Why falling demand hasn't brought down college sticker prices • Hacker News Board

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

#21

Post by pg_bot » Mon, May 14, 2018, 6:38 PM UTC

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?

The average person is applying to more colleges, but the total number of people attending college is decreasing. Therefore each college can promote that they received more applications than the previous year. People don't typically attend more than one college simultaneously.

ex: 20 people applying to 3 colleges each, vs 10 people applying to 10 colleges each.

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

#22

Post by technologyvault » Mon, May 14, 2018, 6:40 PM UTC

A few observations about this "will the traditional college survive" situation, which I've been following for a long time.

The higher education market feels a bit like the healthcare market in that it's somewhat difficult for the consumer to tell what the actual cost will be prior to purchasing the product. Published tuition rates and other costs of attending school feel like they're abstracted until a long-term commitment has been made and it's too late to get a refund.

It may seem strange that, with the increasing debt being amassed by universities, record-breaking new salaries are being offered by many of these schools to football and basketball coaches. The 25 salaries for college football coaches range from $3.5M to over $11M per year. I'd assume that in each of those cases, the value received from the coaching hire contributes overall to the school's bottom line.

As much of the same information that is taught in college becomes more accessible for free on the internet, it's hard to see how colleges can compete with smaller, more agile competitors who don't have nearly the overhead that universities do. It feels a bit like retail stores trying to compete with Amazon.

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

#23

Post by onlyrealcuzzo » Mon, May 14, 2018, 6:42 PM UTC

oflannabhra wrote: post #12

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.

For established non-profit schools? Or new, mostly for-profit schools?

I find it hard to believe any reputable, 20+ year-old, non-profit schools are losing money. They should own their assets outright, have extremely low interest rates on any outstanding debt, pay close to 0 taxes. Wages for non-executive staff are not keeping pace with inflation. How are they losing money?

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

#24

Post by TangoTrotFox » Mon, May 14, 2018, 6:45 PM UTC

oflannabhra wrote: post #12

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.

Most of their costs are self inflicted. A cynic would say that colleges have an incentive to keep their their net low to justify ever higher costs. Look at things like the completely bloated administrative and managerial structures which are now also regularly paired with bloated compensation. And something that happened at my universities, which I expect is typical, is that there was massive and widespread construction. They were constantly building up and tearing down things, even when what they were tearing down was completely functional. It was nonsensical, at least if you assign any value to money.

You can even just see things on a macro level. The product that the universities are offering has not meaningfully changed or improved, yet their costs have gone into lala land.

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

#25

Post by drblast » Mon, May 14, 2018, 6:46 PM UTC

Obviously they need larger football stadiums to bring in that TV money.

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

#26

Post by majormajor » Mon, May 14, 2018, 6:47 PM UTC

onlyrealcuzzo wrote: post #23

oflannabhra wrote: post #12

Earlier quoted context omitted.

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.

For established non-profit schools? Or new, mostly for-profit schools? I find it hard to believe any reputable, 20+ year-old, non-profit schools are losing money. They should own their assets outright, have extremely low interest rates on any outstanding debt, pay close to 0 taxes. Wages for non-executive staff are not keeping pace with inflation. How are they losing money?

Gotta have newer, shinier buildings! Not sure my alma mater has stopped construction since I went there, not sure how they pay for it all.

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

#27

Post by jdeibele » Mon, May 14, 2018, 6:50 PM UTC

lainga wrote: post #3

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?

I am guessing that total applications are up while total numbers of applicants are down (and thus there are more applications submitted per person)?

Yes. One of the things that's different is that there's now https://www.commonapp.org/ which says "you can apply to more than 700 colleges" using it.

To some degree, application fees (paid per college) are still a deterrent but some people qualify for free application fees. There was an article about a young woman who was accepted at more than 100 colleges. http://www.ibtimes.com/teen-gets-accepted-more-100-colleges-...

Applying to X more colleges at $50 or $75 each where one of them may offer 10% or 20% more in aid makes for an interesting decision.

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

#28

Post by lordCarbonFiber » Mon, May 14, 2018, 6:56 PM UTC

technologyvault wrote: post #22

A few observations about this "will the traditional college survive" situation, which I've been following for a long time. The higher education market feels a bit like the healthcare market in that it's somewhat difficult for the consumer to tell what the actual cost will be prior to purchasing the product. Published tuition rates and other costs of attending school feel like they're abstracted until a long-term comm…

Except that the raw "information" taught in colleges doesn't represent enough value to even show up as a line item in a cost breakdown. Anyone can read a book, or even watch a lecture; the value add is access to research, access to professors, and perhaps most importantly, access to a community of motivated(to a degree) students all in plus/minus the same point in their lives.

MOOCs on the internet can't compete on any of these metrics.

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

#29

Post by TangoTrotFox » Mon, May 14, 2018, 6:57 PM UTC

onlyrealcuzzo wrote: post #23

oflannabhra wrote: post #12

Earlier quoted context omitted.

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.

For established non-profit schools? Or new, mostly for-profit schools? I find it hard to believe any reputable, 20+ year-old, non-profit schools are losing money. They should own their assets outright, have extremely low interest rates on any outstanding debt, pay close to 0 taxes. Wages for non-executive staff are not keeping pace with inflation. How are they losing money?

Berkeley is arguably the poster child for many of these problems. They continue running on a deficit.

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

#30

Post by yayana » Mon, May 14, 2018, 6:58 PM UTC

technologyvault wrote: post #22

A few observations about this "will the traditional college survive" situation, which I've been following for a long time. The higher education market feels a bit like the healthcare market in that it's somewhat difficult for the consumer to tell what the actual cost will be prior to purchasing the product. Published tuition rates and other costs of attending school feel like they're abstracted until a long-term comm…

I think the fundamental problem is that providing "meaningful" credentials requires critiquing your own customers in a complex and non-quantative process. A school needs to amass a major amount of social and other capital that it risks losing when it gives all students an A and even then it is often too tempting to placate the lazy customer (see Harvard undergad scandals such as grade inflation).

The expensive coach and sports team is part of a complex signal of an organizational reputation being risked when the school backs little Bobby-Billionaire Low-IQ's transcript and also accepts a new wing from Bobby's dad.

I wanted to see MOOCs lead to a rise of separate standardized tests to replace integrated education and credentials, but I also recognize that teaching to those tests would end up ruining many MOOCs..