July 30, 2007
Differential Pricing in Higher Education
Posted by Christine Hurt

Yesterday's NYT had an interesting column by Jonathan Glater on public universities charging more for some degrees than others.  The degrees that garnered the higher price tag are degrees where the costs of recruiting professors are higher and/or the cost of equipment is higher.  Some of the examples given are business, engineering, pharmacy, and journalism.  The premiums are not astronomical -- from $250 to $500 more per semester.

Most administrators quoted seem very unhappy with this phenomenon, even at their own schools.  They predict that lower-income students will stay away from pricey majors such as engineering and business.  They bemoan the days when states educated their children to create better citizens that were well-rounded and enlightened.  They brush off apologists who defend the policies on the basis that some degrees are worth more in the marketplace.  Richard W. Lariviere, the provost of the University of Kansas, is quoted saying "Where we have gone astray culturally is that we have focused almost exclusively on starting salary as an indicator of life earnings and also of the value of the particular major."

A few thoughts.  First, I don't think we can read this article without recalling the almost daily newspaper articles about the high cost of educational debt that many graduates are shouldering.  With so many students going into debt for an education, and many with high-interest private loans, shouldn't we be teaching them something about the dollar value of a particular major.  Yes, students should seek out jobs that are interesting to them and that will bring them fulfillment throughout their lives, but they should think twice before borrowing $100,000 for a major where the starting salary is $22,000, right?  To say that this should not be a consideration is pretending that everyone that goes to university is wealthy and coming merely for self-actualization -- to take Latin, Greek, Philosophy and Theology and return to their position in the aristocracy.  That's not real life.  Students are going to college to gain knowledge, skills and credentials to support themselves and their families.

So, why shouldn't an Engineering degree cost more than an Education degree?  I don't think this is insulting to Education majors.  In fact, why raise tuition across the board and have people who want to teach kindergarten have to subsidize the education of people who want to become engineers, who will get paid much more after graduation?  Why not just let engineering students pay more?  (The article did not mention lab fees, which I had long thought were already a mechanism to have students in certain majors pay more than others.  Texts also cost vastly different amounts in various majors.)  Students already pay more for elite institutions than non-elite institutions; more for university education than community college; and more for degree-granting institutions than technical schools or cosmetology schools.  Surely this pay differential has something to do with the value of the degree.  And surely degrees within a particular institution are worth more than others. 

Of course, students going to law school can basically game the system by majoring in low-cost degrees such as English or Philosophy and then going to law school!

Finally, I think we have to take the quotes from these state university administrators with a grain of salt.  They are obviously pitching to their legislatures.  "We have to act this unfairly because you have tied our hands by not letting us raise tuition across the board."  What the colleges would prefer to do is raise tuition not just for Business and Engineering students, but also for English and Philosophy students.  So much for well-rounded, liberal arts education.

One last thing.  As a U. of Texas graduate, I try to stay away from Aggie jokes, even though I have a natural right to make them.  Well, this one makes itself.  The article quotes G. Dan Parker III, associate executive vice president of Texas A&M on the fact that the business school there pays starting professors $130,000 or more.  "The salaries we pay for entering assistant professors on average is probably larger than the average salary for full professors at the university.  That's how far the pendulum has swung at the business schools, and I sure wish they'd fix it."  Ummm, what are you going to fix?  I guess if you can clone sheep, you can alter the laws of supply and demand, too.

Economics | Bookmark

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