Monday, October 30, 2006

CCAP in the NY Sun

The New York Sun published an op-ed this morning by CCAP Director Richard Vedder and Associate Director Bryan O'Keefe. The piece explores why most colleges should not be cheering the new College Board study on tuition. Check it out and let us know what you think of it.

The piece can be found here


superhiker said...

What a shoddy piece of analysis in this article. Community college tuition increased less because in California, it actually decreased. Why was that? I don't know. Did the State of California perhaps make a decision to do so? I don't know. But I'm not an economist spouting off about these things in publications.

Why do college costs go up faster than inflation? Because it's a labor-intensive enterprise, and because income (total compensation, not just wages) is going up in this country faster than inflation. It's called growth in productivity. The people who work in colleges and universities are going to share in this along with the rest of the country.

In a sense, college costs go up this fast because they can. If they couldn't, they wouldn't. But there's enough money out there for it to happen. So it does.

Anonymous said...

I have read the column and agree with many of the conclusions. Part of the problem is that there is no query - except from you guys and respectfully some bloggers like I - into why tuition is so high.

At least now, as I note in my post replying to your column - my alma mater's community college president has had to testify to a state committee that “Low tuition is the best possible financial aid”. However, the trend towards higher tuition goes up. For more, my post and thanks for the comment privledge.

Bob Yates said...

I sure wish our good friends had spent just a little more time seriously answering their own question:

Why are colleges raising their tuition so much? Because they can, and because there are few, if any, incentives not to do it.

As someone who lives in Missouri, I suggest another reason why tuition has gone up so much.

It is found in this Inside Higher Education article.

If you go down to Missouri, you will find that in 2001-3 the state of Missouri cut its support to higher education by 23%. This was one of the more drastic cuts across the country.

Of course, how did institutions of higher education make up the drastic shortfall: no increases in salaries, more contributions to benefits, no replacement of tenure-line faculty who retired, and, of course, tuition increases.

Last year, the state of Missouri increased its funding to higher education for the first time in five years. The increase was 2%.

Let's be clear what that actually means for public institutions in the state that now only get half their funding from Jefferson City. That was actually a 1% increase in the total budget. Where, exactly, will additional money, or savings come from if tuition is not raised?

superhiker said...

Bob Yates -- very good points.

You can do me a favor. I'm considering a move to the University of Missouri. What is the overall atmosphere in Missouri for higher education? From your post, it sounds lousy. Is it really that bad?

TC said...

If tuition continues to rise, eventually potential students will stop looking for ways to keep up with the increasing tuition costs. Families are not going to be driven into insolvency to put their kid(s) through college. Sooner or later higher education will be reserved for the wealthy – a national train wreck.

And the wealthy want their kids to go to the "prestigious" institutions. What will happen then? And what will happen to the good, but smaller colleges and universities in the long term? Is higher education pricing itself out of existence? For the time being, it would seem that tuition prices are inelastic – but this is only because students are using resources such as grants, scholarships and running up student loan debt like most of the country’s nuclear use of credit cards. And as long as that remains the case, the answer to my own question is "no", higher education is not pricing itself out of existence. But this can’t continue – at some point, something has to give. Tuition costs will become elastic because, as I said above, no college or university is going to drive a family into insolvency to pay for college. I have to agree with Mr. Vedder that some tuff love is in order.

It's rare to find people in a transient college town who care about issues that will affect the area after they’re gone – I am guilty of this too. Some (politicians and others) believe that reducing taxes and conservative spending results in economic expansion, innovation, job growth, etc. So using Ohio University as an example; what would happen if OU reduced tuition? Would this result in increased enrollment? Would an increase in enrollment offset any potential loss that would result from reduced tuition? Indeed, would OU actually not only cover their potential losses AND have some money left over to build the “Vedder School of Economics”? This question CAN be answered – but not by me.

I have always believed colleges have the very resources that teach our future business leaders how to run a business. So why not put them to work to address what would happen if OU reduced tuition? The major problem in answering this question is getting access to the university’s Item Master File (how much, and on what, is the money being spent by account).

Colleges and universities need to stop “colluding” (and I use that term loosely) or cooperating on raising tuition and some colleges and universities need to “defect”. This can happen when enrollment starts dropping because higher education becomes too expensive, or it can happen with a sound analysis of a defection scenario. But I’m not going to hold my breath. Convincing a board of trustees to do anything but maintain in statu quo is like asking an albino to “lighten up”.

superhiker said...

Cowboy -- take it from me, I know very well, universities do the kind of economic analysis you suggest when setting tuition levels.

By the way, are you the same cowboy as before? If so, yYour new photo looks more manly than the underwear shot. I think you are showing better judgment.

TC said...

Hi Superhiker,

Yes it is me - same cowboy. I went with the stereotype photo this time, but I think I may ditch the anonymity and use my real picture on my blog. Also, I agree, I think I am showing better judgement - at least I am trying to. And for the record, I apologize to Mr. Vedder and all other commentors on this blog for my ad hominem attacks.

I haven't posted anything on my blog in quite a while - I have been very busy. Well, I guess I'll see you here now and then.

Take it easy.

superhiker said...

To tc: One reason there isn't more resistance to tuition hikes is that many people don't pay the full freight, especially at the more expensive schools.

I've seen what happens when tuition does outstrip demand. At the local community college, public subsidies were drastically reduced in a budget crunch. Tuition went way up, to the point where enrollment started dropping. They're still running a deficit. I think contraction is in the works. At some point they may try to curtail community college staff salaries. Whether that will get anywhere I don't know.

By the way, an amusing aspect of this is that one of our leading local libertarians had run for the board of this community college on a platform of efficiency, reduced subsidies, and the like.

Now he's the most vociferous board member campaigning for a local property tax levy to bail out the college.

TC said...

Superhiker - Interesting post - especially about contraction. To be honest with you, I think Community Colleges have an important role to play. Years ago when I lived in CA, a lot of students went to community colleges before going to a 4-yr school. I think community colleges are going to take on an even more important role in the near future. We have a thriving Community College in Kalispell, MT (Flathead Valley CC). I have attended classes there. Check it out at:

Bob Yates said...


It seems to be the case that the University of Missouri has the highest tuition in the Big 12. That should tell you the state of higher education.

More seriously, Vedder has come to Missouri and spoken before legislative committees about some of his proposals.

superhiker said...

To Bob Yates and tc:

To Bob Yates: Thanks for the info on Mizzou. If I go, it will be for a sweet package, but what you say gives me something to think about (and which I was thinking about already).

To tc: I too think community colleges have a role to play, perhaps a growing role. I have never thought otherwise.