<p>^^^ My reading is that it does not need to increase financial aid budged. Only “monopoly money” financial aid money.</p>
<p>Suppose a school has two students. The first is on finaid and can pay up to 10K; the other studend can afford 100K. Also suppose the cost of educating astudent is 30K.</p>
<p>a) If the tuition is set to $60K the school net revenue is 60K + 10K - 2*(30K) = 10K.</p>
<p>b) If the tuition is set to $100K the school net revenue is 100K + 10K - 2*(30K) = 50K.</p>
<p>In the example b the “financial aid budget” increases from 50K to 90K, but the school makes much more net revenue. The thing is that in many situations these “financial aid budgets” are just “monopoly money”. They only exhist as an internal accounting number. Granted, there are cases in which the overall cost of educating the students is higher than the overall tuition income, but this only happens when schools have monstruous endowments or when schools are subsidised by tax revenues.</p>
<p>The latter is a common case, because there are a lot of state universities and community colleges which enroll mostly subsidized in-state students, although the subsidy gets cut due to state government budget problems.</p>
<p>Of course it does and it will increase the financial aid budget (by definition). In this case, UC raises fees by $3 with the sole purpose of taking 1 of those dollars (from the wealthy student) and giving it to the financial aid program (non-wealthy students). In other words, 33% of every tuition increase goes directly to financial aid. Looked at another way, the poorer students are 100% shielded from every tuition increase.</p>
<p>Which implies that student ability is evenly distributed over socioeconomic status. While this might not be true, it doesn’t change the idea, simply the result shifts one way or the other. </p>
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<p>I was assuming the “Harvard” model of 10% of income up to 180K household income and full price after that. Of 'course if you completely change the model to be that somehow they know exactly the tipping point for every potential current student and just charge them that, they’ll get more revenue and increase the caliber of students that attend, but that’s not gonna happen until Harvard starts bringing psychics onto their admissions team. The information isn’t there. People don’t simply pay the most they can “afford” based on what FAFSA says they can afford, they’re going to weigh the value of a HYPSM degree with the value of their much less costly state flagship degree.</p>
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<p>They’re willing to pay some amount more than they were paying before. I’m betting for those in 70th-98th percentiles that amount is not 100K when they can go somewhere else almost as “good” for far less. Hence, my conclusion in previous posts.</p>
<p>It may be, but student test scores are not evenly distributed (if one can believe CB’s published reports). And since test scores are a large part of admissions to the top tier colleges…</p>
<p>Again, this may be true for the very top 4 or 5 with endowments which could sustain your model, but that is not the case for most top 20 schools that currently don’t offer much aid to upper middle class families. </p>
<p>We have all seen the reports that indicate more and more families are choosing the economical option over prestige. There is no doubt that the relative sacrifice of the, say, 70th percentile family is much greater today than it was 20 years ago. This hasn’t affected enrollment yet because the increasing population means there are more 70th percentilers willing to replace those who forgo the expensive option. Demographic projections show this trend will not continue indefinitely. Sure it can go on for a while still at elite schools that are willing to increase their proportion of internationals, but even that strategy couldn’t be sustained indefinitely as it would lead to a vicious cycle of diminishing prestige.</p>
<p>Full pay prices of comparable universities (at least as comparable as HYPSM to top publics) haven’t diverged to the level you described in your earlier posts (of HYPSM costing about 625% of top publics - 100K vs. 16K), so one should expect that we wouldn’t have seen this yet. I doubt prices will ever diverge that much, but if they were to there’s no doubt in my mind that we would see phenomena I described.</p>
<p>Oh please! Sure they could. Indeed, I believe that the top 20 (or whatever) universities could decide to charge full sticker price, offer no discount whatsoever - it’s $60K to come here, take it or leave it - and there would still be enough takers and similar caliber students. They wouldn’t have the racial / ethnic diversity they are after, but if you wanted to measure smarts by GPA/SAT for the sake of argument, I bet their stats wouldn’t budge much at all.</p>
<p>And I don’t think prestige would be affected one bit. (And if it did, so what? Let rich people pay $60K for the Harvard club if they want. If prestige really does drop, then they wouldn’t be able to sustain that price, but let the market sort itself out.)</p>
<p>We’re talking about as the actual inflation-adjusted cost goes up. At $80,000 a year there are going to be fewer families willing to fork it out for NU or JHU, for example. There may still be enough uber-rich or simply education-at-any-cost candidates to fill those slots for a while but eventually supply and demand is going to affect these schools as well as the less prestigious. To deny this is live in a world where housing prices can only go up and the U.S. will always be the number one economic power.</p>
<p>As has been discussed in other threads, online alternatives are going to make for a very different higher-education landscape in 20 years.</p>
<p>Which is exactly my point. There is nothing to support the original post since we are not yet at a price point of $80k.</p>
<p>OTOH, if that $80k offered JHU premeds a perception that their med school app would be enhanced, they’d be lining up on North Charles Street. Ditto Wall Street wannabes to NYU-Stern…</p>
<p>Well, of course. And then those places will have to bring the price back down, or re-offer financial aid, or shrink their offerings and become boutique, for lack of a better word. It’s not really a “problem,” though, if you believe the free market will sort it all out (which I do).</p>
<p>In the 10 years since we first started paying college tuition, prices have gone up from $40K to $60k. I remember thinking what the level was that parents would balk at paying those prices…I had guessed $50K a year. I was wrong! Just glad we only had 2 kids, lol…</p>
<p>Actually, if we had had more kids, we would have had to restrict college choices.</p>
<p>First, you changed 100K for 60K. That’s a big difference. Second, Harvard has a preference for certain races, correct? So if infact they got similar GPA/SAT students but more racially undesirable students, then they are getting “worse students” in their mind, correct? So their student caliber decreases, correct?</p>