College is a bargain

Or, Why you don't want to major in business at Southwestern University

Jake B. Schrum, president of Southwestern University at Georgetown, Texas, seems terribly pleased with his argument that "College Tuition Still Remains a Bargain," which he also read earlier this week on public radio's Marketplace:

For some reason, Schrum thinks this is a valid comparison:

Try to put your 17-year-old up in an Embassy Suites or any other moderately-priced hotel for 240 nights a year, the length of an average year in college.

You'd pay about $24,000 for the year, and all you'd get is a room, linen and maid service, and maybe a free continental breakfast.

What else would your son or daughter get for the hard-earned $24,000 you spent on a 240-day hotel stay? In a word, nothing.

No professors to teach them. No science labs or libraries. No music instructors. No technology centers. No tutoring or other help when they can't figure out calculus, write a coherent sentence, or parse a differential equation.

No help with finding a job or career placement and training. No coaches or lush green recreational fields.

But that's what a one-year package of tuition room and board costs at a good university.

If you had to actually buy all those things on top of renting your Embassy Suites room, you'd begin to appreciate it.

It's a deal even at a top private university that can cost as much as $45,000 a year.

Then consider what students, families, politicians demand of colleges and universities. …

I hardly know where to start. It seems like Schrum is upset that he can't charge students $100 bucks a night to stay in Southwestern's dorms. It also seems like he's never even seen those dormitories since the school's Student Handbook makes no mention of maid or linen service, while explicitly warning that "There are very few single rooms available on campus."

In other words, Southwestern students, like almost all college students, have roommates. Somehow Schrum managed to forget about that when constructing his analogy. Remembering it would have been rather inconvenient, since having to cut that $24,000 figure in half would have shredded his whole argument.

The dorm rooms Southwestern students share are also not the "spacious, two-room suites" that Embassy advertises, so that $100-a-night figure — which seems to have been chosen due to fear of arithmetic — is probably too high. A quick Priceline check of hotels in Georgetown, Texas, finds moderately priced hotels starting at anywhere from $51 to $79 a night. So let's take the high end, rounding up so as not to scare President Schrum with tricky math, and knock that $100 a night down to $80. Now our 240-day hotel stay is $9,600 (still including the maid and linen service that even those $45,000-a-year colleges don't offer).

But we're still talking about actual, for-profit hotels here — businesses whose prices have to cover the revenue lost due to vacancies. A hotel with a 70-percent occupancy rate would be doing pretty well, but college dormitories are tailored to the precise demand of the student body, ensuring virtually 100-percent occupancy. (Southwestern, like most schools, has a waiting list.) If you're operating a "hotel" with a guaranteed 100-percent occupancy, you ought to be able to do so for considerably lower prices than a hotel facing a constant 30- to 40-percent vacancy rate.

I'm not sure how to account for this difference (all I know about hotel management is that you sure as hell shouldn't study it at Southwestern University), but let's take a ballpark guess of 15 percent. That makes for a rate of $68 a night. Split with a roommate over 240 days, that comes out to a little over $8,000 — or roughly one third of Schrum's "bargain" $24,000 year of college (his school charges $23,650, not counting room and board).

Schrum's lame apples-to-oranges nonsense only makes this "bargain" price seem more dubious. Instead of making this price seem reasonable, it strengthens the suspicion that colleges and universities really can't account for all of that money and there's no reason we couldn't scrap this ridiculous system in favor of something far more affordable.