November 19, 2008

'Market Tolerance' Is Helping Set University Tuition, Report Says

Tuition rates at major research universities are increasingly being determined by “market tolerance,” and those rates are converging, “driven in part by the perception that price confers quality and a corresponding level of prestige to consumers,” according to a new paper from the University of California at Berkeley’s Center for Studies in Higher Education.

The authors of the paper, “The Big Curve: Trends in University Fees and Financing in the EU and US,” analyzed prices at 24 top public and private institutions, and the findings are likely to be of special interest in tuition-averse Europe.

The six European universities in the study included prominent institutions like Cambridge and Oxford, and the finding that market forces foster greater tolerance for higher tuition is particularly relevant in Britain, where a government-led review of tuition caps, currently set at just over £3,000 ($4,450) a year for undergraduates in England, begins next year.

Despite that comparatively low tuition rate, Britain’s approach is closer to the American model than to the rest of Europe, where many “universities retain either no-fee policies or charge a standard university fee for all students,” the report says. But the continental model is also changing, and “the expanding role of universities in the European Union has led to a broadening discussion of the possible role of tuition and fees for resource-deprived universities,” the report says.

Higher-education systems in much of Europe, except for Scandinavia, “show indications of moving toward tuition and differential fees, and have begun to introduce higher fees for international (non-EU) students.”

The authors’ conclusion that market forces are eroding traditional European objections to tuition will no doubt antagonize groups like the European Students’ Union, an umbrella organization that represents more than 10 million students in 38 countries and that has steadfastly stood for the view that higher education “is a human right and should be free to all that can benefit from it,” the group’s Web site says.

The Berkeley paper acknowledges that “the recent implosion in credit markets may seriously shake this emerging pricing model,” but in Britain, at least, the plummeting pound could create a more favorable model in the short term for overseas students, a view seconded on Monday by The Financial Times. —Aisha Labi

Comments

1. Escalating tuition in the United States has benefited from the misplaced public perception that cost is positively correlated to quality.

   This believe — known to product marketers as the Chivas effect — has helped a new generation of high cost for-profit colleges persuade naive students that they MUST be better than their lower cost non-profit cousins.

   The truth: there is no positive relationship between cost and quality in higher education. Never has been.

   Nowhere is this more apparent than in online education where the highest cost degree programs don’t come from the “best“onlie colleges but from a new generation of for-profit colleges that must charge more and more to make up for their lack of government subsidies and to meet the demands of hungry Wall Street investers.

   The truth: the most expensive online colleges are not the best— they are simply the most dependent on funds raised directy from potential students in the form of direct tuition and fees.

   GetEducated’s national online education affordability studies show that an online degree from the U University of Phoeonix, for example, costs 3 to 4 times more than the very same degree from one’s local state college.

   More work needs to be done to help consumers get educated about the true relationship between cost and quality in higher education in the USA.

   Vicky Phillips
   Chief Education Analyst
   GetEducated.com

   — Vicky Phillips    Nov 19, 06:46 PM    #

2. Given that political correctness has completely eroded our educational system & destroyed the credibility of our institutions, it is ironic that costs are jumping up at the same time the level of quality is plummeting. In another business it woiuld be called “inefficiency” and would lead to what we’re seeing in the auto industry.

   Higher ed may have to go through a similar vetting process before anything will improve. Until then, students will pay their tuition & fees, but will also increasingly turn away from meaningless, PC based education and seek solace in alcohol, sex, video games, and other sources of immediate gratification.

   — KD    Nov 20, 09:14 AM    #

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