Wednesday, September 06, 2006

College Tuition

I had an interesting discussion with my graduate assistant Michael Cavallaro on the topic of fixed versus variable college tuition. As it turns out I just paid my first round of tuition for my son. It turns out that his tuition plan is fixed, that is to say you pay not by credit but by semester. This was how I paid my way through the Wharton School at the University of Pennsylvania. On the other hand Seton Hall is on a variable or pay by credit formula. That’s how I paid my MBA bill at NYU’s Stern School of Business. I don’t think that there is a right or wrong way of pricing college tuition. It really depends on the structure of the institution’s classes, faculty and endowment. Universities which rely on large class size and have large endowments can favor a fixed tuition plan. Those which focus on small class sizes and rely on adjuncts more than permanent faculty and do not sport large endowments find it best to go the variable route.

I will say that having shopped around recently; some schools are definitely overpriced relative to the quality of their academic product in many respects. Please note that Penn, Seton Hall and NYU are not amongst those overpriced versus lesser quality institution. Quite the opposite, I think those schools offer great value. However, when selecting a college keep in mind the quality of the education and outplacement versus the tuition. As with the stock market, there are always bargains, blue chips and underperformers out there.

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