- The wider middle-class in the US are used to paying for quality. It's not so ingrained in the UK mindset, where we have been used, up until recently, to government subsidies.
- The UK market is still emerging. Note that charging $14k is only available as of next year - and will most likely continue to rise. As it does, fewer will go to university and the 'value' will drop.
- US Faculty do have higher salaries (~x1.5 - x2.0 in my experience), but good people are deserting UK universities in droves because of massive cuts in salaries, conditions and facilities. My own research group had seen 4 people from 25, including 2 faculty, leave in the past 12 months for better-paid positions abroad. I expect that we'll see another 5 go in the next 12 months. None of them have been replaced.
- Typically, a college degree in the US has been worth the outlay. It's only the last 3-4 years that people have been questioning the worth of the college degree as an investment en masse, i.e. the US market is not currently stable and won't be so for another few years as people begin to reconsider what was previously a no-brainer. This will eventually translate to higher social status for a degree (as used to be the case) and cheaper prices (and so less debt necessary).
- In the last 10 years, in the UK we have begun to view a university as a business. We're asked about cost centers, what we can sell commercially and requested to make PR material for wide circulation. As a business, we are forced to charge what the market will bear. But because there's not a huge amount of competition between universities (at least on price), that doesn't make for a particularly healthy market.
I find most of what you say here fairly uncontroversial, but this raised eyebrows a bit:
This will eventually translate to higher social status for a degree (as used to be the case) and cheaper prices (and so less debt necessary).
That seems to violate a fundamental law of economics to me: If the demand for a good increases relative to the supply, the price will increase, which will reduce demand. If the supply of the product increases then the price will fall, encouraging more people to buy the product. Prices adjust up and down until the demand matches supply. So cheaper prices for degrees, by allowing more students to enroll, would seem to me to decrease status, not increase it.
Yes and no. If fewer people have degrees, the status will go up. If more people don't even consider them, demand also goes down and hence prices. So status and cost can both drop until it becomes cheap enough that everyone gets a degree as a matter of course. And then the cycle starts again...
Just like any luxury good, they'll restrict the supply while keeping the price high. Simply because many people don't even consider Prada shoes as an option hasn't made them any cheaper.
We're not considering only luxury goods though. There'll always be other suppliers of shoes willing to cut their prices to match demands, just like other colleges will cut their prices to match a spectrum of demand.
I think the point is that a Harvard degree will remain viewed as worth more than a Podunk College degree, regardless of the demand because the supply is naturally self-limiting. However, the cost of Podunk College will oscillate with the demand/supply.
If the demand for a good increases relative to the supply, the price will increase, which will reduce demand.
That only applies for normal goods. For luxury goods, an increase in price acts as a signal indicating increased quality. These goods (and I count a college diploma as one) act as status symbols, indicating the superior wealth and social status of their possessors. In this case, an increase in price only serves to amplify the signaling function of these goods, and can engender increased quantity demanded.
In other words, the demand curve for a college education is non-linear. On at least some segment of the curve, quantity demanded increases as price increases. We are in one of those segments right now.
- The wider middle-class in the US are used to paying for quality. It's not so ingrained in the UK mindset, where we have been used, up until recently, to government subsidies.
- The UK market is still emerging. Note that charging $14k is only available as of next year - and will most likely continue to rise. As it does, fewer will go to university and the 'value' will drop.
- US Faculty do have higher salaries (~x1.5 - x2.0 in my experience), but good people are deserting UK universities in droves because of massive cuts in salaries, conditions and facilities. My own research group had seen 4 people from 25, including 2 faculty, leave in the past 12 months for better-paid positions abroad. I expect that we'll see another 5 go in the next 12 months. None of them have been replaced.
- Typically, a college degree in the US has been worth the outlay. It's only the last 3-4 years that people have been questioning the worth of the college degree as an investment en masse, i.e. the US market is not currently stable and won't be so for another few years as people begin to reconsider what was previously a no-brainer. This will eventually translate to higher social status for a degree (as used to be the case) and cheaper prices (and so less debt necessary).
- In the last 10 years, in the UK we have begun to view a university as a business. We're asked about cost centers, what we can sell commercially and requested to make PR material for wide circulation. As a business, we are forced to charge what the market will bear. But because there's not a huge amount of competition between universities (at least on price), that doesn't make for a particularly healthy market.