Discounting

This is an exceptionally useful study of the real price of higher education in the US. It makes the rather obvious point that it is much more useful to think about the affordability of higher education in terms of what students actually pay, rather than what the headline prices are. For private, 4 year institutions, the headline price for a year of education is $22, 259, but the median price actually paid is $14,954 (for 2001-2). Interestingly (p.53), there is more discounting for institutions characterized as “moderately selective” than there is for those that are “very selective.” Overall, there is less inflation in “net prices” than there is in sticker prices, which suggests that universities are sticking it to those with the greatest willingness to pay and the least bargaining power (that is, likelihood of going somewhere else), and redistributing it to those with the least willingness to pay and the most bargaining power.

Author: Steven M. Teles

Steven Teles is a Visiting Fellow at the Yale Center for the Study of American Politics. He is the author of Whose Welfare? AFDC and Elite Politics (University Press of Kansas), and co-editor of Ethnicity, Social Mobility and Public Policy (Cambridge). He is currently completing a book on the evolution of the conservative legal movement, co-editing a book on conservatism and American Political Development, and beginning a project on integrating political analysis into policy analysis. He has also written journal articles and book chapters on international free market think tanks, normative issues in policy analysis, pensions and affirmative action policy in Britain, US-China policy and federalism. He has taught at Brandeis, Boston University, Holy Cross, and Hamilton colleges, and been a research fellow at Harvard, Princeton and the University of London.