IU's Tuition Credit Plan Has Major Flaw

Indiana University recently announced a plan to address the concerns over rising tuition. President Michael McRobbie discussed the new plan on September 1st, 2009. The plan calls for tuition "credits" to offset tuition increases for "good" students. Students that maintain full time status, hold a B average, and our considered in-state will receive about $300 in tuition cuts.

Recently, Indiana University, as well as Purdue University, have been under pressure by state lawmakers to adjust their increases in tuition. Please allow me to boil it down for you. The lawmakers suggested an acceptable range of tuition inflation. IU disagreed, and raised tuition significantly more than the lawmakers recommended. The lawmakers got mad, and held up building project approvals, and then IU created this plan to appease them.

But let's consider the very essence of the problem. Lawmakers felt that IU raised their tuition too much in the face of a daunting economy. It was felt that students (and families of students) would be asked to  sacrifice more economic resources in a time when economic resources are scarce. However, the real problem is this: well educated students will be flooding the job marketplace with giant amounts of debt and no jobs to be had. So whereas the "good" student will now be facing these prospects with less debt, the "bad" student will be facing these prospects with more than the already distinguished "good" student.

Performance in college is much like performance in the mainstream economy. Some individuals rise to the top and flourish, while others sink to the bottom. This is where things get a little hairy. People will succeed and people will fail. And those that succeed create a better path for themselves along the way via incentives, and opportunities created by their hard work. As you may agree, there is nothing wrong with that. In fact, that age-old process of incentivisation and achievement is beautiful.

The problem is this: the "bad" students, those that create their own financial disadvantages via sloth, are going to be at an even bigger disadvantage when it comes to getting control of their financial lives. Don't get me wrong, I'm not suggesting that these students receive a hand-out. I'm simply suggesting that there are always going to be below average students (thus the average), therefore this new program simply puts these below-average students in a deeper hole in relation to their achieving peers. It will probably incentivize a few hundred students to push for that B average, but it more likely will put a bigger financial divide between the good and bad student.

IU must realize that their incentive program, while noble, will actually put their average and below average student at a bigger economic disadvantage than ever before. They would have been better served to cut tuition across the board, and leave the dangling carrots to the corporate world.