Tuesday, October 23, 2007

Higher Education to the People: Go To Hell

By Richard Vedder

Sandy Baum has released her annual study on tuition costs, and, surprise, surprise, tuition costs are continuing to rise at more than double the rate of inflation. Social Security recipients are getting a 2.9 percent cost-of-living adjustment soon, but college tuition fees rose over 6 percent at both public and private four year schools this fall. The more cost-conscious community colleges saw costs rise a more reasonable 4.2 percent.

You might say "published tuition fees are a fiction, since a majority of students get some sort of financial aid." That argument fails on two grounds -- first, a good hunk of the financial aid is the form of loans requiring repayment. Second, "net" tuition fees --after financial aid -- also rose more than 6 percent last year at the four year schools. A quarter of century of trends where tuition rises at double the inflation rate and at an inflation-adjusted rate of over three percent a year continues unabated.

This is happening, of course, in a period in which America is telling higher education loud and clear that the rising real costs are a major problem. The Spellings Commission explicitly urged universities to limit tuition increases to the rate of growth in per capita or per family personal income (I know, because I inserted that passage into the report with the support of chair Charles Miller). State legislatures and governors are cajoling some universities to freeze or limit fee growth. The media are screaming increasingly about this problem. But colleges are not taking this seriously, with the possible exception of the community colleges and a small minority of other schools.

Rather, many schools are like Boston University, which has just announced it (like scores of other schools), wants to join the top ranks of universities, and is raising $1.8 billion to do the job -- hiring more very high paid superstar professors, for example. Of course, all schools are trying to get tax exempt monies from the private sector to lead to ever more costly education. The bottom line, more than ever, is the US News & World Report rankings. Congress could do something about this by putting limits on the use of tax exempt monies in higher ed, although it is easier to propose the idea than actually draft the legislation (I know, because I have discussed the issue with congressional staffers interested in putting some limits on the wild collegiate spending spree).

I always said that if the colleges ignore the people, ultimately the people will turn on them. So far, they have not, since the college-high school earnings differential is large enough to justify exorbitant fees on a private investment decision basis (in most cases). But their arrogance is breathtaking, and the mood to "do something' about it is growing. If it reaches a threshold where it becomes a major national political issue, something will be done. Likely, it will be bad for the nation. Certainly it will not be liked by the colleges who are now behaving more like the spoiled rich teenagers they are educating than as responsible members of the American community.


sciencedoc said...

Sorry to break the news, Rich, but there are good economic reasons why college costs are rising faster than the rate of inflation. If you are incapable of understanding this, I don't think much of you as an economist.

Christian said...

Don't drive-by post. Just what are these economic reasons?

sciencedoc said...


Happy to elaborate. Basically, college is a service in which productivity doesn't change much. Yet the providers are highly trained people who expect to share in the growing prosperity of the economy, in fact, share in the even faster-growing prosperity of other highly trained people. Since the economy (per capita) is growing faster than inflation, the expenditure per capita for higher education is growing correspondingly.

That's the nub of the argument. It applies to other situations too like symphony orchestras, physicians, etc etc -- any situation where people still want the same (or more) attention from the provider.

It's reflected in economic statistics. I can direct you, if you are interested, to a federal reserve report that lists the growth of public higher education tuition and total expenditure vs. inflation-adjusted growth in per capita GDP. They are very similar.

Another way of putting it: the share of the economy going to higher education is pretty constant over time. Since the economy is growing considerably faster than inflation, so are higher education expenditures and costs.

Again, that's the nub of the situation, though one can quibble and question a lot of it.

For example, is it reasonable that productivity should be stagnant in higher education?

Well, I haven't noticed that the students I teach want any less attention from me than in the past. If anything, they're coming to expect more.

TC said...

"Basically, college is a service in which productivity doesn't change much."

That is a completely naive and fallacious statement. Universities have the same, if not more, access to innovation than a lot of private sector companies. I only need one word to negate your contention: "Computers".

sciencedoc said...

Well, maybe after nearly 30 years in the trade, I'm naive, but I doubt it. I certainly use my share of computers, both in my research and in my classes. In a certain sense, of course, they've improved productivity. They do add something to classroom education. I suppose there would be no sense in using them otherwise.

But they certainly don't make me more "productive" in terms of the number of classes I can teach in a given number of hours, or the number of students I can reach in a given number of hours. To the contrary, they make classes more time-consuming. And the kind of stuff I teach doesn't lend itself terribly well to distance education. Using computers to teach classes that way is less, not more productive. Maybe the "product" is better, but more efficient it's not.

I've actually looked into claims of improved productivity from computers from their use in large "intro" science classes, where they might be expected to have the best chance of being helpful in that way. You can certainly hear these claims from the vendors and other proponents (such as arm-chair education experts in think tanks). But when I've asked department heads who actually use this stuff if it saves them money, the answer is no.

So, you can call me naive, but I suspect I have quite a lot more experience and knowledge of what I'm talking about than most people.

TC said...

sciencedoc - I can't take you seriously at all. The comments you post have a common thread that leads me to believe that something about sciencedoc is suspect.

sciencedoc said...

Well, cowboy, go ahead and be suspicious. I couldn't care less what you think of me or my posts.

TC said...

sciencedoc - If you don't care what people think of your posts; then why do you bother?

sciencedoc said...

I said I don't care what YOU think. I was kind enough to answer your query and your response is that I am "suspect". Go ahead and suspect whatever you want. I couldn't care less, and I won't waste my time on you again.

TC said...

sciencedoc - I find your reaction to being called "suspect" quite interesting. Based on such a reaction, one can combine the common thread in your posts with said reaction and begin to build a rather accurate profile based on a certain number of social and behavioral predictors and descriptors. It is quite an interesting science.

sciencedoc said...

As I said, I don't give a hoot what you think! So bug off. If anybody else has anything interesting, I'm interested.

TC said...

How big a gal are ya? You a big-boned gal like my wife Sharon-Jean? She can take a 2000lb bull and wrastle it to the ground quicker than you can say "Ad Eundem"