Friday, February 11, 2011

College Tuition Prices

Here is an interesting article from the New York Times asking why college tuition prices have been rising and also what college/universities might do to reduce these higher prices. As I have blogged before about college tuition prices, some of the reason for higher tuition prices is that college students then to be price inelastic, hence giving an incentive for colleges to raise prices in an effort to increase revenues.

Yet, given that endowments are decreasing for private colleges and budget allocations are decreasing for public colleges, college/universities are having to come up with new strategies to deal with the declining amounts of revenue to spend. Some are trying to increase the number of students (i.e. use a tuition based model), some are trying to lower costs (such as not replacing leaving faculty or increasing class sizes), some are advocating for higher teaching production from existing faculty and some are focusing on more external funding from donors or grants. Given the reality of the situation, one or a combination of these strategies (note this is not an exhaustive list) will impact the college landscape in the future.

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