Colleges have gotten increasingly good at price discriminating. The list price is set high, and then many customers are offered a discount called “financial aid” based on their ability to pay. Here’s the secret plan: In the future, Harvard will cost $1 billion a year, and only Bill Gates’s children will pay full price. When anyone else walks through the door, the message will be “special price, just for you.”
—Greg Mankiw, professor of economics at Harvard University
One of the curious aspects of how colleges price their bachelor’s degrees is that students pay different prices for the same education. Colleges essentially price themselves like airline tickets.
A person who books a flight on United Airlines at ...