Are Colleges Trying to Fix the Cost of Tuition?
The Washington Post reported yesterday about a move backed by the National Association of Independent Colleges and Universities (NAICU) to change federal anti-trust laws to allow colleges to consult each other about the cost of tuition, a move they claim would lower rates across the country.
The article reports that colleges, as recently as the 1990's, spoke with each other about cost and how much financial aid to offer individual students who applied to more than one of them.
As stated in the Washington Post: "As many as 150 schools belonged to 24 groups that met to compare notes in this way, according to the advocacy organization Institute for College Access and Success. Then, in 1991, the Justice Department brought charges of price-fixing against the most prominent of these, the Ivy Overlap Group, which included the Ivy League institutions and Massachusetts Institute of Technology. The Ivy League schools quickly settled, and the practice largely ended.
I talked to Prudent Money Contributor and College Admissions expert John Hupalo about this on the radio this past week. He agreed. This looks like the attempt to control prices on the way down. Let's face the fact - The big universities who are charging 50 to 60,000 plus a year are threatened by the competition from cheaper avenues of education. They fear that they are going to lose control as they are forced to lower tuition to compete. Thus they might as well try to coordinate an organized price decline versus a free fall in the price of a college education.
If not, then why don't they go ahead and lower prices and let the free market work?
These expensive colleges could start to find themselves with a problem. Students and parents are getting smarter about the money they are willing to spend.