¶ … change dining plan at Texas a&M University The person making the transaction, the student, doesn't respond to market incentives because they aren't the ones paying for the food. Prices for the meal plans are included in the overall bill that students or parents have to pay. And because it is on top of other expenses, it is easy to overlook the huge expense of these plans. Students who live on campus are often individually mandated to purchase a plan, which sounds a lot like Obamacare, doesn't it? Just as distortions occur in the healthcare market because of third-party payer, so too are distortions present with on-campus dining. Because they are being overpaid for lower-quality food, food service providers have little economic incentive to improve quality or lower costs." (p. 1)
PROPOSAL TO CHANGE REQUIRED DINING PLAN FOR INCOMING FRESHMEN AT TEXAS A&M
Freshmen and members of the Corps of Cadets at Texas A&M are required to select a dining plan prior to attending the university however, should the student fail to select this dining plan by the first of August, the student is then automatically assigned to the Good Bull plan. This plan includes 120 meals or approximately seven to eight meals per week. Each plan that is created by A&M University dining has three tiers within the plan. The various University dining plans include: (1) Old Army; (2) Good Bull; and (3) Non-Reg. The number of meals varies ranging from approximately two hundred meals to ninety meals each semester. The Old Army meal plan is the most expensive costing $2,070.00 which provides the student with $500.00 dining dollars each semester and then ranging downward to the lower end of the spectrum at $1,090.00 providing the student with $300.00 dining dollars or ninety meals per semester.
II. Statement of the Problem
The problem being experienced by students with the University dining plans is such that dining dollars remaining at the end of the fall semester may be moved to the spring semester only if the same dining plan is purchased by the student in the spring semester that was purchased in the fall semester. However, dining plan meals do not roll over to the next semester and the left over meals are lost by the students. Meals are not eligible for transfer into dining dollars in turn dining dollars cannot be exchanged for cash.
III. Background of the Problem
According to the work of Kaib (2014) university meal plans "are just like Obamacare…across America, college kids are ripped off by campus meal plans." (p. 1) The students are reported to be faced with "limited choices, high prices, and business monopolies on campuses. The quality is low, the cost is high, and lines are far too long." (Kaib, 2014, p. 1) It is reported that campus officials at American University made a decision that they would not renew their food-service vendor contract following years of complaints. Then a new company was contracted with based on promises of better food and service with university officials ensuring students that conditions would improve however, that has not been the case. Universities campuses are anything but a free market with on-campus dining described as "essentially a duopoly, with two entities" the food vendors and local businessmen reported to be running the dining outlets on campus and those with meal plans paying more for their food than is paid by customer purchasing the same food with cash or off campus.
It is reported that since students who have meal plans "are typically somewhat insulated from the costs" due to college loans and parents that they are invariably ripped off by dining departments at universities. For example, students at American University with the 150 meal swipe plan are reported to pay in excess of $13.00 per meal and can be used for purchasing burger meals, Subway sandwiches, chicken tender meals as well as other food options however, clearly, these meals would be much less than $13.00 per meal if the meals were purchased with cash. These types of problems are experienced by students at universities across the country.
It was reported by The Massachusetts Daily Collegian in regards to problems with meal plans in January 2013 that "students are losing almost $2.00 for every swipe they use at [on campus] outlets." (Kaib, 2014, p. 1) Importantly, the United States Department of Agriculture reports that the cost to feed a family of four ranges between $146.00 to $289.00 per week and feed them healthily whereas students with the Value Meal Plan at American University are paying in excess of $153.00 per week for food. Therefore, the students are spending enough to feed a family of four per week for only their individual meals using the University meal plan.
A report published by Consumerism Commentary reports that if students are to realize the meal plan's full advantage in view of the price paid for the plan that they must "eat every meal and use every point, and that's not a realistic expectation." (Kaib, 2014, p. 1) Kaib (2014) reports "The meal swipe system at most universities is similar to ...
Porter (2010) reports that according to the Wesleyan University business office "simple calculations reveal that "students with meal plans pay more for each meal than those who pay with cash." (p. 1) It is reported that a full meal plan costs approximately $1,809.00 per semester. Stated is:
"At this rate, the Block 150 plan, which is the most popular, costs $10.23 per meal. The Block 200 plan costs $8.55 per meal. This semester, 94% of residential students selected one of these two plans. Only 3% of residents selected the 23 Meal plan, which costs $6.03 per meal and limits students to using one meal per meal time. For those who pay cash, dinner in the Baldwin dining facilities costs only $7. Breakfast and lunch are even cheaper at $5 and $6, respectively. Wildcat allows students to mix-and-match entrees, sides and drinks, but the most expensive combination would cost no more than $7.72 if paid cash. The priciest meal on the menu at Mario's totals $7.07. The resident district director for Pioneer College Caterers, Chris Lampson, who has been at his current post for two months, said he acknowledged the discrepancy between the price paid by students and the price a la carte." (Porter, 2010, p. 1)
It is reported that missed meals were factored in so that costs could be kept down however; the school's prices are not based on a per-meal basis.
Landes (2014) reports that college meal plans are convenient because "A student's food costs are wrapped into each semester's tuition bill, allowing them to focus on academics and college activities rather than finding the money for each meal. Many colleges offer similar meal plan choices, and the two most popular options are plans that offer either three meals a day or two meals a day. In addition to the ability to swipe a card to qualify for a meal, many dining plans offer points to be used for additional food expenses, whether in a dining hall, a campus fast food establishment, or a convenience store." (p. 1)
However, it is reported that meal plan prices vary between schools and meal plans are "expensive, and most students don't take full advantage of them." (Landes, 2014, p.1) Landes reports examples of how much a typical meal plan costs each semester at schools and states "At some schools, the two plans cost the same amount. The difference would be in the number of "points" one may receive for extra meals." (2014, p. 1)
The following chart provides examples of meal plans at several universities.
College Two meals per day Three meals per day
Ithaca College $2,882 $2,992
Rutgers University $2,035 $2,190
SUNY Potsdam $2,185 $2,250
West Chester University $1,189 $1,281
Yale University $2,600 $2,600
Source: Landes (2014)
Many universities make it a requirement that students who live on campus sign up for a meal plan since these prices "not only pay for the food, but help defray the college's costs of running dining halls on campus, and all students share these costs regardless of whether they use the dining halls." (Landes, 2014, p. 1) The majority of universities let the student choose between a two meal per day plan and a three meal per day plan with additional options available that offer fewer meals with varying combinations of flex or meal points.
Williams (2013) reports that Only one-third of 3,400 U.S. college students say they're satisfied with their meal plans, found a survey by food industry research firm Technomic. But schools are finding that to address the problem, they need to go beyond simply improving what winds up on diners' plates." (p.1) According to David Porter, food service consultant "Sometimes it's not the food itself that can make or break a school's dining program; it's where and how it's available on campus." (Williams, 2013,…
The person making the transaction, the student, doesn't respond to market incentives because they aren't the ones paying for the food. Prices for the meal plans are included in the overall bill that students or parents have to pay. And because it is on top of other expenses, it is easy to overlook the huge expense of these plans. Students who live on campus are often individually mandated to purchase a plan, which sounds a lot like Obamacare, doesn't it? Just as distortions occur in the healthcare market because of third-party payer, so too are distortions present with on-campus dining. Because they are being overpaid for lower-quality food, food service providers have little economic incentive to improve quality or lower costs." (p. 1)
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