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We just learned that our school is increasing its sticker price by “only” 3.9% this year. Now the fully-loaded cost of attendance is a snail’s-breath shy of $60,000 per year. With one caveat let’s proceed. The caveat is that this fully-loaded cost is paid by very few people – most students are receiving some kind of financial aid. Indeed, the reason for this is that universities are the most expert “price discriminators” in the country. This fact, plus the “responsible” 3.9% increase might make one want to lose their lunch when placed in the context of a university faculty and staff that is wholly hateful of market pricing and believes that the current decrease in the rate of increase in federal government spending is some sort of spend-a-geddon.

Here is a short-excerpt from the story:

U of R students can expect some changes on their college bills next year. Tuition for University of Rochester undergraduates in the College and the Eastman School of Music will increase at the lowest rate in more than a decade: 3.9 percent, from $42,890 to $44,580 for the 2013-14 academic year.

The combined term bill of tuition, room and board will increase 3.9 percent to $57,644.

At the same time, we continue to pursue cost efficiencies wherever we can find them. And we are increasing financial aid, so that a Rochester education will remain accessible to hard-working students who could not otherwise afford it,” said Seligman (the University President).

Folks familiar with this site and with any university’s operation will find that last statement to be humorous. Just to remind myself of how humorous it is, I get to walk past this “symbol” of university responsibility each and every day I teach Microeconomics and walk past our library. I’ll only focus on one small aspect of this piece today, for it deserves far more space than a blog post. The idea that a 3.9% increase in cost is somehow the bastion of responsibility because it is the “lowest increase” in a decade is wholly misleading. The BLS reports that measured price inflation for the last 12 months has been only 2%. So this year’s price increase is double the rate of inflation – and this is exactly what the rate of tuition increase for colleges has been for the last 35 years. Hardly “responsible.” And look, I understand that some things get more expensive over time, so this is not in itself a criticism, but it is a criticism so long as our school tries to pass it off as some sort of heroic achievement. In real terms, how does this tuition increase compare to the others over the past decade? And how does this compare to peer universities? Have our “real” costs actually increased by 4%? I surely am not charging the University 4% more for me to teach my classes. And I don’t want to hear about all of this being driven by health care cost increases. ObamaCare is about to be implemented, ¬†and I am told the “health care cost curve is bending” so why would we want to say that health costs are driving this (I am sure they are, in part). It’s pretty clear what sorts of things drive these cost increases, but they must not be uttered in polite company. I’ll let your imagination run wild. Needless to say, now that I have worked in a University setting for more or less a decade, I know there is little chance that I would willingly pay anywhere near this kind of money to send either of my children to a University like ours. Not … at … all. And when my kids are all grown up, God willing, then I would be happy to have to explain to them why I refused to pay tuition to a school that (____ insert thing which may not be uttered in polite company____). Of course, maybe I am just bloviating – after all, I DO work for the place. And we DID send my wife to school here.

By the way, if every one of the students I teach actually spent 3.9% more per class per student that I teach, then my classes alone (assuming they are 1 of 8 classes taken each year by students) would be generating $1,690 times 650 divided by 8 more revenue for the school … or $137,313. I’m pretty sure that it’s not costing me that much more to educate my students next year. Or even 1/10th of that. Or even 1/100th of that.

7 Responses to “We “Only” Increased Tuition by 3.9%”

  1. chuck martel says:

    You well know, Professor WC, that as long as students keep applying, tuition will continue to rise.

  2. Harry says:

    Maybe they got scared by the Fed’s $85 billion per month bond purchase program.

  3. Speedmaster says:

    I’m always amazed that so many people are okay with this kind of blatant price discrimination, but if Wegman’s cashiers sized-up every person in line and charged each of them a different price for the same gallon of milk, they would be incensed.

    Price discriminate over a $3 item? Outrageous. Price discriminate over a $240,000 (over 4 years) item? M’eh.

  4. Harry says:

    This system has been going on for all my live, but has been aggravated by college teacher unions, one of which is headed by a friend I used to rub elbows with in college philosophy class.

    The idea is to screw everybody who managed to accumulate any savings, equity, or capital prior to their (sic) children going to college. The system discourages thrift, and encourages buying a big boat, a big coach RV, two Beemers and a big SUV, on credit so your net worth is a hundred thousand dollars negative. If you have any assets, it is claimed by the university. This is how socialist educators do their part to achieve social justice — the PhD’s getting back at the MD’s.

    I am not impugning WC’s PhD, by the way.

    My daughter’s annual bill was about $22,000 per year, for what I thought was a great value at a great place where you got taught a liberal education by real professors,

    More than once a year my alma mater (actually a current student) calls me for money. I try to explain that my church and other organizations need my money more, and that my alma mater with billions of endowment does not need a dime, we get to the discussion of how come it costs a king’s ransom to send your daughter there if you happen to be a farmer.

    The student has a script to overcome such objections, and after some conversation I fork over $50, reminding her to make sure it gets registered with my class.

    This gets back to WC’s discussion of altruism. There is nothing altruistic about that fifty bucks. Masochistic, maybe.

  5. RIT_Rich says:

    Why is inflation a benchmark here? I can see no reason why price increases or decreases in the provision of a good should necessarily be compared to inflation. I know that complaining about tuition is everyone’s favorite target, but is it justified? After all, the price of tuition only makes sense if one takes into account the benefits one gets from that service it provides. I’m not sure anyone can realistically make the argument that tuition has kept up with the benefit it provides.

    Therefore my stance remains: tuition is too cheap. And it’s too cheap because government drives down the prices at public schools.

    • Harry says:

      Great point, Rich. I guess the price is too high if they have trouble filling the school. If the school is private, that’s their business.

  6. […] a 3-year increase in greed from the middle of 2009 until today. And is my university therefore 3.9% greedier this year than they were last […]

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