Why does a student majoring in English have to pay the same tuition as an engineering student with much higher earning potential? In a new working paper published by the National Bureau of Economic Research, one economist suggests looking at differential tuition—the practice of varying tuition costs across areas of study.
Using data from the Integrated Postsecondary Education Data System, Kevin M. Stange from the University of Michigan’s Gerald R. Ford School of Public Policy analyzed 50 universities that had instituted higher fees for their nursing, engineering and business majors between 1990 and 2008. Mr. Stange found that the effects of implementing differential tuition vary among groups of students and areas of study.
The share of degrees awarded in engineering and business decreased within three years after putting in place the differential tuition program. Nursing gained some graduates in spite of a boost in fees. Women and minorities were more likely to be negatively affected by increases in tuition than men and whites.
“Price does appear to be a policy lever through which state governments can alter the field composition of the workforce they are training with the public higher education system,” writes Mr. Stange.
Mr. Stange acknowledged that results may diverge with the inclusion of other types of schools, such as smaller public universities, private colleges and for-profit institutions. He also noted that other external factors can affect enrollment, such as how universities allocate the revenue collected from increased tuition costs.
The rationale behind differential tuition is that fees for majors should align with program-specific teaching costs and post-graduation income potential. Critics argue that differential tuition will discourage student exploration, adversely affect low-income students and make it to difficult to increase participation in science and math fields, which are often the areas of study to see higher fees with differential tuition programs.
Differential tuition has been gaining popularity over the last three decades. In a 2011 survey conducted by the Cornell Higher Education Research Institute, researchers found 143 public academic institutions offering some form of differential tuition. The results marked a significant jump — the practice of charging different rates for different majors was largely unheard-of in the 1980s.
Originally Posted On: blogs.wsj.com By: Khadeeja Safdar
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