|This week’s assignment is to analyze a situation presented in an article summary relating to supply and demand. The article and questions appear on the course CONTENT page. Answer the questions posed in the problem
Students Learn the Hard Way
In most states, tuition is going up in four-year public universities. Most are in the single digits, but some are huge – freshmen at Texas A&M will pay 26 percent more, University of Kansas students 21 percent, and University of South Carolina students 17 percent. The culprit is reduced state funding. The weaker economy has decreased tax revenues, and so states have cut spending to balance their budgets. Higher education is easier to cut than K-12 and prisons because someone else can pick up the tab – students and their families. This is not easy, however, due to the recession. As a result, more and more students need financial aid and are requesting loans.
Certainly, student enrollments are growing due to the recession which has reduced job opportunities, but the extra tuition simply makes up for some of the lost state subsidy. Consequently, universities are reducing faculty and programs, freezing salaries, delaying capital projects, and increasing class size.
To relieve the burden, some universities are giving students incentives to complete their studies quickly. At Texas A&M, if a student takes no more than 3 credit hours more than the minimum required to graduate, they can receive a $1000 rebate after graduation. Meantime, Utah State guarantees that students can graduate within four years if they agree to certain stipulations, but if they take a class three times or enroll in 35 percent more classes than necessary, they are subject to a tax. The University of Oregon is giving a 15 percent discount to students who register for classes scheduled after 3 p.m. in order to decrease class sizes earlier in the day. Student governments are very concerned and are watching the quality of their education carefully.
(Updated October 10, 2002)
Source Mary Beth Marklein, “Public universities raise tuition, fees – and ire,” USA Today, August 8, 2002.
1. As the article points out, many schools are seeing an increase in costs as well as a reduction in state funds available. Draw (for yourself) a supply and demand graph that illustrates this. Then, for your posted answer, describe the graph in terms of shifts of supply and/or demand curves, direction (left or right) and impact on equilibrium price and quantity of college educations.
2. Why would student government groups like the ones described in the article be concerned about the quality of the education students are receiving?