Money well spent for an education - Duke

[rthomas]

http://www.npr.org/blogs/money/2014/...lly-a-discount


Wasn't sure where to put this? Ie in the article on college admittance disappointment or on the EK board on in a separate OT thread. Anyway it is interesting.

[Channing]

I disagree with the premise of your title. Just because (Duke claims) that $60k/yr is a discount does not mean it is money well spent. It just means that (using Duke's accounting methods) the actual cost per student exceeds the collected cost per student.

Put differently, getting a $360,000 Ferrari for $240,000 is definitely a discount. But, many (myself included) would argue that it is still a waste of money when you can have a fantastic, luxurious, and beyond functional Lexus for $40,000 (no offense to the Ferrari enthusiasts among us). ESPECIALLY if you are going to paying off the Ferrari for the next 15 years while you could pay off the Lexus in 5 or 6 years.

[rthomas]

I disagree with the premise of your title.

It was meant to have a question mark.

[Edouble]

I disagree with the premise of your title. Just because (Duke claims) that $60k/yr is a discount does not mean it is money well spent. It just means that (using Duke's accounting methods) the actual cost per student exceeds the collected cost per student.

Put differently, getting a $360,000 Ferrari for $240,000 is definitely a discount. But, many (myself included) would argue that it is still a waste of money when you can have a fantastic, luxurious, and beyond functional Lexus for $40,000 (no offense to the Ferrari enthusiasts among us). ESPECIALLY if you are going to paying off the Ferrari for the next 15 years while you could pay off the Lexus in 5 or 6 years.

But you can get way more bangin' hot chicks with that Ferrari.

[brevity]

I disagree with the premise of your title. Just because (Duke claims) that $60k/yr is a discount does not mean it is money well spent. It just means that (using Duke's accounting methods) the actual cost per student exceeds the collected cost per student.

Put differently, getting a $360,000 Ferrari for $240,000 is definitely a discount. But, many (myself included) would argue that it is still a waste of money when you can have a fantastic, luxurious, and beyond functional Lexus for $40,000 (no offense to the Ferrari enthusiasts among us). ESPECIALLY if you are going to paying off the Ferrari for the next 15 years while you could pay off the Lexus in 5 or 6 years.

But you can get way more bangin' hot chicks with that Ferrari.

So what are you saying, if we're sticking with this analogy? That a Duke degree is a magnet for "bangin' hot chicks"? Does any degree do that? Wait, where did Derek Jeter go to school?

[Indoor66]

So what are you saying, if we're sticking with this analogy? That a Duke degree is a magnet for "bangin' hot chicks"? Does any degree do that? Wait, where did Derek Jeter go to school?

Kansas must - look at Wilt.

[Edouble]

So what are you saying, if we're sticking with this analogy? That a Duke degree is a magnet for "bangin' hot chicks"? Does any degree do that? Wait, where did Derek Jeter go to school?

My Duke degree has never failed me in that department!

In all seriousness, I discovered this article in my inbox this morning and found it an interesting read. It seems the dollar value that one's Duke education is worth has to do with how much you take advantage of the world renowned labs/profs/research facilities while you are there. I would bet that a lot of the really good stuff is more accessible to grad students or upper level classes at least.

But if you spend all your time on your laptop at The Perk or Cosmic Cantina, or wherever kids go these days, you're certainly not getting your $60,000 worth.

I attended every home basketball game at Duke during my four years with the exception of the four months that I was in Florence. What's the Iron Duke buy in for season tickets these days? $6K? $8K? $10K? + the cost of the tickets themselves... if you go to all the games, that could be almost a 1/4 of the $60,000 that you're getting fair market value for right there!

[fuse]

My position is a general one for college, and that is your first 4 years salary ought to be greater than or equal to the 4 year cost of college tuition.

Even when Duke was 20-25k per year and 100k for college was a lot, you could get an entry level job in your chosen field and clear that hurdle.

I've not looked to see what the average Duke senior salary is upon graduation, but more power to them if it is above 60k.

