Premium Essay

Setting Tuition and Financial Aid

In: Business and Management

Submitted By fherrero25
Words 591
Pages 3
Setting Tuition and Financial Aid
Managerial Economics

The idea behind “applicants had apparently concluded that if the college cost more, it must be better” (Brickley, Smith, & Zimmerman, 2009) is still a premise that society perceived as accurate but the financial problem behind this idea is if students are not receiving the help needed with a financial aid increase, it feels that this idea will not hold up very much longer.
Susan’s analysis that the increase in tuition fee is likely to increase in the student enrollment and therefore would be helpful in solving the school’s financial problem is absolutely incorrect. Financial aid is an important factor when students are thinking about applying for a college. College education is getting more expensive every year and if they cannot afford to attend, they will most likely not apply, therefore the College need to think about the implications of this action. “Higher education, like any business, must listen to the “voice of the customer” in pricing deliberations” (Kurz & Scannell 2005).
Susan is using the law of demand, which rising the price would work however she needs to take other factors into consideration. Education being a normal good cannot have an upward sloping demand curve and therefore Susan’s assessment that demand is upward sloping and hence tuition fee has to be increased is misleading. The fact that other colleges have seen increase in enrollment with increase in tuition fee is not because demand curve is upward sloping but because their colleges are very high in demand in terms of education. The reasons for high demand for enrolment in a particular college or university could be huge placement opportunities, better study environment, prestige of college, existence of hostel and accommodation facilities, proximity to town, high opportunities for extra-curricular activities,...

Similar Documents

Premium Essay

Setting Tuition and Financial Aid

...Chapter 4 8/31/2014 MBA-540 Chapter 4: Setting Tuition and Financial Aid 1. Evaluate Susan’s analysis and recommendation. At first sight it is easy to see why Susan would believe that the demand for applying to a college increases when the cost of tuition is increased, based off the statistics seen at colleges such as Ursinus College and Wesleyan College. Ursinus increased the cost of tuition and the demand increased. Wesleyan did the opposite and decreased there tuition and the demand decreased. Susan’s belief in an upward slope, where the quanitity demanded increased with price, is seen as a Giffen good. Giffen good is when “a good for which a demand increases as the price increases and falls when the price decreases” (Investopedia, 2014). This contradicts the law of demand. As discussed in the text the law of demand refers to the demand curve sloping downwards because individuals buy less of a good and not more when the price increases (Brickley, Smith & Zimmerman, 2009). Giffen good is very rare to the point where there is actual debate about their existence, because the good in question must be considered an inferior good and there must be a lack of close substitutes (Investopedia, 2014). It would be irresponsible as a consultant to make a decision based on just Susan’s theory, especially when there could be other factors that not being considered for the affects of this demand increase over the increase in tuition. It is important to consider......

Words: 614 - Pages: 3

Premium Essay

Analyzing Managerial Decisions: Setting Tuition and Financial Aid

...MBA 540 Chapter 4 Case Analyzing Managerial Decisions: Setting Tuition and Financial Aid In 2000, Ursinus College raised its tuition 17.6 and fees percent to $23,460. After the fee increase, the college recognized an increase in applications by 200 compared to the previous year. There was an assumption by the college president that the applicants concluded the college must be better since its cost was more than others were. In addition, colleges such as the University of Notre Dame, Bryn Mawr College, Rice University, and the University of Richmond raised their tuition in order to match rival colleges, thus causing an increase in applications also. On the other hand, North Carolina Wesleyan College lowered their tuition and fees ten years ago by 22 percent; however, the decrease in costs only attracted a small number of candidates, thus determining the reduction in tuition and fees was not attractive to the students. Susan Hansen, Admissions Director, at a liberal arts college in the East gave a recommendation to increase tuition and reduce financial aid to students in order to increase enrollment. Susan projects the increase in tuition and the decrease in financial aid will solve the school’s financial problems. Last year, the college enrolled 400 new students who each paid an effective tuition of $15,000 (after financial aid) totaling $6,000,000. Susan projects the increased demand from charging an effective tuition of $25,000; the college will enroll 600 new students,......

