Thursday, May 15, 2008

Bounty Hunting, University Style

By Richard Vedder

A few days ago, the New York Times had a story featuring my own university and, indeed, a friend of mine (Josep Rota). The story pointed out that more and more American universities are using recruiters in Asia to get them students --paying the recruiters an amount, say 10 percent of tuition, for each student enrolled. My university started using the practice a couple of years ago, and undergraduate foreign enrollments are soaring.

Actually, there are some very good aspects of this phenomenon. Students who completely lack knowledge of foreign universities get help, albeit sometimes rather biased help. The universities often get students who are qualitatively the equal or superior of the average undergraduate, and they gain some diversity in the student body. Moreover, economically, for many state schools it is a good deal. Ohio University charges about $18,000 out of state tuition for undergraduates --which probably exceeds the marginal cost of educating an undergraduate, particularly the first two years. Even after paying a thousands dollars or so to an agent, the students are actually more an asset than a liability to the university.

Yet there can be serious ethical problems. Many agents collect twice --once from the university, and a second time from the student. The agent is not a dispassionate, objective dispenser of information.

Moreover, some of the schools using agents are at least moderately selective in their admission practices. My university turns downs thousands of Ohio students annually prepared to pay the $9,000 or so in state tuition --and in part replaces them with out of state (and nation) students paying far more. The university claims it promotes diversity and excellence, but taxpayers subsidizing my university might claim that the practice discriminates against students from the place where taxpayers are footing perhaps one third or more of the bills.

In principle, I see nothing terribly wrong in using recruiters. They help make transactions occur. They provide information. They are compensated for their services. Instead of universities using their own employees, they use agents, which is often more cost effective. Schools out source part of admissions recruiting, consistent with pleas I have made for years about universities concentrating on those things they do well and relatively efficiently. At the same time, the agent taking payment from both the consumer and the provider is engaging in what Americans, but not Asians, view as dubious behavior. But compared with other problems facing universities, I think this is a relatively trivial one, at least at this point in time.

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