How Colleges Are Just Like Hospitals

A hmw_0314_collegedebttigher education riddle: When can a college slash tuition by almost half, without losing revenues? Answer: When nobody much pays full tuition anyway.

When Converse College, a tiny women’s college here, announced that it was “resetting” next year’s tuition at $16,500, down 43 percent from the current year’s published price of $29,000, the talk was about affordability, transparency and a better deal for struggling families.

But of Converse’s 700 undergraduates, only a small number ā€” in the single digits, its president said, paid the full sticker price in recent years. Almost everyone received a tuition discount from the college, along with, in many cases, financial aid from the state and federal governments. (NYT)

But you won’t hear any of the usual suspects in health policy complaining about the universities that pay their salaries.

Comments (11)

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  1. Rachel says:

    “For decades, most private college pricing has reflected the Chivas Regal effect ā€” the notion that whether in a Scotch or a school, a higher price indicates higher quality.”

    Definitely true in health care as well. I am unsure of the validity behind the thought, though.

    • JD says:

      Probably true generally, but definitely not always.

    • Dewaine says:

      It really depends on your personal definition of quality. Some people get utility from “conspicuous consumption” regardless of an objective quality. For them, higher price may translate to higher quality.

  2. John says:

    I often wonder where all that tuition money goes. Is it due to excess administration? Tenured professors?

  3. Tim says:

    There are definitely a lot of similarities between higher education and health care.

  4. perry says:

    Well you can bet that the hospital where you get your knee replacement is not paying those outrageous pricest you get charged for your joint device or the tylenol they’re givning you for pain.

  5. Greg says:

    “But you wonā€™t hear any of the usual suspects in health policy complaining about the universities that pay their salaries.”

    It would be unwise to bite the hand that feeds you.

  6. Dewaine says:

    The key is choice. With the free online education we may see a legitimate challenge to the education-industrial complex.