Why I don't give .edu discounts

I create an educational product and students occasionally ask for discounts. So-called "educational" discounts are very popular, but I don't give them.

To be honest, I don't like them at all, but there is some nuance.

Not all educational discounts bother me—primarily it's the discounts limited to students at degree-granting institutions and especially those tied to having a .edu email address.

# Why might .edu discounts be good?

Many of the arguments for student discounts are similar to those for region-based discounts, which I am a fan of. So let's look at some reasons to give discounts in general.

# Need

The idea behind student discounts, at least as it was first explained to me, sounds great. Students are often broke so it's only fair to give them a price break!

I totally get that. As a student myself, I worked as a waiter, a calculus tutor, a bar tender and even started a house painting franchise in order not to get buried in debt. I went to a cheap state school, back when it was only about 70% of what it costs now, and I was still broke.

I have a great deal of sympathy for anyone trying to pay their way through school in the US now. I have even more sympathy for anyone taking out debts they likely won't repay for many, many years.

# Price discrimination

In economics, price discrimination refers to the idea of charging some customers more than others in order to maximize revenue.

In the extreme form, it would mean charging each customer the absolute maximum price they're willing to pay and completely eliminating consumer surplus. This isn't practical or possible in most cases, but less extreme forms are very common.

Sometimes customers are segmented by their actions, such as spending time clipping coupons or watching movies during typical work hours. Other times, customers are segmented simply by who they are. Senior discounts or higher prices for foreign tourists are both common examples.

A less direct form of price discrimination is to create a slightly different product that would only appeal to customers with more money. In software, we see this often with features revolving around team management, accounting and compliance. This makes it possible to both sell to frugal hobbyist users and to charge large companies very high prices.

# Creating habits

For most, going to college is a time of major life transitions. Other than marriage, having children or serving in the military there are few times when people change as much.

This is incredibly appealing to marketers.

The opportunity to reach people when they're at a place where they're open to creating so many new habits that will stick with them for years or even decades is worth spending heavily on. One way to do it is through advertising. Another is by giving students a steep discount.

# The problem

In a number of ways that matter to me, educational discounts as they are typically implemented are radically different from region or need-based discounts.

# Who has a .edu email address?

Who has a .edu email address? Generally it's only students, faculty and alumni of accredited US colleges. This roughly translates to "many of the most priviledged people in the world".

The vast majority of adults in the US do not have a 4-year degree. There are probably a billion people in the world who would love to either enter a US college themselves or get their children into one.

Competition for those slots is fierce. People spend small fortunes on English language education for a shot. I've seen it first-hand living in Asia for most my adult life.

Obviously, not everyone with a .edu email address is or will be wealthy. However in aggregate, their parents are wealthier and they will be wealthier than any country in the world... by a large margin. At a minimum, getting a 4-year degree costs tens of thousands of dollars. Saving a few dollars a month on my screencasts is trivial in comparison.

In contrast, the average person in Nigeria earns 2,000 USD/year. Even the average programmer isn't making much compared to their counterparts in other countries. Nigerians are also a double digit percentage of my audience! Indians are a large percentage as well.

I have a completely different reaction when someone living in poor country asks for a discount than I do when someone spending more per year on tuition than I earned until my late 20s does.

# Who is a student?

An even more salient question is, who counts as a student. I've spent a great deal of time as a non-credentialed student at language schools, at a programming school and even completely on my own with a self-designed curriculum.

During those times, I wasn't very successful in asking for educational discounts since nearly all are tied to credential-offering schools. I often thought about why and settled on two answers.

  1. They probably worry about non-students claiming to be students to get the discount.
  2. Their educational discounts weren't really motivated by any sense of altruism or fairness to begin with.

# Hypocrisy

Perhaps the thing that most bothers me about student discounts I see announced is the virtue signalling.

If you're offering a discount to get your customers hooked early in their careers or to raise prices for business users, great. But you're not doing a noble thing if you're restricting a discount to people with .edu addresses.

What that discount model actually does is exclude all of the students in poorer parts of the world as well as anyone who couldn't stomach going $100k in debt for a credential.

# What does the discount subsidize?

As economists love to point out, incentives matter. When you subsidize something, you get more of it. This isn't just true of governments, but it's also true of companies and other groups.

That leads to the question of what educational discounts subsidize. In effect, they subsidize going to very expensive universities. Is this something we want more of?

In what's likely a minority opinion, I think too many people pursue formalized schooling for too long. Universities are necessary for some kinds of careers and for some kinds of research. Far more often, the price is just too high. The worst part of this cost isn't dollars either—it's four years of a person's life.

Nearly anything universities teach can be learned outside of a university, and usually faster. I've experienced this first hand with mathematics, foreign languages and programming but it's certainly a wider phenomena.

According to George Mason economist Bryan Caplan, only about 10%-20% of the value in schooling is actually education. The other 80%-90% is selection and signalling.

# What products are exceptions?

If I were selling very expensive tools for skilled professionals, like Adobe used to, then I'd offer student discounts. Even a person in relatively fortunate circumstances has fewer resources than a typical company.

Dropping a few dollars a month doesn't move the needle compared to tuition, but spending thousands of dollars on a photo or video editor sure could.

Another factor in Adobe's case was that by being the tool to use in the industry, students needed to learn it. Anyone trying to become a designer pretty much had to find a way, even if that meant "pirating" it. Giving students convenient affordable access to such a tool is also a great way to become a standard tool in the industry.

Even Adobe didn't limit their discounts to US students, though. Doing so might have cost them billions.

# The bottom line

Having a .edu email address generally means being in the most expensive and desired university system in the world.