Financial Aid

Differential Tuition: A Matter of Fairness


Student Taking Notes in Lecture Hall

Student Taking Notes in Lecture Hall

There’s a new study out from the Cornell Higher Education Research Institute that suggests that differential tuition–the practice of charging some students more than others at public institutions–is on the rise. The study found 143 colleges or universities with some form of differential tuition, including 29 percent of bachelor’s institutions, 11 percent of master’s institutions, and 41 percent of doctoral institutions. The number of schools following the practice has grown every year since 1985.

Why should this matter to business students? As we reported back in March, the burden of many differential tuition policies falls disproportionately on business students (as well as engineering and nursing). At the University of Virginia’s McIntire School of Commerce, business students pay $3,000 a year more than everyone else. At the University of Tennessee, Knoxville, they pay $50 more per credit hour, a surcharge that will add about $3,200 to the their tuition bill over four years.

Many schools that are opting for differential tuition are doing so out of desperation. When Tennessee started last year, the number of undergraduate business majors had more than doubled since 2004, while the number of faculty hadn’t budged. State budget cuts were looming, federal stimulus funds were drying up, and classes were packed. Without more cash, the school would have had to start turning students away.

Given that the average tuition at four-year public colleges is now $8,244 for in-state students and $20,770 for out-of-state students, three grand is nothing to sneeze at. But is differential tuition fair?

The logic behind differential tuition rests on the assumption that business and engineering students will earn more over the course of their lives. But the sad truth is that not everyone graduates with a degree. According to the federal government just over half the students who start a bachelor’s degree program graduate in six years. For business students in the other half who are charged a differential tuition, the higher tuition just means a bigger student debt load–a hole made all the more impossible to dig oneself out without the job opportunities and higher salary that a degree would bring.

For now though, let’s consider those who do graduate with a business or engineering degree and who go on to earn those fabulous salaries. If they’re earning more, then they’re paying more in taxes, a portion of which goes to support the very same institutions that awarded their degrees (or state institutions in another state, if they move). In effect, they’re already paying a differential tuition–to Uncle Sam and for the rest of their lives. Hitting them up for another $3,000 while they’re still in school adds insult to injury.

Business has been one of the most popular majors on college campuses for many years, so charging business students more makes a certain intuitive sense. After all, if business teaches us anything it’s that when demand increases and supply remains constant, prices will rise. But should education–a social good paid for at least in part by taxpayers–follow the dictates of supply and demand?

I would argue no. If business and engineering education does, in fact, lead to a more productive and better-paid citizenry, then colleges shouldn’t be in the business of discouraging it by charging more. If anything, they should use differential tuition to discourage academic disciplines with less economic impact and poorer job prospects. As a society, we need to decide what we value more and start pricing college accordingly.

Louis_lavelle
Lavelle is an associate editor for Bloomberg Businessweek.

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