A quarter to half million dollars in educational debt feels to me like way too big a hole to ask anyone to climb out from under. I guess it's a good thing we're all living and working longer. :-)

[weezie]

So what are you saying, if we're sticking with this analogy? That a Duke degree is a magnet for "bangin' hot chicks"?

Well of course it is! Everybody knows that.
My husband met me at Duke.

[theAlaskanBear]

My Duke degree has never failed me in that department!

In all seriousness, I discovered this article in my inbox this morning and found it an interesting read. It seems the dollar value that one's Duke education is worth has to do with how much you take advantage of the world renowned labs/profs/research facilities while you are there. I would bet that a lot of the really good stuff is more accessible to grad students or upper level classes at least.

But if you spend all your time on your laptop at The Perk or Cosmic Cantina, or wherever kids go these days, you're certainly not getting your $60,000 worth.

I attended every home basketball game at Duke during my four years with the exception of the four months that I was in Florence. What's the Iron Duke buy in for season tickets these days? $6K? $8K? $10K? + the cost of the tickets themselves... if you go to all the games, that could be almost a 1/4 of the $60,000 that you're getting fair market value for right there!

I listened to the program, and it was very interesting indeed. You are right that the crux of the argument is undergrad vs grad, and whether or not it is appropriate for undergrads to subsidize research and labs that the university benefits from in other ways. Ultimately it gets to the sometimes conflicting roles of research vs education. In an ideal world, both would be integrated seamlessly into an education.

It doesn't always work like that though, and an argument can be made that ANY activity by the university that increases the prestige of a Duke degree benefits all students, regardless of graduate vs undergraduate.

Edouble, since you brought up the basketball angle, do you believe that the success of Duke's basketball program has increased the value of a Duke degree? It is worth the expense? I would say probably yes, and that the expense of research functions in the same way, only in scientific and academic communities rather than the general public, and that defraying the costs across all students isn't entirely unjust.

On the other hand, most elite institutions like Duke have healthy endowments and investments that are large and growing, and have very little trouble bringing in enough revenues to cover operating costs. Should research and lab funding come from these sources (and grants of course), in order to keep Duke degrees more affordable to undergrads? Should tuition be earmarked to tangible budget items that actually improve undergraduate education, rather than intangible "university prestige"?

[sagegrouse]

Interesting circular argument re the accounting. Twenty-four percent of the cost of higher education, according to Duke, is financial aid. Uhhh... puh-leese!! It is not a relevant cost; it is a rebate. So, you are explaining to the 50+ percent paying the full freight that the $22,000 in average financial aid granted to other students contributes to their education. No.

[Bluedog]

Interesting circular argument re the accounting. Twenty-four percent of the cost of higher education, according to Duke, is financial aid. Uhhh... puh-leese!! It is not a relevant cost; it is a rebate. So, you are explaining to the 50+ percent paying the full freight that the $22,000 in average financial aid granted to other students contributes to their education. No.

Yeah, that's certainly an interesting angle to argue. It is clear that those paying full freight are subsidizing those that are not. Whether that is fair or not is obviously up to debate, but I think the majority would argue that Duke (and its peers) should strive to be affordable to everybody. But it's basically forcing others to pay more just so others can pay less. Furthermore, it is clear that those in the sciences and engineering require a larger investment (in equipments, labs, buildings, etc.) than those in the humanities. Some public schools charge more for their engineering/science students than others or charge on a credit basis and science courses have more credits - Duke obviously does not follow this practice and everybody owes the same amount.

It's an interesting paradigm that at many institutions of higher education you get a sizable discount if you happen to not have a lot of money - there are very few other purchases in life that take into account the wealth of the consumer. Using the car analogy, imagine if you got a 90% discount on that Ferrari simply because you make less than $60k/year - that would be pretty sweet! I, incidentally, received financial aid from Duke and majored in engineering, so am certainly grateful for Duke's system and not saying it is wrong at all - just find it a fairly unique situation and can certainly appreciate arguments from both sides.

