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Price discrimination in the form of scholarships and the "show us exactly how much money is in your wallet" scam they call "need-based-aid" allowing universitie

• fishpen0 2y ago
  Funny enough this is exactly how vendor engagement goes when you are publicly traded. They can see your books more or less and charge wildly different numbers to different companies. It has nothing to do with how much you use the product or the resources you'll use and everything to do with what they think you are worth. We've had so many calls where we're like "brand new product with team of 10 wants your thing" and they come back with a high 6 figure saas contract. It's so fucking annoying that they don't have to show their prices online and can make all their customers sign pricing NDAs
  • exe34 2y ago
    I suppose it's karma for all the companies that refuse to publish the salary being offered for jobs upfront.
• SkipperCat 2y ago
  I've always wondered why the family that pays full price for tuition does not get the tax credit for their charitable contribution to some other student whom they subsidize. If I donated $20k to a university, I'd get to write that off as a charitable contribution in my taxes. If I pay full tuition and 1/3 of that goes to a student needing aid, I get no deduction.
  • vernon99 2y ago
    That’s the only thing that bothers you? :) How about we outlaw the price discrimination described in the parent comment? I think everything else just pushed the conversation deeper in the weeds and does us all a disservice.
    • gnicholas 2y ago
      So no more youth ticket prices, senior discounts, etc.? Price discrimination is a very commonly-used tactic, and it goes by many different names.
      • desmosxxx 2y ago
        Nuance can be introduced. Allow aged based price discrimination but not descrimination that is based on actual income numbers?
      • rgovostes 2y ago
        Senior discounts: When the median US senior citizen is significantly wealthier than younger adults, absolutely yes. https://www.cnbc.com/2023/10/28/americans-median-net-worth-by-age.html https://www.cnbc.com/2023/10/28/americans-median-net-worth-b... France grants free museum admission to adults under 26, which strikes me as a better policy than charging the highest price to access cultural works to the people who (a) have the least earned wealth, (b) the least lifetime exposure to those things.
        • gnicholas 2y ago
          Yep, I think senior discounts are partly/largely about willingness to pay, not ability to pay. For example, senior citizens aren't the target demographic for most movies. Theaters get full freight from the 18-45 crowd, who want to see the movies the most. Then they entice senior citizens to come watch movies that they don't love by giving them better pricing. Same applies for theme parks, where the target audience is young adults and families with small kids. I'm not defending any of this — just pointing out that price discrimination is sometimes about ATP, and sometimes about WTP.
          • anamax 2y ago
            Senior discounts are also used to smooth out/move usage. "Seniors pay 20% less for movie tickets at Tuesday at 1 pm" sells tickets that few people with jobs would buy, regardless of price.
  • rendang 2y ago
    It's typically the opposite of what you say - the true expenses/student that a private university pays is much higher than even the richest kid pays (difference made up for by the endowment's income) So the better question is why they don't raise prices such that the rich kids have to pay the true full price & have more money for aid for the less-rich.
    • floor2 2y ago
      No that's not the better question. If private universities are truly spending so irresponsibly and profligately that their sticker price isn't covering their expenses, then their entire administration should be thrown out and replaced. It's only incompetence or corruption that could excuse such costs.
      • AgentOrange1234 2y ago
        Throwing out the entire administration and then only replacing a small fraction of it would work even better!
    • StressedDev 2y ago
      I have a hard time believing this. Every course I took in college had at least 15 people and usually 30-50 people. Large classes like Calculus 1-2, Linear Algebra, and Differential Equations had at least 300 people. There is no way you cannot pay the salary + legitimate overhead for 1 profess, and 1-10 TAs with these class sizes. My guess is a lot of the money does not go to instruction but goes to administration, sports palaces (stadiums), luxury dorms, etc. Colleges used to be MUCH cheaper in the 1950s, 1960s, and 1970s. The education was just as good but cost far less. The big problem with colleges today is they are "non-profit" in name only. Instead, of giving profits to shareholders, they are giving them to employees and insiders. This hurts students and the United States. However, colleges do not care because they, their employees, and friends benefit.
