The two most overpriced goods in the US economy are health care and private education. In the latter case we have been told that the cost of teachers has risen because these highly educated people could easily go and work on Wall St. or Silicon Valley.
Now all those fabulous job opportunities have dried up, yet tuition rates are unchanged as are professor salaries. So after all tuition paying parents have suffered a loss of 40% in their net worth, they are now looking at their options and public education institutions are back on the table. Many excellent students will now go to their local state university rather than pay $40m for a private college unless they can argue that it’s worth it.
This will cause the spread to narrow between the quality of student that goes to each institution. Rankings will narrow between them as many of the most overpriced mediocre private colleges suddenly find that applications dry up. Here are some of my favorites:
- Short USC vs. Buy UCLA – they’re right next door to each other, UCLA is ranked higher and costs less than half as much (for a California resident).
- Short Boston University vs. Buy U. Mass. U Mass is ranked 102 and costs $10m while BU is #50 and costs $37m! (honorable mention on the short side to Northeastern – $34m). U Mass is going up at BU’s expense.
- Short USD vs Buy UCSD. UCSD is ranked 35 and costs $9m for in state applicants while USD is ranked #102 and costs $34m! (honorable mention on the short side to Pepperdine- $37m and ranked below almost every UC college).
- Short U. of Miami vs. Buy U of Florida. The former costs $35m and is ranked #51 while the latter costs only $4m and is ranked higher at #49.
- Short Wake Forest vs. Buy UNC Chapel Hill. Wake forest is ranked only 2 spots ahead of UNC and costs $30m more for a state resident!
Any private college that depends on location to attract students is in trouble. Will people continue to pay huge extra $ for good nearby skiing or to just be in (say) Boston? How important is a tan at $40m/yr when you can get the exact same tan down the street for 1/4 or 1/8th the cost. Luxury good prices for mediocre education are coming to an end.