My son tells me that there is a big debate going on at his school over whether more student services should be included in tuition bills. This is a form of negative option billing where students who don’t want the service have to pay for it and later line up to get their money back. This kind of change creates some financial winners and some losers.
Let’s take a simple example. Suppose that a one-term bus pass costs $300. Suppose further that the students fall into three equal-size groups:
1. Those who use the bus.
2. Those who don’t use the bus and will get their money back.
3. Those who don’t use the bus but won’t bother to get their money back.
By switching to negative option billing, twice as many students pay for bus passes. Thus authorities only need to charge each student $150 for the bus pass fee part of the tuition bill. With this change, students who ride the bus win $150 and students who don’t bother to get their money back lose $150.
Of course, the real situation would be more complex. The three groups wouldn’t be of equal size. Some students who don’t bother to get their money back will probably use the bus at least a few times. Not all of the cost savings would be passed along in the form of lowering the bus pass charge on the tuition bill.
Even when we take the more realistic conditions into account, students who use the bus should get their passes cheaper under the new system. If this doesn’t turn out to be the case, then someone isn’t negotiating very well on the students’ behalf.