The Best Scam in Higher Education Continues

By Richard Vedder

This is my annual (maybe biannual, I am not sure) complaint about the greatest outrage in a sector that has a lot of dubious practices and inefficiencies. I am not talking about intercollegiate athletics (lots of ethical and financial problems), the true cost of much faculty research (tens of thousands annually per article produced, most of which are of dubious value), or the soaring salaries of university presidents. Rather, it is the absolutely outrageous time of completion record regarding PhDs in this country.

The PhD is a damnably expensive degree to produce. Schools that neglect undergraduate students, allowing them to be taught by poorly paid and untrained graduate students who can barely speak English, nonetheless think nothing of running graduate seminars with 10 students taught by $125,000 professors. It is bad enough that this is happening. What is worse is that the colleges force, encourage or allow those graduate students to hang around for years and years before giving them a degree.

The Graduate School organization has released another study. Below are the 8 year completion rates for several groups:

GROUP 8 YEAR COMPLETION RATE
Males 58%
Females 55%
International Students 64%
Whites 53%
African-Americans 48%
Latinos 46%
Asian Americans 49%

Other data show that well over 40 percent of students do not have the degree after 10 years --a very high dropout rate similar to the undergraduate rate of attrition (but a much, much larger waste of resources per student). Well under one-fourth of students get their PhD within five years, and even if you exclude the dropouts, the typical PhD student takes 6 or 7 years. To be sure, many PhD students are married and need to work at least part-time. But a lot of the long time span is simply because it is exceedingly profitable for some schools to have students linger around. State schools often get big subsidies for graduate students. All schools use them as cheap teaching labor. Professors exploit them to further their own research interests (although in many cases it is legitimate exploitation, as the professors credit the graduate students for their contributions).

Incentives need to change. States who hand out subsidies on the basis of enrollment should cut off subsidies to PhD students after four years--period. I managed to earn a PhD in three years, doing a little teaching along the way. Two years of course work, one year of largely research and writing, and a fourth year to allow time to do some teaching and research for others along the way--that is enough. We are keeping extremely productive resources out of the labor market at enormous expense by keeping them around for long periods. Federal research grants should be reduced for those schools that have a poor PhD completion rate--defined, I would argue, as 4 years, certainly not more than 5.

Needless to say, the same principles should apply for undergraduate completion as well. The best way to effect change is to subsidize students, not institutions--and only for a limited amount of time. We now cut off welfare benefits after a specific time period, a reform that dramatically lowered the percent of the population on public assistance--and, importantly, the poverty rate as well. We should do for higher education what we did for welfare--cut the subsidies after a reasonable period of time.