Status Quo Bias in College Financing

New ideas face an uphill battle not only because of legitimate concerns, but also because of humanity’s tendency to be uncomfortable with change – a phenomenon known as status quo bias.

Higher education financing is no exception, as illustrated by John Villasenor’s op-ed defending the idea that all majors should be charged the same tuition (Florida recently proposed charging different tuition for different majors, and his piece argues that would be unwise). An enlightening exercise is to read Villasenor’s piece but mentally replace the arguments for “equal tuition for all majors” with “equal tuition across all colleges” or “equal state funding for all colleges.” This exercise illustrates that many of the arguments that are being used to argue for equal tuition across majors are thought to be persuasive, yet when applied to similar questions, are found to be unpersuasive.

For example, this sentence on the consequences of switching majors:

Does Florida really want to add to their already substantial stress by imposing a financial penalty on them—and, in many cases, on their tuition-paying parents—for switching majors?

Becomes a sentence on the consequences of switching colleges (substitutions in bold):

Do we really want to add to their already substantial stress by imposing a financial penalty on them—and, in many cases, on their tuition-paying parents—for switching colleges?

And this sentence on STEM majors paying less than liberal arts majors:

Do Florida’s public universities really want to formalize the second-class treatment of liberal-arts majors in that way?

Becomes a sentence on California giving more funding per student to the University of California (UC) system than the California State University (CSU) system (substitutions in bold):

Does California really want to formalize the second-class treatment of CSU in that way?

In both cases, it seems radical and dangerous to apply the idea of differential pricing to majors – which is why most people would answer no to the first question in each set. Yet our current policies reveal that we have no problem with differential tuition across colleges and different levels of state support across colleges, which are similar enough issues that many of the same arguments come up. There may be legitimate reasons for some of the differences in persuasiveness across questions, but it seems to me that most of the difference is simply status quo bias. We are comfortable with different colleges charging different tuition because it has always been that way. And we are (irrationally) uncomfortable with colleges charging different tuition for different majors because they haven’t done so in the past.

Photo Credit: Technapex