Deep Purple said:
Some possible points of illumination on a few of the topics in this thread. Very long, so fair warning: Skip, if not interested.
- The pioneer (or one of the pioneers) of the TCU tradition of Rich Daddy buying a house near campus for his student offspring was Nolan Ryan. When his kids -- Reid, Reese, and Wendy -- were at TCU (1991-1999), Nolan bought houses for all of them just across Bellaire Drive from Worth Hills campus. When they had all graduated, he didn’t sell the houses, he rented them to other TCU students. In fact, he formed a partnership to buy even more near-campus houses for rental to students. During my son’s final two years at TCU (2008-2010), when he was living 2 blocks off-campus, I made out that monthly rental check to “Shope & Ryan.” At that time, before near-campus rental rates skyrocketed, it was actually cheaper than living on-campus. Now it’s about on-par.
- What is “fair” for a private university to charge? In a free-market economy, fair is whatever the market will bear. Whatever people are willing to pay. There comes a point where the market does top out, but until it does, what people are willing to pay is fair. As it is, student charges pay for only 70% of what it annually costs to operate TCU. So every TCU student – even those who get no financial aid and pay full price – is still partially subsidized by the university. TCU does not charge them the true cost of their education. Financial aid is simply an additional, targeted discount on top of the general discount everybody gets.
- The “fairness” issue really applies more readily to public universities. For about half of American history, all universities were private, and only the wealthy could afford to send their children to college. In the late 19th century, states began to create public universities, largely funded by land grants, to make higher education more accessible and affordable for working-class families. That was their mission. But in recent history, many large public universities – especially flagship universities -- have raised their tuition rates and admission requirements at a much higher rate than private universities because they want to compete with or exceed the privates in status, prestige, and exclusivity. In doing that, they have betrayed their own mission.
- Having said that, there are still many thousands of public universities that are not flagships and charge a much lower price, courtesy of public subsidization. As long as so many of these lower-cost options exist, it’s ludicrous to speak of any private university price as “unfair.” Unfair is when you have no other options. American students have thousands of other options. Calling a private university price “unfair” basically boils down to “I want to attend (or my children to attend) this school, and I can’t afford it.” Well, guess what? I’d love to drive a Range Rover LR-4 Silver Edition, but I can’t afford it. Is that “unfair”?
- All university prices – public and private -- have increased faster than inflation for several reasons:
If you’re not increasing your revenue rate above inflation, you’re not finding the money to add faculty, majors, and class sections, giving students more academic and class-scheduling options. You’re basically stagnant, which hurts your marketability.
Inflation is created by the market rates of for-profit companies. But the overwhelming majority of universities – public and private – are nonprofit corporations. They don’t have the option of socking away surplus profits to weather financial downturns. This is why universities build endowments and do fundraising. An endowment isn’t a checking account, it’s trust fund – a hedge against the future. The earnings provide fairly reliable income when variable income (such as student charges) go south. But private university endowments – and almost all of their facilities -- aren’t paid for by student charges. They’re paid for by private donors. Private universities survive off of endowment and charity. If they relied on student charges alone, they’d be out of business. Public universities often pay for these things through state appropriations or simply raising student fees. It’s one reason student fees at public universities are usually 3x to 4x the fees at private universities. It’s a form of “backdoor tuition” that doesn’t require state approval.
Critics and parents may say “Just give us basic education at cost, without all the frills and amenities.” But what they say and what they do are two different things. A handful of universities have offered just that – basic education with almost no added amenities or student services – only to watch their applications fall through the cellar, and parents enroll their students at higher-priced universities that offer the very things critics say they don’t want. We’ve seen that market principal in operation dozens of times on this board. Every time a student gets raped, or a student commits suicide, or a student-athlete goes off the reservation, dozens of posters ask, “Why doesn’t TCU offer better counseling? Why doesn’t TCU provide better supervision? Why doesn’t TCU have a program to help prevent this?” As if all of this stuff comes for free. Then the very same posters turn around and complain about the unnecessary expense of “bloated staff” – as if these programs operated on their own, without personnel or budget. What it basically boils down to? “We want the services and amenities, but we don’t want to pay for them.”
- The suggestion that TCU is trying to become SMU, pricewise, is completely off-base. TCU tuition is still 20% lower than SMU and only 11% higher than Baylor, which is one of the lowest-priced private universities of its size and offerings in the land. Plus, Baylor charges $1,000 more per semester in student fees than TCU, and SMU $1,800 more. So it seems that even some private universities have entered the “backdoor tuition” game. But not TCU.
All fair points. This is TCU's choice and the consumers have a choice too.
TCU is essentially out of my price range for what I consider fair. So, in a free market, my family made other choices.
I mentioned the word fair one time in my post, but it was in relation to what I consider a "fair price," much like buying a car. I may choose to buy a reasonably priced used car because I think that is a more fair price. That doesn't mean that we should not have high end cars for those who think it is worth the extra money. As a consumer, I get to determine what I think is a fair price. If I choose not to pay it, I have other options, which is what I chose. More power to the ones who have enough extra cash to justify giving that much of it to TCU. I did not feel it was prudent use of my resources and that it would not provide the return on investment for my kids' chosen degrees.
Between my wife and I, I finished training at 30 years old with over $300,000 in educational debt (the average med student graduates med school with >$200K in debt now). None of my debt was to TCU, thanks to junior college, scholarships, working 30 hours a week while at TCU, and assistance from my parents.
By the time all of the debt is paid off (almost there), I will likely have paid twice that after interest.
I have listened to Dave Ramsey a lot in the past 3 years or so, which has inspired my wife and I to be better about our finances. Debt has been a noose around our necks and we have climbed out of that slowly over the last three years. I have heard him make some very good points about education. He had a caller who had gone $300K in debt to get a religion degree from Columbia. She now had no real job opportunity and a huge debt. The only way she will have a significant earning potential (still not that high) is if she does graduate school (another 2-3 years with significantly more debt). He ripped her apart for that decision and said that, if you want to major in something that has a low earning potential, you need to adjust your decisions based on the return on investment. Junior college and a state school would be a much more prudent route, and you may be able to get out with little or no debt, which will fit your future earning potential much better.
I think that is actually pretty wise advice.
