4 ms·

100%. There are revenue management consulting firms that boast of increasing price realization by 15%+ by managing admission rates, communication patterns, and

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 3y ago
What makes you say the marginal cost of each student is $20k?
- danielheath 3y ago
  That number is preceded by the word “if”, right?
  - gnicholas 3y 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 3y ago
  Seems reasonable, as that's about what K-12 costs at a public school.
  - rightbyte 3y ago
    Uni has to be way cheaper than K-12? The teacher density is way lower in uni and TAs are not FTE.
    - gnicholas 3y ago
      OTOH, you don't get room and board at a public school, and the facilities are much less complex (in terms of labs and other specialized buildings).
- amluto 3y ago
  Is the marginal cost even well defined? A lot of the expensive universities operate near capacity, where capacity is limited by housing, zoning, lecture hall space, capacity of the departments, etc. They have costs that look marginal (housing, teaching, food) and costs that look fixed (administration, management, some IT expenses, libraries). But, due to the approximately fixed class sizes, this whole breakdown seems a bit fictional.

gnicholas 3y ago

What makes you say the marginal cost of each student is $20k?

danielheath 3y ago
That number is preceded by the word “if”, right?
- gnicholas 3y 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 3y ago
Seems reasonable, as that's about what K-12 costs at a public school.
- rightbyte 3y ago
  Uni has to be way cheaper than K-12? The teacher density is way lower in uni and TAs are not FTE.
  - gnicholas 3y ago
    OTOH, you don't get room and board at a public school, and the facilities are much less complex (in terms of labs and other specialized buildings).
amluto 3y ago
Is the marginal cost even well defined? A lot of the expensive universities operate near capacity, where capacity is limited by housing, zoning, lecture hall space, capacity of the departments, etc. They have costs that look marginal (housing, teaching, food) and costs that look fixed (administration, management, some IT expenses, libraries). But, due to the approximately fixed class sizes, this whole breakdown seems a bit fictional.