Education

What is differential tuition?

Recently, I was talking with a Maryland resident about 529s, financial aid, and tuition. You know, my favorite subjects. After the conversation, I poked into the costs of attending the University of Maryland and found a surprise: differential tuition. 

Huh. What is lurking behind this obfuscation? Let’s find out.

What Good Is Differential Tuition?

In its effort to sell differential tuition on students and parents, the official FAQ starts off explaining the why before the what. To summarize the why:

  • Yo! “Exemplary academic experiences” ain’t cheap!
  • Yo! “Keep[ing] pace” with other universities ain’t cheap!
  • Yo! “Amazing facilities…under construction” ain’t cheap!
  • Yo! Recruiting “the best faculty in the world” ain’t cheap!
  • Yo! Recruiting “the best students” ain’t cheap!

Additionally, differential tuition will:

  • “Enrich the educational experience”
  • “Increase financial aid”
  • “Expand course access”
  • “Expand specialized career services”
  • “Enhance the value of degrees”
  • “Attract more top in-state students”
  • “Strengthen the national standing of [Maryland]’s flagship university”

Frankly, not including “will lead to world peace” and “a chicken for every pot and two cars in every garage” was a missed opportunity. With all those benefits, if I discovered that I didn’t have to pay differential tuition, I’d be upset!

But What Is Differential Tuition?

If you are a business, engineering, or computer science major with more than 60 credits (i.e. a junior or senior), you’ll be paying an additional $2,913 in tuition for the year, or 27% more than your roommates who are majoring in other degrees.

Not only that, but credits from non-University of Maryland sources count against you, including transferring students, AP, IB, and others, even though the University of Maryland had nothing to do with those credits. I suppose it was too much for the university to exclude them.

I was a computer science major in college. Frankly, I’m a little miffed by this approach. Okay, more than a little. The only benefit that resonates with me is the hiring of strong faculty. To me, the rest is marketing fluff. I didn’t need an “amazing facility”, just a regular ‘ol campus building. Shouldn’t everyone be getting an “exemplary academic experience”, not just the CS students? Many of the other benefits sound like the university is trying to solve its own problems or those of the state.

This is market segmentation. Differentiate the students who we suspect will be easily employed following graduation and use them to subsidize the students and departments that likely won’t be as fortunate. Reminds me a little of the quote “from each according to his ability, to each according to his needs.”

Instead, A Tuition Discount

Did the University of Maryland miss an opportunity here by marketing it as a tuition increase instead of a discount? What if they had instead increased everyone’s tuition to $13,867/year (about as much as Virginia Tech) and then handed out discounts for other degrees. You’re a third-year biology major or first-year CS major? You get a $2,913 discount. Fourth-year engineering major? Sorry, no discount for you.

The truth is, a discount probably would have been challenging as well. No one trusts sushi that’s on sale. And unfortunately, many people view their college a lot like they do their sushi. Seems rather silly to me.

Conclusion

I have never set foot on the University of Maryland’s campus. I’m sure it’s a fine, august institution. I’m fascinated by the “shaft certain majors” pricing model. Is that pricing innovation going to spread to more universities? My home state UVA already has tuition rates that vary between schools and between upper and lower class divisions. Is this just the beginning? Will it damage the state’s ability to compete with other states or regions who naturally draw students seeking these degrees?

I’d love to hear your thoughts. Drop me a comment!

Hasta luego!

Another product of Maryland

4 thoughts on “What is differential tuition?

  1. It might be interesting to investigate the claim that state schools give preferential treatment to out-of-state students because they pay more tuition than in-state students.

  2. Our business school charges differential tuition. It pays, in part, my salary.

    The economics of higher education indeed seem broken. However, I don’t see it changing until students showing up (and parents stop paying). From my vantage point, we’re not close to that point yet. However, I might be wrong. Until then, expect more $85M student recreation centers like LSU: https://www.wsj.com/articles/lsus-lazy-river-and-the-student-fee-sham-1513381917

    1. I think the professor salary is the only justification that seems reasonable. The other items were just to avoid having a single bullet point.

      Lazy river on campus? Man, I missed out!

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