This strategy, known as price discrimination, is common-practice
in business. For example, instead of
selling loaves of bread for $1 each, a grocery store might double the price to
$2 and offer a “buy one, get one free” deal.
This might be profitable to the seller, because it could allow the store
to sell more bread and increase its revenue if consumers continue shopping
there. Consumers who would have bought two
loaves anyway are unaffected and might even think they are getting a bargain if
they did not pay close attention to the price increase. Yet, consumers who would have bought only one
loaf will now get two since the second one is free for the taking. However, there
is a down-side: waste. Presumably, the consumers who would have bought a single
loaf had good reason for doing so: maybe they have a small family or do not eat
a lot of bread. The second loaf might grow moldy and stale and end up in the
trash. Tampering with prices has consequences: it distorts the signal people get about the
value of things. The second loaf might be free to the consumer who brings it
home even if he is unlikely to eat it. It
was not, however, produced freely: it cost real flour and real labor.
The same wasteful consequence is to be expected from IU’s
banded tuition scheme. Once students have paid for the first three courses, the
deal is: buy one get two free.
Naturally, those students who would have taken four courses will be
tempted to register for two more even if they do not have the time or
inclination to complete them successfully.
Many students have good reasons to want to register for fewer
credits. Many have spouses, children or
elderly parents to care for, some are even single parents, and have non-optional,
time-consuming family responsibilities; some may be ill of have personal
problems; many also need to work, sometimes even full-time, in addition to
trying to juggle a full-time course load. Some students might also feel that
their best chance of getting decent grades is to focus on a smaller number of
courses rather than scatter their efforts over a larger course load. Currently, withdrawing from a course midway
through the semester is a costly mistake for a student: he or she paid the
tuition and ends up with nothing to show for it. Since it is costly, students try to avoid
it. But with banded tuition, the 5th
and 6th courses each semester are free. Just like for the consumer who sees no
downside to bringing home, just in case, a free loaf even if it is likely to
get thrown out, it is no longer a costly mistake to register for a course that
one does not anticipate having time to complete successfully and then
withdrawing part-way through the semester. But registering for additional
courses that are not completed has a cost:
It might take a seat in a classroom away from another student who
remained waitlisted and unable to take a course he or she really wanted; Instructors
may have needed to be hired to teach additional sections that ended up
half-empty after the mid-terms. By
making a common-practice the registration into additional courses that one has
no firm commitment to complete, banded tuition also erodes the work ethic
expected from students who attend university. If everyone registers for courses fully
expecting that they might withdraw from some later, then withdrawal is no
longer an admission of failure. If
everyone does it, it is the new normal.
It is obvious that the primary reason IU’s trustees went
along with the Indiana Commission
for Higher Education’s recommendation to implement banded tuition is to artificially
boost sagging enrollment and revenue. The students who would have otherwise
taken four courses per semester will either enroll in at least one more or be
forced to pay for it anyway. More
revenue and better-looking enrollment numbers? Great! The waste of taxpayers’
dollars and the extra cost to students? Not IU’s problem. It should also be obvious that this is an
unfair way of raising additional revenue. Price-discrimination, as the name implies,
means treating different people differently.
A uniform increase in tuition rate hits everyone equally, at least, in
proportion to the number of courses they take.
Banded tuition hits only the students who would have otherwise taken
less than 15 credits. The care-free
single student with no family or work responsibilities who takes advantage of
banded tuition to register for 18 credits at the cost of 15 gets a sweet deal.
The student who is burdened with family and work responsibilities and who is
struggling to keep up her GPA and make ends meet while paying for 12 credits
will now be forced to pay for 15. It
will increase the cost and ultimately the debt of the very students who can
least afford it. This cannot be
justified on fairness grounds.
I urge IU’s trustees to reconsider their decision to impose banded
tuition. It is a bad idea that will have
wasteful and unfair consequences.