      • wakawaka28 2y ago
        Sports more or less pays for itself in most cases and even brings in profits. That's why even public colleges have active sports programs. You are right about other luxury amenities. But even basic facilities cost pretty serious money, even if they are only built every 50-100 years or so. If I had to estimate, I'd say no school currently pays more than 25% of tuition on actual teaching. Administrators and luxury facilities account for most of the other spending. The real cause of these escalating costs is easy credit for tuition. There would simply be no big market for the current overpriced programs if people couldn't get loans regardless of outcomes. I would like creditors to have to prove how the students will pay for the median salary of a person with the same degree before loaning the money. You should not be able to borrow hundreds of thousands of dollars for stupid stuff that will never pay off.
  • deleted 2y ago
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• weitendorf 2y ago
  It's not just price discrimination, but the process of applying and choosing a college is essentially an auction process designed to benefit colleges over students. US colleges all band together to participate in a single coordinated system (FAFSA, college ranking systems, the common app, Early decision rules, etc.) , acting almost like a cartel, so they get away with it. If you view the college application process through the lens of Mechanism Design you can see that colleges hold all the cards and so the entire system is designed to their benefit: https://en.wikipedia.org/wiki/Mechanism_design https://en.wikipedia.org/wiki/Mechanism_design What exactly is unfair about the process? 1. The colleges which most heavily implement price discrimination are the most desirable to attend and also tend to accept large portions of their student body through Early Decision applications that don't allow apply to most (not all) of the other most desirable colleges. This means that accepted ED applicants have no recourse beyond either accepting or rejecting the proposed "aid package". 2. Highly desirable colleges aim for high applicant "yield" for rankings/planning, which in aggregate makes it so most of their accepted students only get into one highly desirable college. Even outside of early decision applicants, this puts applicants in a bad bargaining position - they must choose between either paying more for the ~single highly desirable college they got into or less for a less desirable college. 3. You cannot generally bid between colleges even if you got into comparably desirable/expensive desirable colleges (you can't tell Dartmouth and Brown that each is proposing a cost of $40k/y and have them bid against each other). This is because they essentially operate as a cartel. This limits downward pressure on prices. 4. The application process operates in rounds with fixed dates, there aren't really do-overs within a given year, and waiting for the next year changes the process (you're either a transfer or gap year applicant). This puts a lot of pressure on applicants to accept the least-worst option and doesn't give them the ability to react to a bad outcome by eg applying to more places after the fact. 5. The acceptance criteria are opaque and in many cases subjective (eg your application essays). Applicants need to hedge their bets and deal with a lot of uncertainty. Any accepted offer from a highly desirable college then feels like a gift and not worth squandering/negotiating. 6. As you mention, colleges know exactly how well you'll be able to pay, and because they act as a cartel that disallows bidding wars or negotiation + all the other forced scarcity/time pressure I mentioned, they can essentially extract as much from applicants as they want, up to their sticker price. It's worth mentioning that not all competitive colleges participate in the cartel to the same degree as the Ivy League. When I was applying to colleges, I remember MIT and Caltech had Early Application (not Early Decision) processes, didn't make applying in those rounds as beneficial as ED colleges, and didn't have as many athlete/legacy "backdoors" as the Ivy League. I also remember that Duke and Vanderbilt offered full merit scholarships to some students who might've received no need-based aid, which I was fortunate enough to benefit from and am extremely grateful for, even if it was probably a self-serving policy to poach applicants away from the Ivy League/improve yield.
