Net Price Comparison, Penn vs Public University
  • Net Price Comparison, Penn vs Public University

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For six years I've been pounding a not-so-popular public policy position, and after six years it looks like the Governor, various civic "leaders" and possibly even the Legislature are about to embrace it. So I guess I should be feeling pretty good about myself for being so far out in front on this High-Tuition/High-Financial-Aid model, right?

Um... not exactly. In fact, you may want to chalk this one up in the be-careful-what-you-wish-for category.

The chart on the right compares the net cost of my very expensive alma mater, the University of Pennsylvania, to the net cost of a typical public university, and as you can see, once financial aid packages are factored in, Penn can turn out to be just as affordable to working and middle class students as a public university. In fact, more so, as Penn's aid comes entirely in the form of grants, meaning its students no longer graduate with tens of thousands of dollars in loans.

That's the way the High Tuition/High Financial Aid model is supposed to work. Those families that can afford to pay full price do, those who can't, pay what they can afford. At Penn, students from typical families earning less than $90,000 a year receive grants equal to full tuition and fees; students from families earning less than $40,000 have their room and board covered too.

From each according to their ability, to each according to their need. Yeah, sure, that's socialism, but if it's good enough for the Ivy League, you'd think it'd be good enough for everybody else.

But the real appeal is that it makes for a very efficient allocation of resources. At Ivy League schools like Penn, students are admitted based on merit only, while financial aid is awarded based solely on need. Compare that to the University of Washington, where all in-state students essentially receive the same flat subsidy, but some, like say, a star football player, receive a free ride, whether they need it or not. Meanwhile, the UW has expanded slots recently, but only for out of state students, because they pay the full, unsubsidized tuition price. Kind of a crazy way to fund a state university system, huh?

So when Eli reported that Gov. Gregoire's higher education task force has recommended allowing state universities to set their own tuition, allowing both in and out of state costs to rise toward the national average, you'd think I might've been celebrating... until I read the fine print:

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To make up for the fact that her proposal for solving this challenge means making tuition less affordable for many current and future college students—like, oh, the ones lined up behind her this morning as photo-op props—Gregoire noted that her task force also proposes the creation of a $1 billion fund, fed mainly by donations from major Washington businesses, that would offer more scholarships to needy students.

Unless I'm missing something, the task force isn't recommending that the state's subsidy to four-year universities be dedicated solely to providing need-based financial aid, nor is it suggesting that in exchange for tuition setting freedom, the universities guarantee their schools become no less affordable. Nor does the task force call for any additional state funding for financial aid. No, they just seem to be proposing a totally free market approach, or something I've dubbed the High-Tuition/Eh-Maybe-Wealthy-Individuals-and-Corporations-Will-Contribute-What-They-Want model.

And if that's the model we end up with, then I'm ashamed of my advocacy.

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