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Commentary Education

Opinion: Why tuition is so high for Zoom universities

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From the outside looking in, something is quite off in the economics of higher education. 

With some universities passing a year mark conducting classes partially or fully online, one would expect some form of a discount on tuition for students experiencing decreased effectiveness from learning online. In reality, however, the paradox is that most colleges have maintained their tuition, with some even raising their cost of tuition to adjust for inflation.  

It seems now more than ever that students, at current tuition prices, are not getting what they are paying dearly for. It is also apparent that colleges have the upper hand in negotiating tuition increases. This power imbalance can be true for many reasons, though I find the following two most recognizable. 

First, college students tend to be at least one step removed from the actual price of college. This is usually done by financing tuition costs via student loans, making cost a problem tomorrow, not today. This is analogous to the shopping experience of having more difficulty tracking the amount of money spent when using a credit card instead of cold, hard cash. 

As a society, it seems we’ve become so accustomed to tuition prices being astronomically high and constantly rising that they now seem a normal part of the system, even though there have been no significant changes that improved education. If anything, the last year of exclusive online education was a downgrade, but nonetheless, it was an expensive downgrade!

The second reason colleges have the upper hand in setting prices is that there is no other business where consumers are expected to build their life around a company for years at a time. To students, colleges are not only training institutions but also their landlord, grocer, security, and public square. As such, when a student is so connected to their college, one cannot seriously expect significant protest in response to changes in tuition cost. It’s simply too disruptive. 

Under normal economic conditions, if a consumer becomes dissatisfied with the price of a product or service, they can choose to find another vendor that acts as a substitute. With colleges, it is quite different. Substitutes are imperfect matches and are challenging to transfer to. Leaving a college in reaction to price hikes comes at an immense cost of the loss of friends, the loss of connections to professors, or the loss of benefits of continuous education in one department. It’s almost always the case that seeking a substitute college is more costly than paying a tuition increase. 

So then, what happens when the cost of tuition increases? 

Well, in reality, there is an actual cost to having universities operate online. Colleges have to pay for online video-conference services and web curriculum. But it is the case that in efficient free markets, increases in costs ought to be shared by both consumers and suppliers (universities). I claim this is not happening currently and that colleges often push the cost to their students via tuition increases. 

Let’s take this pandemic higher-ed case study a bit further. Universities have claimed that, among other things, maintaining or increasing tuition prices is necessary to refrain from letting professors go or even to provide more financial aid to low-income students. These are admirable ends – one of the essential roles of a college is to provide for its students and employees, especially during crises. 

But these financial problems cannot and should not be solved by handing the youth of America increasingly humongous tuition bills, leading to a state of near de-facto indentured servitude.

Especially for private universities, finding money to retain professors or provide financial aid can be funded by many means: dipping into a university endowment, advocating for more donations from alumni, accepting funds from the government coronavirus relief bills, or using a line of credit. 

Despite these options, the cost is often pushed to the students who have difficulty protesting against such increases in price. The new go-to revenue raiser for colleges is always to call for a raid on the treasury of their own students’ future incomes. 

And yet, what university via Zoom has taught us is that perhaps students aren’t getting what they paid for.

Indeed, free markets only function when one gets what one paid for and when buyers are protected against picking a bad choice when all presented options are subprime. These are some of the foundations for understanding the free exchange of goods and services, yet universities’ responses to the pandemic have violated even these foundations.

Cover illustration by epictop10.com.

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Ryan James Solis

Ryan James Solis of El Paso is a junior at Harvard College on a gap year from studying history and economics. He is a Gates, Jack Kent Cooke, and Coca-Cola scholar.

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