The Higher Education Bubble is starting to burst, and campus administrators are begging to grapple with difficult fiscal choices.

As an example, a committee advising Florida Governor Rick Scott suggested that various degree choices would have differing tuition changes. In part, it is hoped such a move would incentivize enrollment in the academically challenging STEM disciplines (science, technology, engineering and math). Jobs in these fields are readily available; Americans to fill those slots are not. Ohio University’s Board of Trustees has recently considered a similar multiple-price approach, and other schools are doing so.

Richard Vedder, who teaches economics at Ohio University and is an Adjunct Scholar at the American Enterprise Institute offers his analysis:

I have mixed reactions to this proposal. Conceptually, it is a good idea. Within universities, on the supply side, the cost of educating say, mechanical engineers, is probably a good deal different (I would surmise more) than educating English or history majors. From the consumer perspective, the demand for engineering majors often exceeds that for English majors. Differential tuition pricing potentially could more closely align the amount students pay to the costs and benefits of various degrees.

For example, if we have underutilized anthropology professors, the cost of educating one additional anthropology major may be close to zero–existing faculty could handle the job. If we have accounting professors working at capacity, the extra cost of adding another major or two might be very high–requiring more faculty. Having lower prices for anthropology majors and higher prices for accounting majors might lead to a better, more efficient utilization of university resources.

Despite claimed altruistic motivation, the current approach of charging different students varying amount for the same services is probably as much an attempt at revenue maximization; in economics jargon, each individuals has his or her own demand curve, so the “equilibrium” price varies by individual. This is the same approach used by airlines–charge price-sensitive tourists buying their tickets well in advance far less than price-insensitive business persons flying on short notice. The airlines collect more revenue, planes fly at near capacity, and resources are more efficiently used.

However, history professors at the University of Florida are protesting this proposal. Inside Higher Ed contributor Colleen Flaherty says the faculty belies this approach will be “pricing out the humanities” and have organized a petition against the Florida proposal.

.. Lillian Guerra, one of Goda’s history colleagues at the University of Florida and a petition co-creator, said the task force plan lays the foundation for second-class degrees. Departments receive funding based on how many students enroll in courses, she said, so decreased humanities enrollment would lead to less funding for the department.

Damage to the department would damage the university overall, she added. “In the short term, I think we run the risk of demolishing our prestige as an institution, when so much of the institution’s prestige has been anchored in liberal arts.”