Monday, April 23, 2012

Differential Tuition

I’m was not at all surprised when Santa Monica College abandoned their  proposed two-tier fee schedule.  Charging more for more popular courses alienates both students as well as faculty.  And if one three credit course earns as much credit toward graduation as another three credit course, how can there be a differential pricing mechanism? 

But let’s go back a step to the actual cost of a course.  Costs vary widely.  A course can be taught by a full time faculty member or by an adjunct faculty member with very different cost ramifications; or by a senior faculty member or a junior faculty member, once again with very different cost ramifications.  A course can be taught as a seminar and the same course can often be taught in a large lecture section, once again with very different cost considerations, even if the actual faculty cost for the seminar and the lecture were identical.  Most courses are taught in standard classrooms but many are also taught in labs of varying sophistication.  Lab or studio courses tend to have smaller enrollment limits (based on available lab stations) than regular classrooms.  And for both equipment reasons and seating availability, these courses tend to have a higher cost base.  But the cost consequences of courses often extend outside of the classroom.  Library and technology needs vary widely and can significantly increase the cost base.  And these differences can even take place in the same department and discipline, and also remember that different disciplines often have market related cost differences.  There are so many cost differences inherent in higher education, that it would be impossible to build them into the cost structure.  We are not a department store, supermarket or restaurant where every discrete item has its own cost.  What we are selling is the opportunity for students to earn credits, and the credits each have identical value.

Differential pricing is not a new concept.  There are different schools and programs within the same university that charge different tuition rates.  Typically these differences are on the graduate level, where the programs are self-contained and do not cross over to other schools or programs.  When differences are built into the undergraduate level, the mechanism most used is a (lab or technology or equipment) fee.  And there are differential scholarships that are awarded, once again especially on the graduate level where the programs are self contained.  Graduate programs where there is tremendous demand tend to award smaller scholarships than those programs striving to assure a critical mass of students. 

What should a hard pressed institution do when it needs to generate additional revenue?  Not an easy question.  Charging more for popular courses is not the right strategy.  Courses are often “popular” because they are required for graduation.  There is no basis for charging more for these courses.  Of course at the extreme, you could charge so much more for these courses that students would substitute into much less popular courses (in areas where staffing is nevertheless abundant) that would meet the same graduation requirements.   Students might hate the course but they would appreciate the lower cost.  Not a strategy I would ever be likely to embrace.  Charging a fee, where there are no obvious extra costs is also not a good strategy.  How could you charge a fee in a room where there are just seats and a white board, or even seats and a smart board?  In addition, reducing scholarships, especially when much of this money goes to meet need, is also not a desired strategy.  And containing all costs is also not a workable solution either for the institution or the individuals working at the institution.  Larger class sizes mask the issue but don’t ultimately solve the problem in most cases.  Lastly, fundraising, even though it is extremely important, is likely to have an impact only at the margin.

What are we left with?  Tuition increases may be the only alternative.  Inflation does exist, costs do increase and as unpopular as such increases may be, they may also be the response that makes the most sense.

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