Business Week, December 21, 2007, Friday

Business Week, December 21, 2007, Friday

Business Week

Selective Tuition Hikes Make Sense

Colleges are justified in imposing differential tuition—charging higher fees for certain courses of study such as business that pay more. Pro or con?

Pro: Free Choices, Fair Fees
In a business venture, greater value equals greater cost. Higher education is wise to follow that model by raising the tuition for business courses, which can propel grads into better-paying careers, as well as classes in certain other subjects, such as science and engineering, that cost the school more to deliver.

The practice, known as differential tuition (BusinessWeek, 12/4/07), especially makes sense for public schools, which often need to compete with prestigious private ones. Any extra monies that public colleges charge students can go toward luring celebrated professors and updating equipment and facilities.

For some schools it’s a matter of survival. An underfunded curriculum could lead to loss of accreditation for certain public schools, leaving high school graduates with no choice but to enroll in more-expensive private ones that have accreditation. Better to raise the prices. After all, a public school with higher fees for certain majors will still cost students less than a private one would.

Upon graduation, business majors—and many of those who studied science or engineering—will be in a better position to repay student loans than grads from other fields. (Know any philosophy majors whose first job pays $85,000 a year?)

And charging more for certain courses of study is nothing new. "At the graduate-school level, tuitions at business schools and law and medical schools are much higher than than they are at undergraduate institutions because of the financial payoff there is going to be," says Ronald Ehrenberg, director of the Cornell University Higher Education Research Institute. "So now, people are sort of doing the same thing at the undergrad level."


Con: Extra Charges, Bigger Headaches
Many students enter college with the goal of sampling different courses on the path to discovering their career goals and achieving general self-enlightenment. The prospect of asking already cash-strapped parents to fork over an extra $35 per credit, as is the case at Utah State University’s Jon M. Huntsman School of Business, could easily intimidate a French major out of trying a global marketing strategy class.

Likewise, the University of Wisconsin at Madison is making undergraduate business majors ante up an extra $500 per semester. Texas A&M’s Mays Business School is considering charging students $500 more per semester as well.

Such price hikes are antithetical to the traditional mission of public schools, to offer a quality education for those who can’t afford, or don’t want to pay, private schools’ frighteningly large tuition bills.

The higher tuition and extra fees schools require can sneak up on young people who, in the whirlwind of college spending and adjusting to a new way of life, may not fully understand exactly how tuition and living expenses can add up.

The University of Oregon charges "programmatic resource fees," not just to business majors but also to students majoring in certain other subjects that require special equipment, materials, or faculty services. "I didn’t know what the fees were when I first got the bill," says Emily McLain, a University of Oregon senior who serves as student body president. "Some students were forced into taking out emergency loans because they didn’t know the total cost."

And just because a school uses the extra revenue to hire bigger-name professors doesn’t mean all students win out. Eric DeFries, a senior business major at Utah State, notes that he hasn’t taken any classes from the seven new vaunted professors at his school. "I find it a little unfair for people who don’t get a direct benefit to be paying $500 extra per semester," he says.