Setting Tuition and Financial Aid

575 Words Sep 13th, 2013 3 Pages
Setting Tuition and Financial Aid
Managerial Economics
09/15/2013

The idea behind “applicants had apparently concluded that if the college cost more, it must be better” (Brickley, Smith, & Zimmerman, 2009) is still a premise that society perceived as accurate but the financial problem behind this idea is if students are not receiving the help needed with a financial aid increase, it feels that this idea will not hold up very much longer.
Susan’s analysis that the increase in tuition fee is likely to increase in the student enrollment and therefore would be helpful in solving the school’s financial problem is absolutely incorrect. Financial aid is an important factor when students are thinking about applying for a college.
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The following result associated with increase in the demand for enrolment in other colleges has convinced the president of Liberal Arts College that increasing tuition fees would lead to an increase in the quantity demanded. But Susan’s analysis is not accurate and the increase in enrollment along with increase in tuition fee is not because demand curve is upward sloping but because there is just an increase in demand for enrolment in these prestige colleges. Hence Susan’s analysis and suggestion of increasing the tuition fee and decreasing financial aid should not be accepted.
A college should be recognized by its education and academic levels and not by its costs of attendance. Susan wants to increase prices to increase revenue and not because the college is investing on better academic resources and faculty staff. If the college wants to increase total revenue, then they need to focus on improving the quality of education by having a better faculty staff and study environment, which ultimately may lead to better job opportunities for student after graduation.

References
Brickley, J.A., Smith, C.W., & Zimmerman, J.L. (2009). Managerial economics and organizational architecture. (5th ed.) New York: McGraw Hil/Irwin.
Clark, K (2013). Understanding the Skyrocketing Costs of a College Education.