Words: 898 - Pages: 4

Premium Essay

Analyzing Managerial Decision: Rich Manufacturing

...Setting Tuition and Financial Aid by Ronald J. Sanders HCM-540, MBOL5, Health Care Organization Instructor: Wenyuan Teng Saint Leo University Distance Learning November 3, 2013 Abstract A college board in Pennsylvania has increased its tuition and fees to the amount of $23,460; a 17.6 increase from the previous year. An increase of 200 additional students inquired to further their education at the college than the prior year. Most college presidents would attribute this to students believing the college is better if the cost is more. Like other major colleges such as Rice University, University of Richmond and University of Notre Dame, the perception is students of prestigious schools believe costs are related to a better education. To contrast this, 10 years ago, North Carolina Wesleyan College reduced it cost of tuition and fees by 22 percent and watched its number student application fall. Recommendations to resolve the school’s cash flow problems may include the future increase of tuition and fees. This case study deals with the managerial decision of setting tuition and financial. Many factors are associated with demand and price elasticity of demand. There is an economic relationship between demand and price? After reading this paper, student will have a better understanding of those things that may affect tuition and fees for colleges.   Introduction An individual can demand so many things. The concept of demand can be easily explained.......

Words: 1584 - Pages: 7

Premium Essay


...Student Account/tuition information The Office of Student Business Services The primary function of the Office of Student Business Services is to assist the student in understanding their semester billing. This department is responsible for sending out semester bills, emailing monthly statements to the students Concordia email account if they have a balance, offer support for the Sallie Mae Tuition Pay Plan, process student refunds, issue book vouchers (if the student has a credit/negative (-) balance), and ensure payments on the student tuition account are posted accurately. This office also manages student accounts that are not currently enrolled but are in a collection status. Any student that is registered for any course whether full time or part time at Concordia University Chicago is responsible for financial obligations resulting from tuition and fees not covered by financial aid or any other source. Meet The Staff Anjelica Estrada: ext-3236 Director Student Account Representatives Nayibe Parra-Garcia: - ext-3010 Tinesha Smith: -ext-3232 Cashier Patrick Nelson:-ext-3241 The Office of Student Business Services is located in Addison Hall, Room 156. The hours of operation are Monday and Friday 8am-4:30pm, Tuesday-Thursday 8am-6pm. Traditional undergraduate academic year cost for the 2012-2013 academic year Per year Tuition Room & Board application) Technology Fee Student Activity Fee Green Fee $ 254.00 $ 270.00 $ 10.00 $ 127.00 $ 135.00 $ 5.00 $25,942.00 $ 8,280.00 Per......

Words: 2481 - Pages: 10

Premium Essay

Mba Economics

...Case Study 3: Setting tuition and financial aid Instructor:  Patricia Wiseman Managerial Economics MBA-540-MB01 Saint Leo University Sushma Madhavaram Summary: Prices are the variable property which can increase or decrease the desire of purchasing the commodity which in simple terms referred as demand. For most of the commodities if prices soar high then people purchase less good hence reducing demand in the same way if supply increases prices go down increasing demand. This basic principle is the basis for the ‘law “of demand which can be described as quantity demand plummets as prices go upward, other variable factors constant. To understand the demand and price relation economists refer demand as schedule of quantities of commodity people want to buy at various prices, other factors constant (Colander, Rockerbie, & Richter, 2006, p.73). Whereas quantity demand is referred as demand of goods at certain price in the demand curve. Ursinus College in Pennsylvania in the year 2000 increased their tuition fee 17.6% to $23,460 in order to increase college revenue and funds to support financial aid which also in turn increased their admissions (Brickley, Smith, & Zimmerman, 2009, p.110). The conjecture of college president is increase in demand is against the law of the demand because of college going student’s snob mentality and their comparison of quality with respect to price. He speculated student’s presumption of costly colleges will have better quality......

Words: 1249 - Pages: 5

Free Essay

The Negative Effects of Tuition Fee Increase to the Academic Performance of First Year Students of the University of Mindanao

...The Negative Effects of Tuition Fee Increase to the Academic Performance of First Year Students of the University of Mindanao GROUP 6 Setting Problem The Problem And Its Setting Tuition fees are fees charged for instruction during higher education. Tuition payments are charged by educational institutions in some countries to have funding on school equipment, staffs, teachers, and facilities to provide a comfortable learning experience. In some countries there are no or only nominal amount of tuition fees in all forms of education, including Universities and higher education institutions. In a country like the Philippines tuition fee is a very sensitive thing for every Filipino once it increases a wave of reaction follows. It’s no surprise since the country is still in developing state and probably millions still under the poverty line defining the economic status of every Filipino. When we have a closer look of the problem you probably see the reality in which it affects as much as tuition fee is concerned, the academic performance of students. Students who choose to stay in school may have to work longer hours at more demanding jobs to cover their expenses. This can interfere with academic performance. A 2002 study by the State Public Interest Research Group's Higher Education Project found that working full-time can harm grades. Forty-two percent of survey respondents reported that working hurt their academic progress, and 53 percent......

