By Richard Vedder
Success in most endeavors comes by getting bigger --selling more and better mousetraps, for example. America's peculiar institution, higher education, is different: success comes in turning customers away. The more students a school rejects, the higher the likely ranking of the school, the academy's equivalent of a bottom line.
But the real job of colleges is to educate --hopefully to educate well, and hopefully to educate a meaningful portion of the American population. Supply rigidities --selective admissions -- have aggravated the tuition inflation in the long run because as demand for colleges has risen, supply has not moved up as much in order to relieve the price increases and enhance enrollment. When the price of wheat soars (as it is doing now), farmers plant more wheat. When the price of college soars, colleges do little on the supply side --at least the prestigious colleges into which many of our best and brightest students aim to achieve.
As more elite schools get obscenely rich, with more than one million dollars of endowment wealth per student, they literally have trouble spending all of the money they extract from students in the form of high tuition, from rich alums, or from the $50,000 or so annual endowment income per student.
A couple of years ago, Princeton did something novel --it said it was going to let enrollments rise a bit. Make a Princeton education available to more students. Now, motivated by guilt, shame or maybe a sense of obligation, several other schools are following suit, include Yale. Harvard claims its campus is too small to grow much (solution: make it bigger). Dartmouth is making noises about maybe following suit. All of this is to the good. While I think too many people in general go to college, I do think the corpus of Americans studying at top institutions is substantially larger than the enrollment of the Ivy League, and the growth in supply at quality top-notch institutions is good news.