A quarter to half million dollars in educational debt feels to me like way too big a hole to ask anyone to climb out from under. I guess it's a good thing we're all living and working longer. :-)

Nobody should graduate Duke with more than ~$22k in debt. They cap the loans at something like $5.5k/year. Yes, you can take out more private loans if you really want, but Duke's financial aid is generous enough that nobody should have to do that. I agree that expecting anybody to be able to deal with $250k of undergraduate educational debt is crazy. I can't imagine that happens to anybody at Duke unless they have wealthy parents who simply refuse to pay. If your annual family income is less than $60k, you get a full ride...Everybody says the college tuition is a bubble and is going to burst, which I would agree with if it was a typical market purchase, but it's not. Duke can increase it's tuition to $80k/year and if they get enough wealthy applicants and endowment returns, it should be no problem. Expected market conditions do not apply. (Although they would apply to much more to schools without fin aid, although easy money from private lenders for educational purposes also skews this.)

[Reisen]

It's an interesting paradigm that at many institutions of higher education you get a sizable discount if you happen to not have a lot of money - there are very few other purchases in life that take into account the wealth of the consumer. Using the car analogy, imagine if you got a 90% discount on that Ferrari simply because you make less than $60k/year - that would be pretty sweet! I, incidentally, received financial aid from Duke and majored in engineering, so am certainly grateful for Duke's system and not saying it is wrong at all - just find it a fairly unique situation and can certainly appreciate arguments from both sides.

At first blush, I should be the first person to feel that part of Duke's tuition is not fair. I tend to be against wealth redistribution, and subsidization. Indeed, financial aid has turned into a "game" where people can manipulate the system (ie putting college savings in grandparents name so it doesn't count against financial aid).

That said, I think it fair to point out that price discrimination happens pretty regularly in most industries, from automotive sales, to groceries, general retail, you name it. Firms spend a lot of time and money trying to find each consumer's ability and willingness to pay, and then leveraging things such as rebates, targeted offers, "loyalty" incentives, etc to charge different people different prices for identical goods.

Duke is doing the same thing, I just see two differences: #1, Duke is more transparent about it. #2, Duke is not doing it to maximize total revenue (otherwise they would just let in everyone who can pay full freight).

That said, why they may not be maximizing short-term revenue, by being so selective about who they admit, and offering financial aid to those that would not otherwise attend, they may be maximizing long-term revenue. If they were ranked 50th in undergraduate universities, they might not be able to command that high price.

Outside of this discussion, I can only add that I think universities in general will be forced to start paying more attention to the cost side of things in the coming decades, and this will affect everyone. It will start at public institutions, but will force private Universities like Duke to reign in their spending.

[Channing]

"Nobody should graduate Duke with more than ~$22k in debt. They cap the loans at something like $5.5k/year. Yes, you can take out more private loans if you really want, but Duke's financial aid is generous enough that nobody should have to do that."

Isn't it based on parental income. If a students parents earn north of 300k/yr he may not be eligible for grants or aid and may only be eligible for loans. If his parents don't want to pay for his tuition or can't (maybe there are 5 kids in the home) he has no choice but to load up on debt to go to duke. At least that is as I understand things

[Bluedog]

"Nobody should graduate Duke with more than ~$22k in debt. They cap the loans at something like $5.5k/year. Yes, you can take out more private loans if you really want, but Duke's financial aid is generous enough that nobody should have to do that."

Isn't it based on parental income. If a students parents earn north of 300k/yr he may not be eligible for grants or aid and may only be eligible for loans. If his parents don't want to pay for his tuition or can't (maybe there are 5 kids in the home) he has no choice but to load up on debt to go to duke. At least that is as I understand things

Yes, if a student's parents earn more than $300k, that student definitely should not expect to receive financial aid. If those parents don't want to contribute to the bill, then that student is just simply out of luck. Duke does not consider "willingness" to pay from parents, but rather expects the parents (and the student himself) to contribute based on ability to pay. Now, you could argue that Duke's calculation isn't fair in all circumstances, but that's a different argument. If you make more than $300k, but aren't willing (or able) to spend a considerable sum on your child's college, then expensive private schools probably aren't the best choice. Financial aid, incidentally, considers other siblings in the family, particularly if they're enrolled in college at the same time.