Words: 3147 - Pages: 13

Premium Essay

College Tuition Policy Analysis

...degrees. Tuition has doubled three times since 1980 and outpaced the nation’s inflation rate, whereas the student loan debt is at its highest at over $1 trillion (Sobel, 85). That is comparably higher than the rate of credit card debt (Education). Current policies by legislators do not directly address setting tuition rates, but establish the parameters and budget for the boards to follow (Weeden 2015). Your proposed alternative to the current tuition policy, by implementing a tuition free...

Words: 1487 - Pages: 6

Free Essay

Planning for the Future

...College Board (2009), college tuition rates are expected to increase at rates of five to eight percent each year. The cost of one year’s tuition at a public university currently averages $6,585 (College Board, 2009). At a rate of five percent per year, tuition could be increased by $329 each year. Imagine a child who has 15 years before attending college. Is it better to pay $6,585 or $11,520 per year? Fortunately, there are many options available to assist families in saving for future college expenses. When it comes to preparing and paying for college, one option is to start a Qualified Tuition Program, which guarantees current tuition rates and provides tax free savings. Qualified Tuition Programs were created in 1996 by Internal Revenue Code (IRC) 529 (Internal Revenue Manual, 2009). IRC 529 sets forth requirements plans must meet in order to receive federal tax exemption status for Qualified Tuition Programs. These types of programs are commonly referred to as ‘529 plans’ because of the code number they were created under. According to IRS Publication 970 (2009), a Qualified Tuition Program is any “program set up to allow you to either prepay, or contribute to an account for paying, a student’s qualified education expenses”. These programs are set up and maintained by states or eligible educational institutions. There are two types of plans; Prepaid Qualified Tuition Programs and Qualified Tuition Savings Programs. Prepaid Qualified Tuition Programs allow for the......

Words: 1794 - Pages: 8

Premium Essay

The Dream Act: the Hope and Vision for Illegal Aliens

...aforementioned can be mutually beneficial as students like Grecia would benefit as a person from gaining a higher education and the opportunities available during and after this pursuit while society would be able to enjoy the fruits of her labor as well as the taxes she would generate, to name a few. Therefore, in order to support those 1.2 million smart illegal students to continue their pursuit for higher education, a proposal was brought to the senate in 2001 called the DREAM act (Development, Relief and Education for Alien Minors). The purpose of this act is to allow illegal aliens to receive a green card which would allow them the benefits reserved for a U.S citizen. This act will grant many illegal immigrants in-state college tuition as well as financial aid in order to fulfill their academic goals. Even though this act was re-introduced in...

Words: 3074 - Pages: 13

Premium Essay

Essay On Minority Education In America

...Minority families tend to struggle financially. Many cannot afford college tuition and many do not qualify for scholarships. Catoosa High School will have the ability to provide such a scholarship(s) to help the minority students that are enrolled in the high-school. In order to create a scholarship, finding the funds will be important. Students can promote awareness by doing fundraisers, and people that want to donate may be able to receive tax benefits for making contributions to the scholarship. Now, if they do decide to attend college, they are required to pay out-of-state tuition. Out-of-state tuition is about double the cost for the in-state tuition. This issue causes a big concern for minorities to attend a college or university. Setting up new scholarships that sets aside money or minorities will greatly increase the amount of enrollments of minority students in colleges. Colleges can also provide financial aid to provide a less expensive tuition to pay for their...

Words: 944 - Pages: 4

Free Essay

How Career Expectations, Tuition Fees and Government Aid Impact Student Enrollment

...a relationship between tuition fee and student enrollment exists, this study focusses on this relationship moderated by government aid and career expectations. By manipulating these variables in a questionnaire with vignettes all other variables able to influence this relationship are controlled as much as possible. Results suggest that a variation in both government aid and career expectation influence students’ decision to enroll both for their first study as for a further study after graduation. The effect of career expectations seems to be the most crucial on a student’s enrollment choice. How career expectations, tuition fees and government aid impact student enrollment Education in all its forms is one of the fundamental elements of societies. By educating people a society can function and develop. This is especially the case in western countries in which knowledge, which can be acquired through education is of crucial importance. The need for high educated persons is of great importance for western countries such as member states of the European Union. The importance of higher education is reflected in strategies launched by the European Union (Rodriguez, al, 2010; European Commission, 2010), aiming towards a knowledge economy and becoming more competitive in future years. This vision is also being shared outside the European Union (Yang, 2011). The tuition fees in the Netherlands are rising and government aid is decreasing, which......

