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That's only public universities, though. How does that explain the corresponding increases at private schools?

ethbro 9y ago
I'd assume the two are strongly correlated. If state schools raise their prices, then private schools can stay at the same multiple above them and also raise their prices.
learc83 9y ago
First you have to factor in the fact that public schools are a competing good, so when public tuition rises private tuition will as well. Then you have to realize that tuition increases at private schools are misleading. You have to look at what people are actually paying not what the sticker prices. At Harvard, for instance, 70% of students receive financial aid, so they are paying $12k a year on average (not the $60k sticker price). That's tuition, fees, and room and board. Harvard has generous financial aid, but it's not unusual among elite schools. Most private schools worth going to are going to have very good financial aid packages. And even at lower tier private schools most people aren't paying sticker price unless you're talking about for profit institutions.
- gozur88 9y ago
  But private schools have to compete with each other. If this was really about increased demand from students who would have otherwise gone to public schools, what we'd see is an increase in the number of private schools, not an increase in tuition.
  - learc83 9y ago
    Assuming the number of private schools that students want to go is in no way supply limited, which is an incorrect assumption. How long does it take to build and staff a private school? How long to get it into US News top 500? Even something like increasing the number of students admitted to existing private schools is tricky because they are tracked on their admission percentage.
    - stale2002 9y ago
      You don't have to create a new college. All that has to happen is for EXISTING colleges to realize that they can make a ton more money by expanding in size. Obviously, this doesn't happen overnight. You have to hire new employees, buy more land, and build more buildings. But I'd argue that this process would happen a lot, lot quicker than "create new college". Colleges are already expanding all the time.
      - matchbok 9y ago
        You don't think they know that? I'm sure they do. But the other option is to stay the same size, but charge much more. Either way, more money. Only one solution demands building more classrooms and housing.
        jononor 9y ago
        The more you charge the more valuable you are seen to be.
        stale2002 9y ago
        Competition would prove otherwise. If a single college doubles in size, the effect on total college supply is minimal. You double the amount of quantity sold, for You, while only slightly decreasing price, because Total college supply has only barely increased. It is simple supply and demand in a competitive market.
        learc83 9y ago
        It's not that simple. A huge part of what makes a particular college attractive is selectivity. Acceptance rates are tracked and reported. Harvard and Yale are ranked so highly that they could get away with it. But they won't do it for other reasons. Mainly that they don't need the money coming in from tuition. If you take a private school a bit further down the list though, their rankings would tank if they accepted twice the students. Also there are other limiting factors. Many colleges don't have the physical space to just double in size. Their isn't land for sale within walking distance of their current campuses. Adding satellite campuses is one way around that, but that adds logistical problems that will reduce desirability. In addition to satellite campuses not always inheriting the reputation of the main campus. Additionally you can't simply double the student to faculty ratio b/c that would tank rankings, and hiring double the faculty takes time. You also don't know which departments you need to scale beforehand. If you decide to double your enrollment in the next 5 years, which majors will the new students choose? It's unlikely the ratios would stay the same. Good programs don't always scale well either. If a department worked hard over the last 20 years to build a good reputation, they can't just hire 20 new faculty members and teach twice the number of students without impacting quality. Schools do expand all the time, but it is a very slow process that by its nature can't keep up with a constant growth in demand.
  - prostoalex 9y ago
    You are right, there's no increased demand. Advertised sticker price and actual price of a private education can be substantially different https://www.wsj.com/articles/private-colleges-see-record-discounting-amid-pressure-from-cost-conscious-families-1494820861 https://www.wsj.com/articles/private-colleges-see-record-dis... For decades the private sector has been feeding off the gravitas created by Stanford, Harvard, Yale and other superb private institutions. Maybe time has helped, maybe the Internet made comparisons easier, but it's pretty clear that private schools can be separated into three tiers, with tier one (Stanford, Yale) still being top notch, tier two being a questionable proposition for most people, and tier three (U of Phoenix, Trump U) being borderline fraud.
    - learc83 9y ago
      Trump U literally was fraud. He paid out millions in settlements.

