Tuesday, June 21, 2005

CU Tuition (Price) Discrimination

The University of Colorado recently proposed increasing tuition for in-state students by 28%. The response by the Governor and by other state politicians was not very supportive. Today we hear in the news that CU is considering a compromise proposal:
The University of Colorado may cut a 28 percent tuition increase nearly in half for students whose families make less than $80,000 a year, under a proposal floated Monday.

CU officials scrambled to find a compromise to satisfy state officials who have threatened to block the tuition hike. Earlier this month, CU announced a variety of tuition hikes, including a 28 percent increase that applies to many in-state undergraduates - including all students in arts and sciences - on the Boulder campus this fall.

Gov. Bill Owens and the Colorado Commission on Higher Education want to cut the amount the legislature had authorized CU to raise by increasing tuition. CU was initially allowed through this spending authority to raise $43.5 million, but the governor and the CCHE earlier this month asked the Joint Budget Committee of the legislature to rescind $13.8 million of that amount.

The Joint Budget Committee is scheduled to consider that request today.

The main proposal CU is contemplating is to lower the 28 percent tuition increase to 15 percent for students whose family income is less than $80,000 a year, according to sources familiar with the proposal. It would also lower tuition for other in-state students who were facing tuition increases of more than 15 percent. In addition, the plan would also increase money for financial aid for middle-class students.
It seems to me the compromise proposal means that CU would practice price discrimination. Does it seem right to allow a government agency to price discriminate, or to charge different students a different price for the same educational service? Should one student in a microeconomics course be charged a higher price (or tuition) to sit in the same classroom and hear the same lecture as another student? Or should all students be charged the same price?

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