[cspan37421]

If the true cost of the undergraduate-only education is much less than the $60k/yr, due to subsidies of both financial aid (25%) and fancy labs and facilities for graduate research that probably less than 10% of undergraduates avail themselves of, would not then small liberal arts colleges have much lower tuition than large private national research universities? They tend to be very similar.

Are they similar because those LACs make up for the difference with more financial aid (I didn't think they were as generous), or perhaps they don't benefit from economies of scale, or what is it, exactly, that keeps the tuition numbers very similar?

I'm quite prepared to believe that full-freight students are "overcharged" severely (ignoring the "benefit" of adding wealth diversity to their peer group), but if they were truly being overcharged due to graduate research facilities, why aren't small LACs a notably cheaper option?

[theAlaskanBear]

If the true cost of the undergraduate-only education is much less than the $60k/yr, due to subsidies of both financial aid (25%) and fancy labs and facilities for graduate research that probably less than 10% of undergraduates avail themselves of, would not then small liberal arts colleges have much lower tuition than large private national research universities? They tend to be very similar.

Are they similar because those LACs make up for the difference with more financial aid (I didn't think they were as generous), or perhaps they don't benefit from economies of scale, or what is it, exactly, that keeps the tuition numbers very similar?

I'm quite prepared to believe that full-freight students are "overcharged" severely (ignoring the "benefit" of adding wealth diversity to their peer group), but if they were truly being overcharged due to graduate research facilities, why aren't small LACs a notably cheaper option?

Can you be more specific which small liberal arts colleges you mean? The top LACs on US News and World Report top out around 45k. That said it could be both types of institutions overcharge, but without looking at the finances of specific schools, it is tough to say.

[cspan37421]

Can you be more specific which small liberal arts colleges you mean? The top LACs on US News and World Report top out around 45k. That said it could be both types of institutions overcharge, but without looking at the finances of specific schools, it is tough to say.

Bennington College: $62,520
Williams College: $58,900
Carleton College: $58,149
Haverford College: $61,784
Colgate University (which is really a college with handful of MAT students): $60,145
Pomona College: $59,730

etc etc.

HTH. Perhaps the numbers you saw were tuition only. That would be ballpark for tuition only.

[Dev11]

Yeah, that's certainly an interesting angle to argue. It is clear that those paying full freight are subsidizing those that are not. Whether that is fair or not is obviously up to debate, but I think the majority would argue that Duke (and its peers) should strive to be affordable to everybody. But it's basically forcing others to pay more just so others can pay less. Furthermore, it is clear that those in the sciences and engineering require a larger investment (in equipments, labs, buildings, etc.) than those in the humanities. Some public schools charge more for their engineering/science students than others or charge on a credit basis and science courses have more credits - Duke obviously does not follow this practice and everybody owes the same amount.

Actually, the engineering cost of attendance is about a grand higher per semester if I remember correctly, with a slightly higher tuition and lab fees. On the order of magnitude of the full cost of attendance, that difference is almost negligible (say, $58K per year vs $59K).

Duke doesn't charge by credit hours, which theoretically hurts the students who don't take many labs, as they aren't 'maximizing' their class time. On the flip side, the engineers and other STEM majors spend a lot more time in class to achieve the same number of credits as the non-STEM majors (an argument that I, a Pratt alumnus, made often to my Trinity friends when they told me how our course loads were the same so I shouldn't make fun of their easy schedules ).

I was surprised at how much those who pay the full sticker price are 'subsidizing' those who don't. I don't know how I feel about it, but it certainly helps Duke's PR.

[Bluedog]

Trinity and Pratt undergraduates pay the same tuition:
http://finance.duke.edu/bursar/TuitionFees/tuition.php
That was the case when I graduated in 2007 as well. Although I see a whopping $28 for engineering government dues.

Actually, the engineering cost of attendance is about a grand higher per semester if I remember correctly, with a slightly higher tuition and lab fees. On the order of magnitude of the full cost of attendance, that difference is almost negligible (say, $58K per year vs $59K).