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college major discounts

Here’s a simple idea: why not discount college tuition according to the market value of the major? For example, why should philosophy majors pay the full $40k at leading schools? Those folks should pay way less. Pros and cons:

  • Improve enrollments in majors that people would like to take, but are viewed (justifiably) as financial burdens.
  • Allow people more flexibility after college. The dreamer who majored in art may not have to do that corporate gig if the college debt is, say, $30,000 instead of $130,000.
  • Majors that get lots of people based on their job prospects would suffer as people shift.
  • Winners: the arts, philosophy, some of the humanities. Losers: business, engineering, pre-professional degrees.
  • Might possibly allow minorities, low income, and immigrant kids to have more of a chance in “fancy pants” areas like philosophy. These kids are especially sensitive to the debts acquired in school and arguments from their parents that they *have* to get a job immediately after graduation.

When I suggested this for econ grad school, I was half joking. But the more I think about it, the better the idea is. If your job is an important factor in your life long happiness, then why have a college tuition system that consistently encourages many young people to not experiment with different career tracks while they still have the chance?

Written by fabiorojas

August 3, 2009 at 4:04 pm

Posted in economics, education, fabio

22 Responses

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  1. Discounting a particular collge major would lead to a status-hit few departments would be willing to take, imo :)
    I do agree with you on #5 though. But that can be served by more scholarships/aid in the ‘fancy pants’ areas.

    Like

    sd

    August 3, 2009 at 4:34 pm

  2. Devil’s advocate time. What about the other side of the coin — many of these departments are essentially subsidized by other departments in the college. How many large grants is the philosophy department writing yearly?

    It may also tie more closely the idea of tuition and future earnings. To wit, a graduate of Monroe College is suing for $70,000 in tuition due to her inability to find a job after graduating.

    Like

    Trey

    August 3, 2009 at 5:09 pm

  3. why should philosophy majors pay the full $40k at leading schools? … “fancy pants” areas like philosophy

    Data from PayScale suggest that Philosophy majors have higher expected starting and midcareer salaries than majors such as Information Technology, Business Administration, Business Management, Communications, Human Resources, Microbiology, Zoology, Health Sciences, History, Geography, Psychology, Anthropology, Education, Criminal Justice, Nutrition, and of course Sociology.

    Like

    Kieran

    August 3, 2009 at 5:22 pm

  4. Fabio,
    Here is an easy way to test your hypothesis. Look at distribution of majors in Germany, where until recently tuition was zero. If your hypothesis holds, then you should see a very different distribution of majors in Germany than we find in the US.

    Like

    tom

    August 3, 2009 at 5:24 pm

  5. Incidentally, IIRC the student loan system in Australia does in fact weight your repayment schedule by the expected value of your degree.

    Like

    Kieran

    August 3, 2009 at 5:24 pm

  6. interesting… wondering if another downside might be the suffering in the quality of programs of the arts, if, presumably, the differential in pay widens between, say a business professor and a philosophy professor.
    there’s also an interesting question of what types of colleges would stand to benefit from such a structure. my guess is that colleges with strong brands have a big disincentive to adopt this since it results in a large reduction in revenues (and future endowment, as you get a greater number of alumni in lower paying jobs). that said, could this be something more tasteful for smaller unis?
    -eugene
    fiftylinkslater.com

    Like

    Eugene Lin

    August 3, 2009 at 5:34 pm

  7. This would create some very serious risks for students.

    Consider taking a computer science degree in the late 1990s and turn of the millennium. You’d be borrowing huge amounts of money to pay the premium of a white-hot labour market.

    But if you then graduated at the tech bust, you might find yourself no more employable than those who had paid a discounted tuition in other fields — so you’re paying back a premium paid to train for a job market that no longer exists.

    Like

    b0rk

    August 3, 2009 at 6:45 pm

  8. Another way of phrasing the proposal is that we should be creating marginal incentives (especially for people with low liquidity and/or high time preference) to pursuer cultural capital instead of human capital. (Where I am defining “human capital” narrowly to mean those skills which are financially rewarded on the labor market). Speaking as someone who is familiar with the data on artistic labor markets, I feel comfortable saying this is a bad idea (although I admit that it’s not entirely an empirical question).

    Like

    gabrielrossman

    August 3, 2009 at 7:47 pm

  9. Are there currently fewer students taking philosophy or english than is good for the smooth operation of society? If anything, it seems like we should be subsidizing math, science and engineering, which pay well on the other side of schooling but get lower than optimal enrollments.

