And sure enough, right after you drove your shining new Plymouth Fury home and parked it proudly in the driveway, your neighbor came over to tell you that his brother-in-law got the same model for a hundred bucks less and the dealer threw in whitewall tires for free.
|How much is this beauty really worth?|
For example, Utica College in central New York and Rosemont College in Pennsylvania recently slashed their tuition prices drastically. Utica cut its tution from $35,466 to $20,000--a 42 percent price reduction. Rosemont dropped its tuition price from $46,000 ($46,000!) to $30,000--a discount of more than 30 percent.
Wow! Prices Slashed! Everything Must Go! What a lucky break for college students and their families. Just like the end-of-the-year sale at the Chevy dealer.
But wait. According to Inside Higher Education, very few Utica and Rosemont students were actually paying the full cost of tuition. At Utica, only 271 out of 2,300 students were paying the sticker price. And at Rosemont, only 9 out of 1,100 students were paying full tuition--less than 1 percent!
Rosemont and Utica, like most American colleges and universities, are engaging in differential pricing. They set a very high sticker price, hoping a few suckers will pay it; and then they offer steep discounts to the students they really want to attract--minorities, students with high SAT scores, athletes, legacies, etc. In fact, nationwide, the average tuition price at private schools is about half of the posted tuition.
Of course, all businesses adjust their prices somewhat to attract buyers at various income levels. That's the way business has been done since the beginning of time.
But American colleges have taken differential pricing so far that they've tarnished their integrity. How can a college honestly say that its tuition price is $46,000 when less than one percent of its students actually pays that price?
The hocus pocus about college tuition prices is part of the general confusion about college costs. The FAFSA form for financial aid is unintelligible, tuition varies from student to student, and the student-loan process is so complicated that many students don't know how much money they borrowed, how much they still owe, or whether their loan is a federal loan or the loan from a private lender.
But that's the way the colleges like it. Keep 'em confused. And if a customer asks too many difficult questions, throw in a set of whitewall tires to seal the deal.
|My brother-in-law told me you'd give me a really good deal . . . .|
Big price cuts, small savings at two private colleges. Inside Higher Education, September 17, 2015. Accessible at: https://www.insidehighered.com/quicktakes/2015/09/17/big-price-cuts-small-savings-2-private-colleges