Calculations show the I-BUCKS meal plans sold by Residential Programs and Services offer little to no savings, despite claims of large discounts by the organization, giving rise to ethical questions about how RPS markets and sells its meal plans.
Hanging on the wall in the food court of the Indiana Memorial Union is a large crimson poster. It displays the “core values” of IU Dining, the new food services arm of RPS.
One of the core values is “transparency.” Another is “accountable.”
Misinformed students stand to lose potentially thousands of dollars before graduation, all the while thinking they got a good deal. Deliberate or not, RPS meal plans give the appearance of a scam.
RPS and IU Dining contend that their I-BUCKS meal plans offer large discounts. The I-BUCKS 60 plan is named for a supposed 60% discount, and the I-BUCKS 25 for a 25% discount. The language of “discounts” features prominently on the IU Dining website, printed informational materials, RPS emails, advertisements, tweets and signs at dining locations.
Consider the I-BUCKS contract for the 2019-2020 school year. According to the fifth clause, “I-BUCKS 60 plans provide a sixty percent (60%) discount off retail prices. I-BUCKS 25 plans provide a twenty-five percent (25%) discount off retail prices.”
Accordingly, the use of the word “discount” is pervasive among students. The belief circulates thanks to communications and publications from other IU groups, such as previous first-year orientation guides produced by the Indiana Daily Student, which regurgitate the message. Naturally, students and parents may think every dollar spent on an I-BUCKS 60 plan equates to $2.50 in the food court. What a bargain!
Calculations reveal that the plans offer little or no effective discount.The I-BUCKS 60 “Standard” plan, which IU Dining calls the “most popular plan,” offers no savings at all. The plan costs $3,600, and in return students receive 1,440 I-BUCKS points.
To recover the dollar value of these meal points, divide the number by 40%, which is what remains after the 60% discount. The result is $3,600, exactly the same number of dollars spent on the plan. It’s a zero percent discount. Similarly, the “Mini” plan is dollar-for-dollar. A student might as well pay with a credit card.
Even the “Max” plan, which costs $4,600 up front and provides $6,100 in purchasing power, only equates to a 24.6% savings. That’s less than half the rate of savings implied by the phrase “60% discount.”
It’s also less than the rate implied by the name of the I-BUCKS 25 plans targeted at off-campus students. The I-BUCKS 25 plan charges $500 at the outset and yields $533.33 at the cash register, offering a meager 6.3% savings.
Who does RPS think it’s fooling?
Last year, the IDS Editorial Board criticized the marketing of meal plans, as well as the “high markup” of food prices at RPS locations.
On one hand, the extensive use of the word “discount” in RPS informational and marketing materials is highly misleading. By another view, it may also be knowingly deceptive.
In an era of ballooning college debt and increased awareness of student food insecurity, the marketing scheme stands out as ethically indefensible.
The approach might be seen as less objectionable if all students had the freedom to opt out. Of course, students are usually locked into I-BUCKS plans and subsequently pushed to renew their contracts. In general, the university requires that all first-year undergraduates live in university housing, and, consequently, they are obligated by RPS to purchase meal plans.
According to the Living Wage Calculator from Massachusetts Institute of Technology , a Bloomington resident typically spends $255 a month on average on food expenses. That amounts to less than $2,000 total during the weeks classes are in session.
It’s a far cry from the minimum $3,600 price tag demanded from first-year students.
Many students can’t afford even the typical expenses for food. Recently, food insecurity in college has risen to be a major point of discussion among students. One survey by the Hope Center indicates that as many as 45% of college students are food insecure.
Considering that meal points can be added to the base plan at any time, the justification for buying a “Max” plan is paper-thin. “Max” and “Plus” plans cost more than double the typical food expenses in the MIT data tool.
Often, it’s simply more food than a student can eat. As a result, hundreds of meal points can go unused, and hundreds of dollars can end up wasted.
Until the policy changed in 2018, all remaining I-BUCKS 60 points at the end of the school year rolled over as I-BUCKS 25 points. Each dollar spent on a meal plan lost 46.7% of its value overnight. Many current seniors may recall having lost hundreds of dollars from meal points devaluing at the start of May 2017. The current policy, according to the contract, is that unused I-BUCKS 60 points keep their previous value but roll over for just one semester after the contract before disappearing.
IU Dining bases its suspicious claim of a 60% discount on the idea of “operational costs.” According to its plan comparison webpage, all I-BUCKS 60 plans incur a $2,160 operational cost. Additional I-BUCKS 60 points purchased after that value carry the true discount.
In other words, the first $2,160 spent provide the student with no meal points whatsoever. Then, by the logic of IU Dining, additional dollars offer a major “discount” on actual food items.
The idea that operational costs wouldn’t be included in the sticker price of an item probably strikes anyone who’s ever purchased food as bewildering, if not entirely nonsensical. If it’s not an outright attempt to confuse customers, then at least it appears unnecessarily complicated.
Residential Programs and Services, the parent organization of IU Dining, is a type of business which the university calls an “auxiliary enterprise.” Auxiliary enterprises have different accounting policies than other IU offices. By having their own budget and purchase accounts, auxiliary enterprises are in fact financially distinct from the rest of the campus.
The IU Bloomington budget for 2018-2019 shows that “student living,” which includes dining operations and RPS administration, accounted for nearly half of the auxiliary enterprise total budget. At $156 million, its allocation was larger than the budgets for athletics, transportation and events combined.
Despite the status of RPS as an auxiliary business, the Board of Trustees must approve all rate increases for room and board. And, they have. According to IU data, the official cost of room and board is higher than tuition and fees. It has increased 11% in the last five years, more than any other category in the cost of attendance.
What if students knew the real value of RPS meal plans? They might make smarter financial decisions and have more options for books, supplies and housing. Does this prospect frighten RPS? Put more favorably, does the profitability of the à la carte food business depend on misleading students?
I hope IU Dining lives up to its core values. With greater transparency and accountability, a more ethical approach to meal plans could make a positive difference in students’ lives.