Why is the Biden Administration Against Fee Transparency in Education?

By Alex Tabarrok.

"President Biden has made a big deal of simplifying fees:

The FTC is proposing a rule that…would ban businesses from charging hidden and misleading fees and require them to show the full price up front. The rule would also require companies disclose up front whether fees are refundable. This would mean no more surprise resort fees at check out or unexpected service fees to buy a live event ticket.

Like everyone, I dislike these kinds of fees, although I don’t think they are a good subject for legislation. But I would certainly not prevent firms from offering a simple, up-front fee. And yet that is exactly what the Biden administration is doing in higher education.

So called Inclusive Access programs let colleges package textbooks with tuition and other fees. Students get one bill and access to textbooks on the first day of college. It’s convenient, no more hunting for textbooks or sticker shock. In addition, inclusive access programs give colleges bargaining power when negotiating prices.

Strangely, the Biden administration’s Department of Education wants to ban colleges from offering inclusive access programs. Thus, the Dept. of Education is arguing that simplified pricing is bad for consumers at the same time as the FTC is arguing that simplified pricing is good for consumers. What makes this contradiction even more baffling is that Inclusive Access was a program promoted in 2015 by the Obama-Biden Administration!

Proponents of the ban argue that letting students negotiate their own purchases lets them better tailor the outcome. Maybe, but that’s the same argument for letting airlines unbundle seat choice and baggage allowances. Hard to have it both ways. Pricing is complex.

Tyler and I are textbook authors so you might wonder where our interests lie. I actually have no idea. It’s complicated. I suspect inclusive access leads to a more winner-take-all market on textbooks. Modern Principles is a winner, thus on those grounds I would favor. More generally, however, I would get the FTC and the Dept. of Education out of pricing decisions and let colleges and firms negotiate. Pricing decisions are more complicated and contextual than simplified bans or regulations."