How Costly Does Higher Education Need to Be?

By Richard Vedder

I have had a couple of pleasant phone conversations recently with Vance Fried, the Brattain Professor of Management at Oklahoma State University, over the issue of university costs. We have discussed the question: how much does it really cost to offer a quality education at a four year institution? Both of us think that the amount is a lot less than most universities currently spend, and that many of the affordability/access questions would largely disappear if we organized universities efficiently, with cost containment a paramount objective, not merely an after thought to which we pay some trivial rhetorical homage.

On occasion, I ask myself: if I was designing Low Cost U from the beginning, with the objective of offering a quality 4 year education, but with few bells or whistles (or climbing walls or Jacuzzis), how much would it cost society per student attending? The answer is probably less than $10,000 a year, perhaps a good deal less. How would I do it?

1) Faculty would be reasonably well compensated, but would teach high teaching loads --maybe 12 hours per week using a semester system, possibly even 15 hours weekly.

2)Elective course offerings that are today taught mainly because the professor wants to and not because of a crying educational need would be drastically curtailed. College course offerings in total would be reduced at least 50 percent from the conventional levels today.

3) Clean but utilitarian buildings would be utilized to the hilt, and instruction would be on-going throughout the year. Perhaps lower tuition fees would be offered for courses taught in the summer or at unpopular times, such as 8:00 a.m. or on Fridays or in the evening.

4) The University would stay out of ancillary businesses about which they have no particular expertise, such as housing and feeding students or running quasi-professional athletic teams that have effectively become the minor leagues for professional sports.

5) Where possible, cost-effective distance learning would be encouraged, such as Internet instruction.

6) Administrative staffs would be lean. Some academic-related student services would be provided, such as placement services, but a huge bureaucracy to administer to student needs would be avoided.

In some ways, I have defined the modern for-profit institution that tries to minimize costs in order to maximize profits. So be it. The problem is that there are few incentives for current not-for-profit institutions to morph into Low Cost U. Perhaps those incentives could be created, likely rewarding academic entrepreneurs on cost containment, or on having a high "value added" (learning) to cost ratio. New ventures like Western Governors University have some promise, but no states seem to be showing any interest in starting Low Cost U. Perhaps some should.

Low Cost U is not ideal for everyone. Many students, particularly from relatively affluent homes, want to buy the "socialization" or consumption dimension of higher education. Graduate and professional education requires a different model for the most part. Campus-wide lecture series, concerts, and even athletic events add to the joy of going to college and often have some educational value as well, but they add to costs. You probably cannot have a champagne education on a beer budget, but we can offer a reasonably high quality academic program at much lower prices than today -- if we put our mind to it. I have asked Professor Fried to share with me his thoughts on this, and, with his permission, my sidekick Bryan and I will post them in this space at a future date.