Public universities are looking for ways to expand engineering and other in-demand programs, while keeping tuition as low as possible.
Since the mid-90s, schools have experimented with charging higher tuition to students in these programs, to the point where 42% of public doctoral institutions had tuition differentials in 2010 and 2011.
Differential pricing was justified out of fairness — humanities majors shouldn’t have to pay for engineering investments and anyway engineers will earn more money in the future.
It was not known exactly how these changes affected major selection, however, until the publication this week of an NBER paper from The University of Michigan’s Kevin Stange.
The results are somewhat confusing: the study found that charging more for certain majors produced 1.1% fewer engineers and .08% fewer business majors but 0.8% more nurses.
Stange concludes that higher tuition could be scaring away some engineers and business majors, while for nursing the tuition increase goes right toward expanding capacity, with so much demand that price increases don’t matter.
The study finds that additional aid from schools doesn’t significantly change the price effects, though increased visibility and targeted outreach might be able to overcome that, especially if government pitches in.
Despite the risk of scaring away some students, supporters argue that raising money for investment in important programs is worth it in the long run.
The alternative, currently being pursued in Florida, has even more problems. This is to freeze tuition for needed majors, while increasing it for liberal arts students. While this effectively pushes students towards desired fields, however, it doesn’t provide money for quality and capacity improvements.
There’s also a fairness issue – an assumption that the liberal arts are useless and that those students should subsidise everyone else.
Stange calls for more research to look into charging different prices for different majors. If used correctly, it could be the best way to produce engineers and other workers that America desperately needs.
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