College administrators: Why are there so many rich white and Asian people buying our $300,000 product?

One of the perks of being an expert witness in software patent lawsuits is that I get to eat where law firm partners eat. At O Ya, for example, I enjoyed the $285/person “grand omakase” menu (would have been another $100+ for the wine pairing, I think). At L’Espalier it was only about $200 per person, including wine. At no time did the restaurateurs come out, scan the dining room, and say “I can’t understand why it is mostly rich white and Asian people who eat here.”

Yet give a person a PhD in Higher Education Administration and he or she can be reliably counted on to wonder “Why don’t we have more racial diversity here on our gold-plated campus?” Following the Supreme Court’s decision in Schuette v. BAMN, upholding Michigan’s ban on sorting applicants to public colleges by race, university administrators are scratching their heads once again, unable to figure out why a $300,000 undergraduate degree is appealing primarily to white and Asian Americans.

I’m wondering if it would make sense for a college that was interested in having a more diverse student population simply to cut prices so that a degree cost less than, say, a lightly used Rolls-Royce. There is a lot more racial diversity in a restaurant that charges $20 for a meal than in a restaurant that charges $200. Why wouldn’t we expect to find the same in higher education?

14 Comments

  1. SK

    April 23, 2014 @ 2:54 pm

    1

    Wait, wait, are you saying that these other peoples are poor? That’s racist!

  2. Jonathan Graehl

    April 23, 2014 @ 5:07 pm

    2

    I take it that private universities looking for non-asian color without lowering costs can offer race-targeted grants/scholarships, but public schools cannot, instead having to offer them on basis of financial need (the horror).

  3. passerby

    April 23, 2014 @ 5:48 pm

    3

    > Wait, wait, are you saying that these other peoples are poor? That’s racist!

    No, he’s saying that they don’t pay for expensive education.

    The reason is shrouded in mystery. They may be just cheap, like me.

  4. angel

    April 23, 2014 @ 5:58 pm

    4

    As a mexican, living in Mexico, I can only speak for myself or what I have seen, so here it goes:
    We have a saying that goes “el que es perico donde quiera es verde” which translates into “if you are a parrot, you are green anywhere”.
    So no matter how much higher education you get, you won’t land a better job, so 300k for a job that pays 50k a year, i dont see a win-win situation. Plus, the higher wages always go to the family members or business partners, even in the U.S. You know best since you are in Harvard, where the rich send their sons to study. Those Harvard kids can afford these type of tuition, but you won’t see them after they graduate looking for a job outside their family business….

  5. The lone marshmallow boy

    April 23, 2014 @ 5:59 pm

    5

    What really sucks is being poor and white.

  6. Jay c

    April 23, 2014 @ 6:51 pm

    6

    Jonathan, youre probably correct. I attended a ‘top 10′ private university.
    The student population was bimodially distributed with peaks of poor students of color and wealthy students of Asian or white origin. Wealthy as in daddy owns a yacht (75ft) and is ceo of a pharmeceutical company, daddy owns a horse farm in long island etc. most of the poor students were on full scholarships with stipends or student work study. Needless to say i didnt fit with anyone there and transferred to a state university and the population was mostly white and Asian middle class. In the Valley i have run into several people i went to grade school/high school and state university with on the east coast but 0 from that august university i transferred from.

    Tuition at that private university is now over $44k/ yr. it reminds me of a 1990s Russian joke. One oligarch says to the other, ‘hey look at me. I got this coat for $10,000′. The other says, ‘you fool! You could have paid $20,000 for it!’

  7. Josh

    April 23, 2014 @ 8:57 pm

    7

    My old school, Clarion University of Pennsylvania, is in an area of the country where, for the price of Phil’s condo, you could buy a dozen three bedroom houses with half-acre yards (no joke). Yet it constantly talks about “competing” with other schools.

    Ingeniously, it does this by raising tuition and campus living, closing down entire departments, not have enough money to hire professors to replace retired profs or ones who moved elsewhere.

    But it was somehow able to build off-campus housing two to three times as expensive as many of the older buildings in the area (with no options for such cheaper, but more updated, living). They tore down a seven story dorm, no replacement; closed another one and turned it into administrator offices despite it being “dangerous” to live in; destroyed a perfectly good cafeteria that was less than ten years old and built a much smaller one (but it’s prettier, so win!); built much-more-expensive-than-the-current-dorms dorms that manage to be about as functional as ones built in the 50s, etc. They also managed to tear down the science building and replaced it with a kewl, modern building that is mostly empty space, almost no class rooms or labs, and shitty offices for the professors.

