ECO 204 Assignment Week 2 Raise Or Lower Tuition
Raise or Lower Tuition
ECO204
Week 2 Assignment
Tinda Reagan
June 29, 2015
I am currently consulting with NSU to find ways to increase revenue. Over the next few paragraphs I would like to address a few topics that will be beneficial in figuring out the best method in increasing NSU revenue. First I will assess a raise in tuition and if it will guarantee the university more revenue. Determine the conditions in which revenue will rise, fall, or remain the same. Then, explain the process of revenue at NSU, focusing on the relationship between the increased revenue from students enrolling at NSU despite the higher tuition and the lost revenue from possible lower enrollment. I will also discuss my suggestion for expanded revenue if the elasticity was truly (-1.2). Finally we will reach a conclusion about what best suits NSU and their future revenue. After carefully reviewing the NSU revenue I have determined that raising tuition will not necessarily increase revenue. Considering NSU is not research university revenue is not lost on research projects. The cuts in state funding and lack of donations have put NSU in a financial crisis. Therefore a raise in tuition will replace some of the funds already lost. Meaning an increase in revenue is unlikely. If, for instance, state governments were to cut subsidies for public colleges and universities, those institutions could choose to raise tuition (rather than, say, cut spending or solicit alumni donations) to make up the difference. This is a cost shift (Matthews, 2013). Let’s just face facts tuition will continue to rise no matter if state funding increases or donations rise. The cuts that happen during a downturn in the economy results in a rise in tuition cost, the money becomes a dependent factor in revenue for the university. But rather than adjusting itself when the economy starts to recover, the reliance on tuition revenue has steadily increased over the past 25 years, creating a "new normal" for
ECO204
Week 2 Assignment
Tinda Reagan
June 29, 2015
I am currently consulting with NSU to find ways to increase revenue. Over the next few paragraphs I would like to address a few topics that will be beneficial in figuring out the best method in increasing NSU revenue. First I will assess a raise in tuition and if it will guarantee the university more revenue. Determine the conditions in which revenue will rise, fall, or remain the same. Then, explain the process of revenue at NSU, focusing on the relationship between the increased revenue from students enrolling at NSU despite the higher tuition and the lost revenue from possible lower enrollment. I will also discuss my suggestion for expanded revenue if the elasticity was truly (-1.2). Finally we will reach a conclusion about what best suits NSU and their future revenue. After carefully reviewing the NSU revenue I have determined that raising tuition will not necessarily increase revenue. Considering NSU is not research university revenue is not lost on research projects. The cuts in state funding and lack of donations have put NSU in a financial crisis. Therefore a raise in tuition will replace some of the funds already lost. Meaning an increase in revenue is unlikely. If, for instance, state governments were to cut subsidies for public colleges and universities, those institutions could choose to raise tuition (rather than, say, cut spending or solicit alumni donations) to make up the difference. This is a cost shift (Matthews, 2013). Let’s just face facts tuition will continue to rise no matter if state funding increases or donations rise. The cuts that happen during a downturn in the economy results in a rise in tuition cost, the money becomes a dependent factor in revenue for the university. But rather than adjusting itself when the economy starts to recover, the reliance on tuition revenue has steadily increased over the past 25 years, creating a "new normal" for