Mike Shedlock

I have been waiting for and expecting news headlines just like this one: Seton Hall will lower tuition rate by $21K to match Rutgers for some incoming freshmen

Getting good grades and high SAT scores could save some Seton Hall University freshmen more than $21,000 a year in tuition costs under an unusual new program that could pit the Catholic school against Rutgers University for some of the state’s top students.

Starting next fall, Seton Hall will match Rutgers’ tuition — which is currently $10,104 a year for most in-state undergraduates — if freshmen score at least 1,200 on the combined reading and math sections of their SAT tests and graduate in the top 10 percent of their high school class.

Other students on the South Orange campus will continue to pay Seton Hall’s regular annual tuition rate, which is currently $31,440 before room, board and other fees are added.
Expect Plans to Spread

Drew University in Madison rejected the plan as a publicity stunt. However, I expect such plans to spread. I also expect more competition from online classes.

If Congress really wants to do something about the high cost of education, it would:

  1. Cancel student loan programs
  2. End support for the University of Phoenix and all for-profit universities
  3. Accredit more online universities
  4. End collective bargaining of public unions

Cost of College Education will Crash Within a Decade

The cost of college education would sink like a rock with those four structural improvements.

Interestingly, even with piss poor government policies, places like Seton Hal, prices have collapsed for some students. Right now the opening toss applies to 10% of the students. Next year it may be 25% of students and offered at more universities.

For those who have kids in grade school, I would not advise programs that lock in today's rates if paid in advance.

The cost of college education will crash within a decade, simply because it has to. Moreover, the free market would lower costs sooner and far more dramatically, if only given the chance. Wages are not supportive of current education costs.

Addendum:

I wrote the above quoting the New Jersey Start Ledger article written yesterday. I received two emails just now pointing to additional articles in the Wall Street Journal and New York Daily News.

Please consider the Journal Article Seton Hall Cuts Cost For High Achievers
Seton Hall University will radically restructure its tuition for next year, slashing costs by more than 60% for all incoming students who have achieved a set of academic standards in high school, officials announced on Wednesday.

Some national education experts expressed concerns that the plan could accelerate a national trend: a shift in the focus of financial aid toward merit-based scholarships rather than awards based on need.

"There's only so much money, and at the end of the day every college needs to make decisions about who they'll subsidize," said Patrick Callan, the president of the National Center for Public Policy and Higher Education.

The proposal raised concerns among some education experts, who said that schools are moving further away from the original intent behind subsidizing higher education: to help people attend college who couldn't afford it otherwise.

"When you just flat out across the board knock the price down for high-achieving students, you're going to be subsidizing a lot of students who don't really need the money," said Mr. Callan.

This form of subsidization "tends to help the institution attract the freshman class that it wants to raise the academic profile, raise the U.S. News rating," he said. "It doesn't have much to do with providing opportunity to people who wouldn't have it."

"It becomes, from a budget point of view, a race to the bottom," said Jerome Sullivan, the executive director of the American Association of Collegiate Registrars and Admissions Officers. "Someone else will do the same thing only they'll do it $50 better. And then someone else will do it $100 better."

The ultimate result, he said, is that "the budget gets ravished because revenue begins to disappear and in the end it's low-income families as well as the institution that lose out."
Failure of Subsidies

One of the reasons college education is so high is because union activists and socialists want to send everyone to college whether they are qualified or not. When that drove up costs, government "aid" programs were invented, not for the benefit of students, but rather for the benefit of educators. Students became debt slaves in the process.

The education mess has gotten bigger and more costly ever since programs were put in place to subsidize students, many of whom did not belong in college in the first place, but rather a trade school or apprentice program.

Moronic Thinking of Jerome Sullivan

Note the moronic thinking of Jerome Sullivan. He is actually complaining about costs of education dropping, complaining price wars will hurt low-income families.

The fact of the matter is the more prices drop, the more people can afford to go to college.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.
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