Dear Harvard: I, for one, WANT cheap tuition!

If someone can explain this, and assure me that I didn't get redirected to The Onion, then please do (Warning: this is from the NYTimes, so it may throw a roadblock in your way if you want to read the rest of it):

COLLEGEVILLE, Pa. — John Strassburger, the president of Ursinus College, a small liberal arts institution here in the eastern Pennsylvania countryside, vividly remembers the day that the chairman of the board of trustees told him the college was losing applicants because of its tuition.

It was too low.

So early in 2000 the board voted to raise tuition and fees 17.6 percent, to $23,460 (and to include a laptop for every incoming student to help soften the blow). Then it waited to see what would happen.

Ursinus received nearly 200 more applications than the year before. Within four years the size of the freshman class had risen 35 percent, to 454 students. Applicants had apparently concluded that if the college cost more, it must be better.

“It’s bizarre and it’s embarrassing, but it’s probably true,” Dr. Strassburger said.

Ursinus also did something more: it raised student aid by nearly 20 percent, to just under $12.9 million, meaning that a majority of its students paid less than half price.

Ursinus is not unique. With the race for rankings and choice students shaping college pricing, the University of Notre Dame, Bryn Mawr College, Rice University, the University of Richmond and Hendrix College, in Conway, Ark., are just a few that have sharply increased tuition to match colleges they consider their rivals, while also providing more financial assistance.

The recognition that families associate price with quality, and that a tuition rise, accompanied by discounts, can lure more applicants and revenue, has helped produce an economy in academe something like that in the health care system, with prices rising faster than inflation but with many consumers paying less than full price.

Average tuition at private, nonprofit four-year colleges — the price leaders — rose 81 percent from 1993 to 2004 , more than double the inflation rate, according to the College Board, while campus-based financial aid rose 135 percent.

The average cost of tuition, fees, room and board at those colleges is now $30,367. Many charge much more; at George Washington University, the sum is more than $49,000.

But aid is now so extensive that more than 73 percent of undergraduates attending private four-year institutions received it in the school year that ended in 2004, not even counting loans.

“We can cushion the sticker shock,” said Amy Gutmann, president of the University of Pennsylvania, which distributes aid on the basis of financial need. “We focus on both middle-income and low-income families.”

So net prices vary widely on a given campus. On some, as many as 90 percent of students receive support, primarily from the college itself or the federal government.

And financial need is not the only basis for it. Many colleges, competing for the students with high grades and standardized test scores that help a college rise in rankings guides, offer merit aid ranging from a few thousand dollars to a full scholarship.

But officials of private colleges and universities say they fear that unless other steps are taken, the middle and upper middle class could ultimately be squeezed out.

“Eventually, if we’re going to keep raising tuition at rates much more than the increase in family incomes, then something has to be done to make the places more accessible to the middle class,” said Ronald G. Ehrenberg, director of the Cornell Higher Education Research Institute.

As it is, some students may not even apply to private colleges, scared away from the start by tuition and unaware of the available discounts. After all, tuition and fees at public colleges and universities — though growing recently at a faster pace than those at private institutions — remain vastly lower, at an average of $5,836, the College Board says.

It can be argued that everyone studying at a private liberal arts college is getting a discount. At institution after institution, officials say they offer an education costing tens of thousands of dollars more than even the college’s “sticker price.”

Take Swarthmore, the elite college half an hour’s drive from Ursinus. With an annual budget of $106 million to educate just under 1,500 undergraduates, Swarthmore spends about $73,690 a student. But its tuition, room, board and fees in the last academic year were little more than $41,000.

“The half of our student body whose families are paying the full sticker price are paying $41,000 for something that costs $73,000,” said Suzanne P. Welsh, the treasurer. “So they’re getting a great discount.”

The other students receive a bigger subsidy: on average, aid totaling more than $28,500, most of it from the college itself. (Swarthmore limits its aid to students with financial need, but that can mean those from families earning $150,000 a year if, for instance, there are circumstances like having multiple children in college.)

What makes it all work is Swarthmore’s $1.3 billion endowment, which throws off enough income to cover 43 percent of the operating budget.

There's more here. But I want to point out this section:

Other colleges have tried the opposite. Muskingum College in New Concord, Ohio, cut tuition and fees drastically in 1996, to $10,285 from $14,240.

“We believed that if we lowered tuition, we would open access to the middle class” and “that we would continue to serve the higher socioeconomic-background students by becoming a best-buy institution,” said Anne C. Steele, Muskingum’s president.

Revenue increased, with enrollment of more students who could pay full price. Muskingum has also grown, to 1,600 undergraduates from about 1,000.

Yet the same strategy proved disastrous for North Carolina Wesleyan College. Ten years ago that college cut tuition and fees by 22 percent, to $7,150. But it attracted fewer wealthy applicants and more poor ones, who needed more aid even as the revenue generated from tuition declined.

“It didn’t work out the way it had been hoped,” said Ian David Campbell Newbould, the college’s president. “People don’t want cheap.”

Listen, I went to a very nice pretty small private school that did NOT cost an arm and a leg, because there is not way we could have afforded it, and as it was, I spent many, many hours a week earning the money to help pay for it, through work study and music scholarship and running a proofreading service. I didn't go to the big state schools to which I had been accepted not because they were cheaper, but because they had gigantic class sizes and the lack of the personal touch. I don't think I would credit this to a desire for exclusivity and clubbiness.

Who ARE these people? All that happens when the price is increased is this, says the mother of a middle school child for whom college is looming seemingly tomorrow:

Parents get freaked out. We think about selling a kidney (you only need one, right?) and buying lottery tickets, even though we know the lottery is really a tax on the mathematically challenged. Too much in this world is not priced according to reality: look at how much it technically costs to go to the doctor, or the hospital, or for medicine, or the sticker price of a car, to name a few ridiculous examples.

The attitude here seems to be that it doesn't matter what the official price is. Try telling that to my wallet.