Should Nobody State University Raise or

Topics: University, Higher education, Education Pages: 8 (1932 words) Published: November 9, 2014


Should Nobody State University Raise or Lower Tuition
Roseanna Lasley
ECO 204 Principles of Microeconomics
Instructor Harvey Criswell
September 27, 2014

Should Nobody State University Raise or Lower Tuition
Assess a raise in tuition and if it will necessarily result in more revenue:
There are many issues why assessing the raise in tuition and that is first and foremost the college is spending more money each year. In many instances they have to pay more out to the faculty and staff, building new state of the art facilities whether it is class rooms or sporting arenas, performing more research and these cause spending to rise. Then we see that the colleges and universities have seen a decrease in funding from the state and federal levels due to the economy and in turn colleges are making up for the loss of funding by increasing tuition. The issue here is that the schools are taking out the loss of funding from the state and federal level on the student’s tuition increases. Describe the conditions under which revenue will (a) rise, (b) fall, or (c) remain the same:

We all know that our economy has taken a big hit the past few years and times are getting harder for everyone. Being a college student and having two young adults in college as well I have truly seen how the economy has affected our financial aid over the past eleven years or so. Tuition has become a big issue for community colleges, universities and private colleges all over the country. Revenues all over seem to be taking a hit and we see this in our increases in federal and state taxes it seems every year. With the economic situation as it is it is inevitable that the college tuition will go up just like most everything else has. “When states run short of money, higher education is often targeted because it "has a built-in user fee, and that is tuition." (Frahm, R. A., & Courant, S. W. 2002)

Explain the process of revenue at NSU, focusing on the relationship between the increased revenue from students enrolling at NSU despite the higher tuition and the lost revenue from possible lower enrollment:

Tuition revenues have increased for the most part because of the increased enrollment due to higher education being needed in the economic situation we find ourselves in today. Universities are finding that as long as their numbers are high their revenue will remain steady, but with the economy in the shape it has been for the past few years many are finding their enrollment lowering. When this occurs they have to find means of balancing the budget in order to not close the doors. I believe the issue between being able to have adequate revenue stems from those having fear of the skyrocketing tuition costs and having to be in debt the rest of their lives in order to further their education. I believe that the state and local government is the root to the problem because our economy has gotten so bad. Financial assistance has been taken from the higher education area of the state and federal government and placed elsewhere; therefore it is up to the school to find a means of having revenue and being able to function during lower enrollment times. There has to be a means of cutting areas in which they can in order to keep the doors open and continue to provide these students with the education in which they work hard for.

If the true price elasticity were (-1.2), discuss what you would suggest the university do to expand revenue:
It is very important for colleges and universities to measure tuition elasticity appropriately because they depend on tuition for income. In order for the Nobody State University to increase revenue they can increase tuition as long as they have an adequate student enrollment. Now, if the tuition elasticity is greater than 1 and the students are price sensitive then and increase in tuition rates may cause a decrease in total revenue and student enrollment.

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References: Amacher, R., & Pate, J. (2013). Microeconomics principles and policies.  Retrieved from
http://content.ashford.edu/books/AUECO204.13.1
Frahm, R. A., & Courant, S. W. (2002, Nov 07). UNIVERSITY TUITION, FEES TO SOAR.
Hartford Courant Retrieved from
http://search.proquest.com/docview/256652797?accountid=32521
Gardner, S. (2005, Feb 14). The HIGH cost of college; the why and what to do about it. The
Hispanic Outlook in Higher Education, 15, 15. Retrieved from
http://search.proquest.com/docview/219305774?accountid=32521
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