Tuesday, October 24, 2006

Here We Go Again...

By Richard Vedder

The College Board in its annual tuition survey reveals that little is changing. Tuition costs rose about six percent this fall at both public and private four year schools, at a time when the inflation rate is 3-4 percent. So tuition charges rose 2-3 percent more than the inflation rate, in keeping with the typical pattern over the past 25 years, and in keeping with the long run trend of tuition costs doubling every generation in an inflation-adjusted sense.

The College Board made something of the fact that public four year tuition rates are increasing at a slower rate compared with last year, which was below the same rate for 2004. True. But that is the usual pattern after a recessionary period -- high public school tuition increases for awhile to offset stagnant state appropriations, and then a return to "normal" increases, which are still greatly in excess of the rate of inflation. Perhaps we are at the beginning of a period of significant moderation of the tuition explosion, but so far I am pretty skeptical on this point.

On the bright side, two year college fees rose less, about 4 percent, again widening the two year/four year differential. Both types of schools are ostensibly in the same business. Why then are costs rising far faster at 4 year institutions? Because teaching is only a minor part of the enterprise at some of them, and research and administrative costs are exploding, not to mention student services. Also, salaries are rising far more in the four year institutions compared with two year ones. At some point, those who look at colleges mainly for the education that they provide might start revolting at the high fees --and the growing differential with 2 year schools.

By and large, schools are continuing in their own ways, greatly increasing costs, having no productivity advances, and not fundamentally changing their operations to improve efficiency. Change may be coming to the academy, but it is not coming overly rapidly, at least with respect to issues of affordability and productivity.

No comments: