Top colleges squeeze parents dry

Elite private colleges know how to squeeze parents dry, writes Andrew Manshel in the Wall Street Journal.

As high-school seniors around the country open their mailboxes looking for thick envelopes from colleges and universities, their parents are undoubtedly thinking, “Why does college cost so damn much?”—particularly if those children are headed to elite private institutions. Based on my experience as the vice president for finance and administration at a prominent college in the early 2000s, I suggest that the answer is simple: Top private institutions charge what they do because a substantial number of people will pay it.

Elite colleges don’t base tuition and fees on budgetary needs, he writes. They analyze what comparable colleges are charging to maintain the “pecking order.”

I learned that the most prestigious and desirable institutions have a good deal of information about the shape of the demand curve for the families seeking to obtain elite higher education for their offspring. These schools have the capacity to estimate with some precision how many applicants will go elsewhere for each additional dollar they charge in tuition and fees. Each sets its tuition so as to produce a targeted “yield”—the percentage of accepted students who actually enroll there. If in any year we over- or under-estimated the price changes made by the other schools, and we had moved up or down in rank, we corrected the following year by raising or lowering tuition by more or less to compensate. We essentially followed the price leadership of the wealthiest, most prestigious institutions.

The richest institutions could pay all operating expenses from endowments, Manshel writes. But “there are qualified paying customers lined up at the door,” so why not make ’em pay?  Leaders of the elite private colleges could control costs and end inflation-busting increases, raise endowment payouts and “rededicate themselves to providing opportunity to the talented regardless of means.”

Wealthy grandparents can’t pass much on to their grandchildren directly, but they can pay unlimited tuition, notes George Leef. And colleges know that.

Because of financial pressures, middle-class students are more likely to choose community colleges as the most affordable route to a four-year degree, reports the Washington Post. But they may not find counselors with the time to explain which credits are transferable and which are not. (And why that information isn’t built in to the system I don’t know.)

Update:  Better management could save UC-Berkeley $75 million a year, according to consultants. The report recommended “streamlining purchases, concentrating job duties and laying off  redundant managers,” reports the San Francisco Chronicle.

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  1. They’re private institutions; they can charge whatever they want. Of couse, they lose all moral authority as promoters of “equality” unless they’re offering numerous and generous scholarship opportunites to able but less well off students.

  2. SuperSub says:

    Many of the community colleges in NY are in partnership with the SUNY system to ensure that community college students are able to make their first two years count fully.

  3. Most of the elite institutions offer free rides to students whose families make less than $50 or $60K per year. So I have no beef with them charging wealthy families more if they are also willing to allow a fair number of lower income kids the opportunity to study and pay next to nothing.

  4. One:

    Yes, the price-setting behavior of the top tier universities, including our joint alma mater, is heinous.


    Once again, Mr. Leef is presenting data-free speculation as fact. There questions are answerable: What percentage of the US population can afford to write one or more $50K checks for someone else’s tuition? What percentage of that population are (a) old enough to have grandchildren (b) actually have grandchildren of college age? (c) What percentage of college-going students are covered by the answers to (a) and (b). Until Mr. Leef addresses those demographic facts, he’s just…blowing hot air.


    Community colleges: those in my area (Silicon Valley) do have transfer “information built into the system”.. at least for UC and CSU .

  5. From the VA Guaranteed Transfer web site:

    Virginia’s community colleges offer students more than the opportunity to earn a degree or certificate. They provide a gateway to the Commonwealth’s four-year colleges and universities.

    Through system-wide agreements, students who graduate from one of Virginia’s 23 community colleges with an associate’s degree and a minimum grade point average may obtain GUARANTEED admission to more than 20 of the commonwealth’s colleges and universities.

  6. Huh? That info is built into the system. Our local CC system puts it in the catalogue.

    I *do* happen to have a number of seniors every year who expect to have their Duke/Stanford/U of Chicago, etc. tuitions paid by grandparents, but that’s a demographic thing for my community. I wouldn’t think it is widespread outside the wealthiest areas.

    I have just as many kids accepted to those high-flying schools who go to the state land grant due to finances.


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