoths want to reduce costs while attracting more students, it's all too easy; do less and focus on the product: learning. That approach saved IT/CS from ballooning costs and deadlines, and I have first-hand experience suggesting that it can also work in education.

Re: Why falling demand hasn't brought down college sticker prices

#19

Post by matte_black »

larrik wrote: post #2

"Many institutions boasted, in the admission season just ended, that they had received record numbers of applications. What most very carefully didn’t say was that record numbers of applicants are lining up to be accepted." I read this like 3 times, then the article, then again, but I can't parse it. What is it really saying here?

Lots of impressions, very few conversions.

Re: Why falling demand hasn't brought down college sticker prices

#20

Post by School-Cotton »

moorhosj wrote: post #13
brdd wrote: post #5

I only read the article (and not the podcast, if it's different) but I think their argument misrepresents how the economics of higher education work. > "Economics 101 suggests that declining demand results in lower prices." This isn't true for college sticker prices because colleges have perfect price discrimination. Most students don't pay the sticker price; they pay exactly what they "can". In no other industry do…

Don’t other countries have similar forms of price discrimination? Are their education costs rising at the same rate?

Other countries have education funded directly by the State. In the US it is funded by a crazy mish-mash of the State, the federal government, endowments, subsidized loans, unsubsidized loans, etc.
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