Friday, April 16, 2010

Private College Costs -- An Odd Equality in Prices?

I live to destroy newspapers and magazines. Not the institutions -- I am a great fan of paper versions (am I giving an age range away?) -- but my personal copies. I have ripped out thousands of articles, columns, recipes, how to lose weight articles.

And I have been thinking about writing this blog for a long time. So I have an article from the April 27, 2009 Fortune that raised an issue I'd wondered about. The piece, called "Top Dollar, Lesser School," asks why lower-tier private colleges cost as much as an Ivy.

A mighty fine education can be gotten outside of the Ivy League and other well-ranked elite schools. That is not the issue. The question is how can they charge as much when they lack comparable faculty, resources and prestige?

Blame it on supply and demand (lots of kids wanting to go to college, without an increase in schools) and the so-called "Chivas Regal" effect. That's the belief that a high price tag confers status. Discounting would cheapen the brand, so these schools only discount in the form of a merit scholarship. The top tier schools don't offer those, but do try to help those families with lower incomes.

According to the reporter, the perceived best schools actually undercharge but for many reasons can't raise their prices even higher. I guess we should be grateful for that good news.

1 comment:

  1. LOVE, LOVE, LOVE this blog. Woody, move over; this is more important than sex: Everything you always wanted to know about college admissions but were afraid to ask.