Question

Students Learn the Hard Way

News Story

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. To my knowledge As the article points out, many schools are seeing an increase in costs as well as a reduction in state funds available. Can someone please help me create a supply and demand graph that illustrates this. Help me describe how the graph represents this in terms of shifts of supply and/or demand curves, direction (left or right) and impact on equilibrium price and quantity of college educations. I also need assistance in describing why student government groups like the ones described in the article be concerned about the quality of the education students are receiving?

Thank you,

Answer 1

Based on the given news article, it is clear that there is increase in cost of providing college education along with a fall in state funds available. This means there is reduction is supply for college education. On the other hand due to recession, people are demanding more of college education so that they can get themselves a job in these times of recession and hard job competition. Thus there is an increase in demand for college education. In the graph drawn, demand increases from D1 to D2 while supply decreases from S1 to S2. The effect is an huge increase in price of college education. This is also evident in the news article. The quantity of college education has not changed. This is because i have taken the magnitude of both the shifts to be equal.

The reason why organizations are concerned about quality education are as foolows -

1. Provides more scope and oppurtunity is this competitve and recession stricken world.
2. Better quality of education enuser better health, a better life for individuals. Further a better life for individuals makes the society better as whole
3. Better quality of education would make sustainable development more plausibe
4. Better quality of education helps lessen joblessness, reduces proverty and advances innovations.