The media recently reported George Washington University’s dishonest on their admissions policy. For complete article, please click here and here Students are put on wait list simply because they cannot afford to pay the institution’s $61K cost of attendance. This is another example that the application of newly proposed College Affordability Rating (CAR) is justifiable.
Please comments what you guys think?
AAEA is glad to learn that finally the rate (growth) of college tuition increases have slowed in the past two years as reported by the College Board and quoted and written by John Sandman for MainStreet. For complete article, please click here. Keep in mind that the tuition is still increasing, but at the slower rate (that is what it meant by declining rate of tuition increases). The article further mentions that tuition declining is also followed by decreasing government aids.
AAEA would like to take further analyses on college tuition pricing policy using an example. Suppose that Mr. ABC gets admitted to study at College XYZ and his financial award letter is shown in scenario A:
All in all, we are not sure who started or recommended such pricing decisions and why the consumers are willing to bail out the inefficiency? After over 150 years the society does not really know what is going on and why alumni and contributors are still supporting the inefficient system. However, one thing that we know from this simple example in that colleges are failed to be the agent of development and the agent of change as they supposed to and as they have claimed. Rather, they almost make the US economy to go bankrupt. Please read what the president of Converse College has said on how do US colleges make their decision on the tuition.
Readers, please write below your comments?
As it has been reported recently by The Chronicle of Higher Education, some colleges have started to slash their tuition. The following quote are taken from the Chronicle.
[start quote] ”Betsy Fleming, channeling the late management guru Peter Drucker, says there are two crimes in business: Pretending to cost more than you do, and buying customers. “Colleges are in the business of doing both,” says Ms. Fleming, president of Converse College, a women’s institution in South Carolina. “We are not going to do that anymore.”
Last month Converse became one of the latest institutions to announce that it was going to slash its tuition, of $29,124, which no one paid anyway, and “reset” that price down 43 percent to $16,500[end quote].
This self-admitting statement confirms four mistakes: (1). Yes, colleges have recklessly in their tuition-pricing decision; (2). Yes, colleges are managed based on inefficiency paradigms; (3). Yes, colleges have committed business crimes in the past; (4). Yes, colleges are to blame for the whole students loans crises that have happened in the country.
Therefore, it is only fair game if the college administrators PLUS the SCHOOL BOARD members to morally apologize to the American public and their graduates for much of the pains and financial burdens that they have caused. They need to give the money accumulated from the overpriced tuition back to the taxpayers, students and their family.
Share with us what you guys have in mind.
US Colleges are in a long wait and anxious if recent and on-going government shutdown will affect the federal student aids such a Pell Grant reimbursement. This is a real world example that shows how fragile the college operation is, especially to those colleges which are more dependent on the federal government. Perhaps, it is time to shift the strategies so that higher institutions are financially more independent. This is only can be done if colleges operate based on a balance budget policy. What is going to happen if this recent shutdown delays the government to channel the federal financial aids? Will there be college employees’ furlough as well at many US colleges?
Our research results show that more than 90 percent of them has higher operating cost than revenue generated from tuition.
Please write below what you guys think? Share your opinion with others.
The following quote was taken from CBS Money Watch which quoted by Yahoo! News on example of college desperate acts to increase its enrollment number.
[start quote] “During the last admission season, Washington and Lee reported that 5,972 students applied for admission and only 19 percent were accepted. After obtaining internal records from the school, however, the Washington Post showed that more than 1,100 applications — about one out of every six — were never completed. The students failed to submit such things as standardized test scores, teacher recommendations, transcripts or other admission requirements.
If Washington and Lee had not counted the incomplete applications, the school’s acceptance rate would have increased to 24 percent, making it seem considerably easier for students to get in. “[end quote]
This is exactly a clear example of a short-cut that college administrators might do to increase “the money” through enrollment. Rather than to work hard to improve the “value and quality” of their institution, they cheat. However, it further damages the brand. Perhaps, applying the following strategies are better.
Our research results show that there are other objectives other than just to increase the enrollment numbers. Enrollment becomes important only because of the money is needed to support both necessary and unnecessary expenses. Controlling the spending will certainly ease the enrollment pressures.
Please write your comments below what do you guys think?
The stories about government shutdown dominate the news on October 1, 2013 morning. How will the shutdown affect colleges’ operation? Hopefully nothing now!
Well, at least one learns that shutdown can happen to any institution and not just to the regulator. We have discussed the subject many times in this blog that no US colleges can take for granted that enough “funding” or “money” will always be available to support their operation. It can go and puff away in seconds without early warning.
Hopefully colleges will take lessons from recent government shutdown. And convince themselves that perhaps the shutdown-day will also happen to colleges who are operating beyond their means i.e., more spending than revenue, over-investment or operating under inefficiency mindset. Our research results show that majority of US colleges are operating in excess of their operating revenue generated from tuition. Please click here (public colleges) and here (non-profit higher learning institutions) to see and analyze total revenue generated from tuition compared to total education and general expenses.
Please write your comments below what do you guys think?
Recently Harvard asked donors to contribute $6.5 billion. Does this confirm what we have discussed all along in this site i.e:
Recently we have published salary of selected 50 colleges in the US. Along with statistical studies to find the causes of college tuition and student loan increases. Please click here to read the whole article. The results of the study show that salary of full professor and school administrators positively correlate with student loan increases. Please tell us what you guys think?
On September 16, 2013, Yahoo! News reports the need of let the “student debtors” to declare bankruptcy. To read the whole article, please click here. Several reasons were cited below as written toward the end of the article. What do you guys think?
Quote from the article:
According to demographer Cheryl Russell of New Strategist Publications, “debt, coupled with double-digit unemployment, has hobbled millions of young adults who would have bought homes, married, had children and feathered their nests with all the middle-class goodies that keep our economy humming.”
“Rising student debt has been eating into the housing and auto markets,” wrote Brad Plumer inThe Washington Post in April, while many argue that letting students overburdened by student loans go bankrupt would actually invigorate the overall economy.
“This entire system must be overhauled,” wrote Salon contributor David Dayen. “Otherwise, it will continue to damage our economy by indenturing talented students, our greatest renewableresource.”
Based on our studies on 50 US colleges randomly pulled from the IPEDS data base show that faculty members’ salary with a full professor rank has a positive correlation with college tuition. For full report, please click here. Should their salary also be capped up to a certain amount? We love to hear from you guys! Please write your comments.
Recently, a big lender of student loans (JP Morgan) has exited from the market because of rising student loan defaults. This is the sign that everyone has to pay a close attention at. Linking this retrieve and the analyses that we have done (click here), it apparently paints a bleak future that the student loans problem can be solved without leaving a trail of wreckage. The current loan default problems may lead to many US colleges’ closures with potential devastating impacts on the financial market as well as US economy, employment and everything else. It may trigger financial crises globally as well. Please let us know what your guys think?