Words: 5609 - Pages: 23

Free Essay

Enrolment Decisions: Factors Influencing Students in Selecting Higher Educational Institution

...2012 National Research Report Why Did They Enroll? The Factors Influencing College Choice An analysis of traditional-aged students What matters to students when deciding where to enroll? There are a variety of factors that influence a student’s decision to enroll. Factors such as cost and the availability of financial aid are universally important at all types of institutions. However, other factors can vary widely by institution type, demographics, class level, and whether the student enrolled at his or her top choice. Every year, hundreds of campuses administer the Noel-Levitz Student Satisfaction Inventory™ (SSI) to their students. In addition to more than 70 items rated for importance and satisfaction on the general student experience, the SSI includes nine items that address factors in a student’s decision to enroll. During the fall of 2011, more than 55,000 students from more than 100 public and private fouryear and two-year institutions completed the SSI. These students rated the factors to enroll items on a scale of one (meaning not important at all) to seven (very important). This report details the responses from the nationwide pool of data. In particular, this report has a special emphasis on the nearly 22,000 first-year students who responded in order to see which items scored higher with ratings of important or very important (a ranking of six or seven on the answer scale). Comparisons with upperclass students and between students at their first-choice......

Words: 5326 - Pages: 22

Premium Essay

The Pros And Cons Of Community Colleges

...While some employers are successful in building bridges to community colleges, many opportunities are poorly advertised and generate little engagement with community college students. And finally, while America’s College Promise ensures increased financial stability through free and reduced tuition, David Brooks has noted that tuition represents only a fifth of the cost of community college life. The greatest challenge community college students face are often personal expenses: textbooks, transportation, housing, childcare cost, and foregone wages affect students more deeply. Moreover, community college tuition is already quite inexpensive for students from low-income families who qualify for Pell grants and other sources of financial aid. In 2002, 38 percent of community college students have their whole tuition covered by grant aid. A third of students had only hundreds of dollars in fees. However, the least expensive schools do not experience increased retention rates, and in many cases suffer from increased attrition. While community colleges in California are among the most affordable, a majority of California community college students never complete their...

Words: 685 - Pages: 3

Premium Essay

Perelman School Of Medicine Case Study

...Tuition alone is $52,210 but with additional fees, the grand total is roughly $4,000 greater (“Tuition & Fees”). The average debt of University of Pennsylvania medical students is about $119,000 but financial aid is available on the consideration of need, circumstances, prior indebtedness, and fund availability. Since funding is limited, it is the number one prior for the university to assist those with the greatest need (“How to Apply for Aid”). There is a scholarship program called Twenty-First Century Scholars that awards around 30 full tuition scholarships annually to students with outstanding resumes and personal interests/experiences (“Financial Aid Overview”). Every accepted student is considered for these awards. While these scholarships are highly competitive and among the very few the university offers, there are programs in place to assist in helping keep track of finances (“AAMC/FIRST”). AAMC’s FIRST program allows students to understand and plan a responsible way to repay student debt and comprehend how to better understand one’s financial decisions. While it is not monetary assistance, it offers a way to help create a way to find monetary...

Words: 1550 - Pages: 7

Premium Essay

The Difference Between College and High School

...government branches such as the army and navy. Other graduates enroll in a trade program and become electricians and plumbers. The remainder of high school graduates continue their education and enroll in college. Even though college is naturally the next step after high school, the environment and effort required could not be more different. In a high school setting, students are required by law to be enrolled and most public high schools are free of tuition. High schools have set hours Monday through Friday with penalties such as detention and truancy officers if you are not compliant with attendance. The high schools also have many resources such as teachers and guidance counselors who give students the push and motivation that is sometimes needed with students who lack the educational drive. Teachers in high school are conscious of other extra-curricular activities and classes that a student may have and therefore have a tendency to act with leniency in terms of project due dates. In the college setting, college enrollment is 100% the choice of the student. While most colleges offer financial aid to ease the burden of tuition cost, college is very far from free thus adding additional pressure for the student to succeed in school because it is their hard earned money. A highlight of college is the ability to customize the schedule of your classes based on your schedule of daily living. Students have the convenience to have all of their classes in one day, or to......

Words: 694 - Pages: 3