    I always think about Scott Stern’s work on the wage premium scientists pay to work at a company that allows them to pubish in scientific journals. Seems to me that philosophy, history and enlish majors pay something of a premium to study subjects that are personally rewarding, but (except for a very small percentage of grads who are major contributors to their field) not vital to economic prosperity.

    Like

    Sean Safford

    August 3, 2009 at 8:22 pm

  10. Some alternative perspectives on differential pricing:
    –Compute cost-to-degree for different fields according to the Delta Cost Project methodology (http://www.deltacostproject.org/resources/pdf/johnson3-09_WP.pdf) & charge according to how expensive the degree actually is
    –Charge to take advantage of supply and demand curves as a way of relieving some of the pressure on business departments and filling the seats in whatever departments (whether philosophy or math) are not full. Perhaps this could work on the order of the Bolt Bus model where prices for courses or majors vary depending on how full they are–though that would be a nightmare for the bursar’s office.

    Both of these, at least, would involve more objective calculations than the argument over how remunerative philosophy majors are (my $0.02 on that question is that philosophy majors have the best shot at getting into law school).

    Like

    Mikaila

    August 3, 2009 at 9:42 pm

  11. There’s some omitted heterogeneity here within the majors as well — so, for example, a philosophy student trained in analytic philosophy can make a good living by applying their skills in computer science and math-intensive areas (compared to a philosophy student trained in less analytic approaches — though, performativity of course always pays too: analytics meets “doing things with words”).

    This of course goes for any major — there is large variance in outcomes. So, perhaps you charge tuition AFTER folks graduate, once you see how much they make, you price discriminate. So, that English major who graduated fairly recently, and then wrote the Twilight book series (which apparently is making hundreds of millions), would get a hefty tuition bill.

    Like

    tf

    August 3, 2009 at 10:00 pm

  12. My understanding is that most of the heterogeneity in economic returns can be explained by graduate education not undergraduate degree. And, it turns out, there are pricing differences in graduate degrees. Some are free, at least in the sense that universities and foundations greatly subsidize the cost of much PhD education, and some come at a high price (e.g., business school).

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    brayden

    August 3, 2009 at 10:05 pm

  13. Right, graduate schools certainly drives much of this — and some of the lower-earning majors such as English or Poli Sci feed folks, for example, into law schools.

    Like

    tf

    August 3, 2009 at 10:14 pm

  14. “performativity of course always pays too”

    TF: You’re banned from the thread. No comments for you!

    Like

    fabiorojas

    August 4, 2009 at 12:02 am

  15. What, why? Come on. Performativity references aren’t allowed any more? It’s a legitimate performativity reference — related to Fabrizio’s post.

    Like

    tf

    August 4, 2009 at 12:21 am

  16. there are already pricing differences in undergrad degrees at the
    University of Toronto.
    Computer science and commerce majors pay almost twice as much. I had always thought that this was universal, and that it was driven by higher salaries for teachers and the higher future value of income in these fields.

    Like

    David Chen

    August 4, 2009 at 12:27 am

  17. In schools with big football programs, sociology and communications would be priced higher than economics…

    Like

    anon

    August 4, 2009 at 11:36 am

  18. At my institution, the average undergraduate student declares something like 4 majors over the course of their careers, not including double majors. Under your proposal, universities would be under enormous pressure to make it more difficult for students to change majors, which would have the unintended effect of discouraging experimentation. And, universities would have to raise mean tuition rates enough to offset the losses incurred not only by the lost revenues from the “cheap” majors, but the lost revenues from students who game the system. (Declare a cheap major, take courses for the expensive major, and switch majors at the last minute to get the “right” one listed on their transcript.)

    Like

    krippendorf

    August 4, 2009 at 11:55 am

  19. I would only encourage more disadvantaged kids to go into English or philosophy if I hated them.

    Like

    joshmccabe

    August 4, 2009 at 12:53 pm

  20. I second the comment ban!

    Like

    brayden

    August 4, 2009 at 1:27 pm

  21. “This of course goes for any major — there is large variance in outcomes. So, perhaps you charge tuition AFTER folks graduate, once you see how much they make, you price discriminate. So, that English major who graduated fairly recently, and then wrote the Twilight book series (which apparently is making hundreds of millions), would get a hefty tuition bill.”

    I believe this is known as the income tax. :)

    Like

    b0rk

    August 4, 2009 at 6:55 pm

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    Nikith

    August 13, 2009 at 9:42 am


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