• meetingthrower 2y ago
  100%. There are revenue management consulting firms that boast of increasing price realization by 15%+ by managing admission rates, communication patterns, and "scholarship grants" to optimize bottomline price. When the marginal cost of each student is probably $20K, anything over that is awesome. So even if you give a $30k "merit scholarship" to a full pay student you are making bank, as you are still clearing $50K+ as a university. Perverse outcome of this is that the richer students will get more "merit aid." Also, Ivy leagues + Stanford and MIT are a cartel, and don't give merit aid. So they use the "need based" aid system to even more increase their price realization from the richest folks. (Ask me how I know: parent who went way too deep on this, and is now stroking a $85K check to an ivy.... lol.)
  • gnicholas 2y ago
    What makes you say the marginal cost of each student is $20k?
    • danielheath 2y ago
      That number is preceded by the word “if”, right?
      • gnicholas 2y ago
        It is not. I don't think it said "if" before, but it certainly doesn't say it now: > When the marginal cost of each student is probably $20K
    • lupire 2y ago
      Seems reasonable, as that's about what K-12 costs at a public school.
      • rightbyte 2y ago
        Uni has to be way cheaper than K-12? The teacher density is way lower in uni and TAs are not FTE.
• happytiger 2y ago
  It’s the same system California is putting in place with income-based energy billing. Income-based billing is rife for abuse!
  • maxrecursion 2y ago
    The main political realization I had with growing up lower class, still live in poorer areas, and making it to being high income is that basing government programs around income is terrible policy. 1. It's extremely unfair 2. It punishes those working to get ahead 3. It creates 'welfare cliffs' where people become worse off for getting jobs. Losing Medicaid is the best example of this. 4. It makes the program exponentially more expensive to maintain because you have to hire people to track who gets it and who doesn't, look for fraud, monitor for when the income threshold needs changed, etc.. It's just terrible policy all around. We learned this during covid. It's so much easier to write people a check and tax the the high earners more to make up for them getting a check.
    • wakawaka28 2y ago
      I don't remember all that well but I think there aren't really sharp welfare cliffs with financial aid. The expected contribution of you and your family is subtracted from the total cost, and you are eligible for aid to pay the rest. The money you get from working is supposed to be more than your financial aid deduction anyway. So say if you made an extra $10k, it ought to reduce your financial aid by less than that. >It makes the program exponentially more expensive to maintain because you have to hire people to track who gets it and who doesn't, look for fraud, monitor for when the income threshold needs changed, etc.. We already have a system for that. It's called the IRS. The cost of a basic fraud detection system is less than the actual fraud would be of course. They have to worry about things like people enrolling and never going to class. >It's just terrible policy all around. We learned this during covid. It's so much easier to write people a check and tax the the high earners more to make up for them getting a check. It isn't easier or fairer to write everyone a check, because quite a lot of people don't need any help. The average wagie is not going to seriously be disincentivized from working a meaningful way because it might disqualify their kid from certain financial aid. The whole point of financial aid is to give hope to the hopeless and help the struggling, not give everyone benefits whether they need it or not. Taxing people who don't have kids to pay for people who can afford to pay their kids' tuition seems wrong all around.
• kristopolous 2y ago
  Traffic citations in some municipalities do this. College shouldn't be structured like a punitive sacrifice for poor behavior
• rahimnathwani 2y ago
  Imagine any other service where they demanded your bank statements Many private K-12 schools do this as well.
• xtiansimon 2y ago
  If you get food stamps or other services from the social safety net, then you have to show your financials. Requiring the same for educational subsidies seems to follow the same rationale.
  • i_am_jl 2y ago
    There's a difference between "Show us how much you have, we will give you more until you have enough" and "Show me how much you have, we'll raise prices until you can barely afford it with a high interest loan."
  • deprecative 2y ago
    That just goes to the immoral and unethical nature of means based assistance. It makes no sense to deprive people of aid because they make a dollar over some arbitrary line.
    • xtiansimon 2y ago
      And the low-hanging counter argument says there are limited resources in the social safety net, and an arbitrary line is necessary for the administration of such assistance.
• mrgaro 2y ago
  Pretty much every company who does not list prices publicly in their website does this. If the vendor recognizes your company name, the price will be bigger :(