Word: tuition
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Dates: during 1990-1999
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Conspiracy may have played a role. For years a group of America's most influential schools traded data on tuition policies. Penn, Harvard, M.I.T., Princeton, Brown, Columbia, Cornell, Dartmouth and Yale shared information about future tuition rates and fees, agreed never to grant aid solely on the basis of a student's academic merit, and met to negotiate how much need-based financial aid should be offered to individual students accepted by two or more of the member institutions. Ostensibly the goal of this "Overlap Group," dismantled in 1991 after a two-year federal antitrust investigation, was to equalize...
...underlying premise of the Chivas Regal effect proved to be correct. "The theory of it was, basically, we will raise the tuition as much as the market will bear," says William Massy, a former Stanford University finance officer, now a consultant on the subject. And parents bore it. Throughout the '80s, says Meyerson, parents came increasingly to feel that a college education was a necessity, a direct conduit to a high-paying job. Easy financial credit, moreover, made it possible for parents to borrow large sums of money; doing so for college became more socially acceptable. From 1983 through...
Penn, of course, was not alone in raising tuition. Despite having markedly different underlying cost structures, the top schools increased their tuition at nearly identical rates, behavior that persists today. From 1990 to 1994, Harvard and Princeton did a tuition tango that raised tuitions at virtually the same rate each year and consistently resulted in base prices within $10 to $195 of each other. Penn and Columbia did likewise, ending each year in an even steamier embrace--within $36 to $110 of each other--even though the costs of doing business in Manhattan are far higher...
...Overlap arrangement, says Keith Leffler, a University of Washington antitrust economist who testified for the government, allowed member schools to raise their gross tuition (now often called the "sticker price") to very high levels without scaring off talented low-income students. The wealthiest students would come no matter what, and might even be attracted by the high prices. Says Leffler: "There's no doubt [Overlap] artificially inflated tuition prices...
...combination of forces--inflation, hubris, competition, the Chivas Regal effect, perhaps even conspiracy--drove up Penn's tuition. In comparable dollars, says former president Meyerson, a year at Penn today costs about twice what it did in 1970. Yet from 1970 through 1994, government figures show, median family income in constant dollars increased only 10%. In more recent years it has actually fallen below the 1986 figure. Taken together, these trends make tuition a very painful prospect for any parent whose kid has just been accepted by Penn or, for that matter, Harvard, Yale or Princeton...