colleges and universities must offer opportunities and services to students that cannot be
found at lower-cost institutions. The premiums paid to attend a private institution
must yield benefits proportionately larger than other institutions.
After graduating from high school, my
grandfather gave me money to buy a car for college; it was a tremendous surprise and a
welcome gift. After thoroughly researching
and test-driving many cars with my father, I ended up with a new Chevroleta 1984
Vette. It was two-door, cherry red, and
had an automatic transmission. The back seat
was hard to get into and out of and it had very little legroom, but that did not matter
very much. The gas mileage was nothing great,
but with gas prices so cheap, it did not cause serious concern. With a custom-added stereo system, the car was
perfect for my college years.
Looking back on that car, I
dont know how I made it through hot Florida summers without air conditioning. The acceleration was weaker than originally
expected. When attempting to pass other
vehicles on two-lane roads, I had to accelerate heavily in my own lane as oncoming traffic
approached before changing lanes to quickly get around vehicles in front of me. The interior and exterior features were simple,
yet sufficient. It was basic transportation
and it served me very well. You see, I had
not bought a Chevy Corvette, I had bought a Chevy Chevette.
If I had been able and willing to
spend four-times more money on a Corvette, I would have had one of the finest cars on the
market. There would have been plenty of
horsepower to pass other cars, the exterior very stylish, the interior very luxurious and
air-conditioned, and the automobile would catch the attention of onlookers. The differences in the two cars were readily
apparent and noticeable to anyone who saw them. If
I had spent more money for the Corvette, I would have bought a more luxurious, powerful,
and well-built automobile and a car that was more prestigious to possess and one that
others would envy.
Economists make distinctions between
necessity and luxury goods and services. Necessities
are those things that are needed. When the
prices of necessities go up, demand usually stays about the same. Luxuries are things that are wanted. When their prices increase, demand usually drops
more than for necessities for a proportional price increase. Staple-type foods are
necessities and finely-prepared meals served in upscale restaurants are luxury food items. For people who require an automobile for work and
living purposes, a Chevette would be a considered a necessity-type automobile and a
Corvette would be a luxury. Luxuries
typically provide benefits that exceed those of necessitiesincluding a perceived
satisfaction of esteem and ego needs.
Given my needs and budget when
choosing my first automobile, I opted for the less glamorous and more economical car that
satisfied my basic needs. By going with the
more basic automobile, I did not have to borrow money and get saddled with loan payments
for many years. The Chevette met my basic
needs and was affordable enough to pay for with cash.
When confronted with choices of where
to attend college, many prospective students research and shop around before making their
decisions. They collect information, visit
campuses, sit in on classes, and weigh the costs and benefits of attendance of each
Differences in sticker
prices between different colleges and universities are many times more difficult to
determine than for automobiles. With cars,
you can usually see and feel the extra benefits that you acquire with higher-priced
alternatives; but with colleges and higher education, the benefits received from a premium
price may not be as apparent.
As the tuition gap between private
and public schools continues to increase, private colleges and universities must convince
prospective students that investing in their offerings is worth the premium price. Private schools must fill the gap between
lower-cost higher education (perhaps from a local community college and a regional state
university) and their higher-priced offerings with additional valuable benefits. As with automobiles, higher sticker
prices should mean higher quality, more and better features, and a name that will catch
the attention of external others.
With a few notable exceptions, the
name-power of many private colleges and universities does not warrant paying extra tuition
and incurring additional expenses. Most
private institutions are virtually unknown outside of their nearby geographic areas. Most public institutions are also relatively
unknown outside of their geographic regions. So
if name power does not warrant a premium price, what does?
Many small, private institutions
claim that students attend their schools because of their small class sizes, personal
interaction with full-time faculty members, liberal arts traditions, and family-like
environments. While these features would
probably be appealing to students who would get lost in mega-universities, they are not
the sole domain of private institutions. Many
public community colleges and four-year schools also have small enrollments, low
student-faculty ratios, and family environments. Those
features alone do not warrant premium private-school prices.
Private schools must offer more to
their students. Private schools should offer
opportunities and benefits that cannot be found outside of private higher
educationthis means going above and beyond the offerings of public schools. Those institutions that are church-related can and
should create faith-based environments that help distinguish themselves from public
competitors. If they claim to be teaching
schools, they need to be extraordinary in their teaching.
If they claim to offer career and community connections through their alumni
and support network, they must provide those opportunities to students in superior ways. If private schools tout a well-rounded and
complete education for their students, they should offer a complete range of
educational and character-building opportunities for their students. If they purport to prepare students for admission
to graduate and professional schools, they should develop and maintain connections to
well-respected programs. The attention,
rigor, expectations, and involvement of faculty and the interactions and services provided
by staff members must be exceptional. Living
and learning facilities must also be exceptional.
The challenge for many private
institutions is that they must offer exceptional experiences with less-than-exceptional
funding. Most small, private institutions are
at a disadvantage to public schools with respect to funds for operational expenses,
salaries, facilities, and technology. Many
struggle to make their budgets and cover costs. Strong
leadership and a dedicated faculty, staff, and base of supporters working together in a
culture of excellence are needed to draw exceptional performance and offerings out of a
workplace with limited financial resources.
In a society where college degrees
are becoming necessary for jobs and desirable standards of living, more and more
prospective students will judge whether they wish to invest in necessity or luxury
educations. When the benefits of the luxury
institution are readily apparent, institutions will have an easier time attracting
students to their offerings. When premium
prices are being charged for common college experiences, students will likely choose
lower-cost alternatives or go to luxury institutions that do provide premium features.
Institutions that charge
Corvette-like prices for their offerings should provide significantly better features and
prestige than their lower-priced competitors. If
we want our students to pay more and to acquire and carry debt for many years to pay off
their educations, we better provide them with premium-quality benefits.