I'd assume the two are strongly correlated. If state schools raise their prices, then private schools can stay at the same multiple above them and also raise their prices.

learc83 9y ago

First you have to factor in the fact that public schools are a competing good, so when public tuition rises private tuition will as well. Then you have to realize that tuition increases at private schools are misleading. You have to look at what people are actually paying not what the sticker prices. At Harvard, for instance, 70% of students receive financial aid, so they are paying $12k a year on average (not the $60k sticker price). That's tuition, fees, and room and board. Harvard has generous financial aid, but it's not unusual among elite schools. Most private schools worth going to are going to have very good financial aid packages. And even at lower tier private schools most people aren't paying sticker price unless you're talking about for profit institutions.

gozur88 9y ago
But private schools have to compete with each other. If this was really about increased demand from students who would have otherwise gone to public schools, what we'd see is an increase in the number of private schools, not an increase in tuition.
- learc83 9y ago
  Assuming the number of private schools that students want to go is in no way supply limited, which is an incorrect assumption. How long does it take to build and staff a private school? How long to get it into US News top 500? Even something like increasing the number of students admitted to existing private schools is tricky because they are tracked on their admission percentage.
  - stale2002 9y ago
    You don't have to create a new college. All that has to happen is for EXISTING colleges to realize that they can make a ton more money by expanding in size. Obviously, this doesn't happen overnight. You have to hire new employees, buy more land, and build more buildings. But I'd argue that this process would happen a lot, lot quicker than "create new college". Colleges are already expanding all the time.
    - matchbok 9y ago
      You don't think they know that? I'm sure they do. But the other option is to stay the same size, but charge much more. Either way, more money. Only one solution demands building more classrooms and housing.
      - jononor 9y ago
        The more you charge the more valuable you are seen to be.
      - stale2002 9y ago
        Competition would prove otherwise. If a single college doubles in size, the effect on total college supply is minimal. You double the amount of quantity sold, for You, while only slightly decreasing price, because Total college supply has only barely increased. It is simple supply and demand in a competitive market.
        learc83 9y ago
        It's not that simple. A huge part of what makes a particular college attractive is selectivity. Acceptance rates are tracked and reported. Harvard and Yale are ranked so highly that they could get away with it. But they won't do it for other reasons. Mainly that they don't need the money coming in from tuition. If you take a private school a bit further down the list though, their rankings would tank if they accepted twice the students. Also there are other limiting factors. Many colleges don't have the physical space to just double in size. Their isn't land for sale within walking distance of their current campuses. Adding satellite campuses is one way around that, but that adds logistical problems that will reduce desirability. In addition to satellite campuses not always inheriting the reputation of the main campus. Additionally you can't simply double the student to faculty ratio b/c that would tank rankings, and hiring double the faculty takes time. You also don't know which departments you need to scale beforehand. If you decide to double your enrollment in the next 5 years, which majors will the new students choose? It's unlikely the ratios would stay the same. Good programs don't always scale well either. If a department worked hard over the last 20 years to build a good reputation, they can't just hire 20 new faculty members and teach twice the number of students without impacting quality. Schools do expand all the time, but it is a very slow process that by its nature can't keep up with a constant growth in demand.
- prostoalex 9y ago
  You are right, there's no increased demand. Advertised sticker price and actual price of a private education can be substantially different https://www.wsj.com/articles/private-colleges-see-record-discounting-amid-pressure-from-cost-conscious-families-1494820861 https://www.wsj.com/articles/private-colleges-see-record-dis... For decades the private sector has been feeding off the gravitas created by Stanford, Harvard, Yale and other superb private institutions. Maybe time has helped, maybe the Internet made comparisons easier, but it's pretty clear that private schools can be separated into three tiers, with tier one (Stanford, Yale) still being top notch, tier two being a questionable proposition for most people, and tier three (U of Phoenix, Trump U) being borderline fraud.
  - learc83 9y ago
    Trump U literally was fraud. He paid out millions in settlements.