    Why actually attract students when you can make shit tons of money instead?
    (It’s still cheap as dirt compared to most universities and has surprising diversity for being in the middle of nowhere. Less than $10k a year if you’re in-state and living on campus. WAAY less than that if you share a house off campus – off campus being literally across the street.)

  8. paul kramarchyk

    April 23, 2014 @ 9:24 pm

    8

    I downloaded the O ya menu. Some Harvard Business School professor should teach a course on this menu, “How To Sell Pretense To People Who Can Afford It.” There’s no end to the possibilities. Week 1: Warm Chive Blossom Omelette and the cost effectiveness of shipping Wild Santa Barbara Spot Prawns to Boston.

    No coincidence the owner, Nancy Cushman, was an advertising executive.

  9. Paul Houle

    April 24, 2014 @ 11:05 am

    9

    Different cultures have different ideas on education.

    Even though Chinese people were taking standardized tests 2000 years ago, 100 years ago the Chinese immigrant was on the bottom of the global totem poll. Many Chinese focus on getting their children a good education because they wanted to avoid the stigma of being “coolie” labor.

    Mechanization of US farms in the mid 20th century sent a diaspora of Blacks from down south into major cities, and a common theme you see in the 1960s is that Blacks who grew up under Jim Crow were suspicious of institutions of all kinds such as the police and the schools. Specifically, many though that if you got an education, people wouldn’t let you use it. Parents wouldn’t encourage their kids to get education, instead they would actively discourage it.

    Time has changed and so has racism, but I think these attitudes persist. Of course, we know that when a minority gets better-than-average educational results there does tend to be a racist backlash:

    http://nymag.com/news/features/asian-americans-2011-5/

    Unis are very happy to take their money (and even announce that every class is the “most diverse” yet) but giving money to the Uni doesn’t translate to high-status jobs.

  10. Vince

    April 24, 2014 @ 1:26 pm

    10

    Josh – you bring up an interesting point. There must have been a time 50 or 100 years ago when colleges like Clarion weren’t concerned with competing with schools all over the country. They were probably mostly focussed on educating the local population.

    Now we have the US News rankings every year and every college is trying to move up in the league tables. Some might think that all of this competition would spur an increase in quality, but that doesn’t appear to be happening. What happens instead is a big increase in spending, particularly on things like construction. Those costs are then passed on to young people, their parents and the taxpayer.

  11. Robert

    May 1, 2014 @ 5:48 pm

    11

    Phil, I believe it was you who’ve said the tuition model is by design. Colleges are practicing price discrimination and try to extract the most value out of the rich families by having a high ticket price. A good college like MIT would admit students before knowing their financial situation and give poor families enough grants so they can afford to attend. That was certainly true in my case 15 years ago and I will always be grateful. I sure hope admission office still works this way. High ticket prices should not stop a poor student from applying. Maybe the message is not getting through? Although there are plenty of poor Asian families that have somehow managed to send their kids through top schools, myself included. Hopefully some day my kids will have the privilege to pay full price thus subsidizing a poor kid to attend as well.

  12. philg

    May 1, 2014 @ 11:34 pm

    12

    Robert: I’m sure that some students deemed “officially poor” by the bureaucracies within certain universities do end up paying substantially less than the headline price. However, very few of America’s expensive colleges have “need-blind” admissions (http://en.wikipedia.org/wiki/Need-blind_admission identifies 6 schools that are need-blind and meet the financial needs of all admitted students; compare that to the 7000 U.S. post-secondary degree granting institutions registered with the federal Department of Education). Why would a non-rich person want to invest his or her time, money, and energy applying to a $300,000 per degree school with only vague assurances that the final price would likely be less?

    [Separately, about 15 years ago MIT did an internal study contacting students who had the SAT scores and grades to get into MIT but had instead chosen to attend state colleges to study engineering and science. A typical response to the question "Why didn't you apply to MIT?" was "My family couldn't afford it."]

  13. Robert

    May 2, 2014 @ 9:44 am

    13

    Colleges that are need blind for US students is a much longer list and seem to include many top universities. I would also suggest there is very little value in paying $300,000 for a private school that’s not top ranked. ROI is just not there, better off saving your money and go to a good quality state school.
    I am quite surprised by the result of the MIT study. A student who has the grades to make it into MIT should be smart enough to figure out how the school’s financial aid system works and ignore the ticket price when applying.

  14. philg

    May 2, 2014 @ 10:17 am

    14

    Robert: I’m sure that MIT also thought that consumers would be smart enough to guess in advance the outcome of their opaque discounting (“financial aid”) process. Or that all consumers would agree that whatever family contribution the MIT bureaucracy thought was affordable was in fact affordable for them.

    Thus I think we can say that the survey results show that sometimes it is necessary to interview consumers rather than make conjectures and assumptions about their beliefs and behavior.

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