By Richard Vedder
A very useful source of news about higher education is the Greentree Gazette, whose publisher, Jeff Wendt, recently interviewed me for an article in the November issue. There is a free on-line version weekly available by clicking here.
They have run an interesting two part story on the growth of differential tuition pricing, using examples such as the University of Wisconsin and Arizona State University. As I have said before, in principle it makes sense for different pricing for different majors, if for no other reason than the costs of instruction vary considerably across disciplines.
At the same time, however, a lot of these new differential fees are feeding, and disguising, some of the tuition inflation, and also enabling institutional hubris. We read that ASU has decided it wants to be a leading journalism school, has spent $71 million on a new building, and is hiring superstar faculty like Aaron Brown, formerly of CNN. Then, to partially finance this, it raises fees ($250 in this case) to consumers. The University of Wisconsin, noting that their overall ratings are slipping because they are inadequate in faculty resources (e.g., not paying faculty enough), is tacking on fees to enhance faculty pay.
Question: Is it efficient to educate students using Socrates-era technology, paying junior business school faculty well over $100,000 a year for perhaps 200 hours in the classroom? Rather than tacking on more fees, perhaps business schools should look for new ways to conserve their extremely high priced help. That is ostensibly what they train students to do who go out into the real world. The problem, of course, is it is easier to initiate new fees than to innovate, restructure, and rethink ways of doing things. That is academia today. Raise prices and our problems are solved. If General Motors tried to do that, they would be bankrupt within three years.
At a typical university, faculty salaries eat up only less than one-half of tuition fees. Why don't faculty band together, rent cheap buildings as classrooms, and offer a superior education for less money, cutting out most of the outrageous overhead and frills universities have? To some extent, that is what the for-profits are doing. Without state subsidies to their inefficient non-profit competitors, they would be taking over higher education.