Here we go again on high tuition and student debt. When will Millennials and their parents learn that there's a trade off: Incurring massive debt to go to the best-name school may not in fact be a good deal--compared to getting an equally good (if not better) education at a lesser-known school, reducing your debt, and proving your abilities on the job.

A bit of clarification about the cost number. First, Hechinger adds up the total costs expected from a first-year undergraduate: tuition, fees, books, room and board, and other normal expenses. In 2020-21, at the University of Chicago, this total is expected to be $84,888. By the fall of 2025, Hechinger expects it to exceed $100,000. Three other colleges--Harvey Mudd College, Columbia University, and Southern Methodist University--are projected to cost almost as much. And sure, the other Ivies, near-Ivies, and exclusive privates will not be far behind them.

Second, and very importantly, this figure is a sticker price. Only 37% of student actually pay this price. Most pay much less. (You can use the tool and find out here for yourself.) A student whose family income is under $75K pays less than $5,000. Even those students with no apparent financial need (family income over $110K) pay on average only $46,000.

It is widely supposed that this "discounting" of tuition is how Chicago and other pricey schools make attendance affordable for minorities and low-income students. Yes, it can help make that possible. But that's not its main purpose. (The percentage of Chicago undergrads receiving means-tested Pell grants actually fell from 15% in 2010 to 10% in 2016.)

No, its main purpose is to implement perfect price discrimination, scoop out all the consumer surplus under the demand curve, and maximize the university's permanent revenue. Armed with each student's FAFSA number (indicating the family's ability to pay), alumni status (legacies are always good for donations), and SAT scores (to keep USNews "excellence" ratings high), college admissions officers are perfectly equipped to "personalize" the price for each new offeree in a way that keeps the university flush, now and in the future. What's more, the high sticker price (even if few pay it) serves as a status marker, further increasing the college's appeal. As Alia Wong observes in The Atlantic, "the gap between sticker and net price is growing at colleges across the country."

If these were private businesses, the FTC would have intervened long ago to forbid such blatant price discrimination. But because these are nonprofits and because the ostensible goal is helping the less fortunate, policy makers let it go. Indeed, political leaders praise academia for this sort of self-serving manipulation. Big Pharma does much the same thing with its massive nonprofits whose purpose is to make expensive drugs "affordable" to low-income patients--or simply to relieve patients of their copayments. That's a massive bottom-line boost for firms that experience near-zero variable costs. (See "Big Pharma's Generosity Helps Their Bottom Line.")

Some Gen-X parents may even imagine that they are getting a "special deal." No, they're not. It's just like "personalized pricing" at Safeway: The purpose is not to give more money back to you. The purpose of all price discrimination is to take more money away from you.

The most delicious part of this story is that the University of Chicago is leading the way. Who better understands, in mathematical detail, how to confiscate consumer surplus than the heirs of Friedman, Coase, Director, Levi, Stigler, and Epstein? It was their "law and economics" curriculum that made Chicago famous.

A further twist, however, is that the rising generation of academics who currently teach at Chicago are becoming big advocates of renewed antitrust enforcement. Their arguments are no doubt in line with the frustrations of most American families (see “High Cost of Higher Education Can Put Families Into Impossible Binds”). They may even be somewhat supportive of the progressive agenda on college debt and antitrust being advanced by Elizabeth Warren and Bernie Sanders. Millennials certainly seem on board (see “Millennials Still Love Bernie Sanders”). The 2020 election may in an interesting fork-in-the-road for the pricing policies of big-name schools.