Making College More Affordable: Lumina''s Help

By Richard Vedder

When I started CCAP a couple of years ago, with critical financial support from the Searle Freedom Trust and others, I thought we would be largely reporting on the causes and nature of the college cost explosion rather than being more actively involved in trying to slow it down. While the research/reporting dimension of our job is important, we are increasingly trying to help in a more pro-active way to reduce college costs.

One modest way, of course, is through our entry into the college rankings business. The market leader, US NEWS, has produced a ranking scheme that encourages high amounts of spending --this we have verified empirically. We wanted to devise a rankings scheme that, first of all, dealt with the concerns of students and parents (is the instruction any good, do graduates get good jobs, will the student incur big debt, etc.), and secondly, if possible, be expenditure-neutral, meaning that spending more money per student does not increase the probability of a higher ranking. Our FORBES rankings achieves that goal. We hope to refine and improve the rankings over time, and steadily gain market share, an objective I think the folks at Forbes enthusiastically share. To the extent rankings matter in determining prestige, student college selection, etc., this is a worthwhile objective. We want to contribute our bit to academic disarmament, to reducing the intensity of the academic arms race, albeit perhaps only modestly.

Now we have received a magnificent grant from the Lumina Foundation, the single group that has done the most to promote research into higher education with a goal of improving its quality and make it more affordable and accessible. Our Lumina grant will allow us to do some things that previously were beyond our reach financially. For example, we hope to put together a primer on reducing college costs, outlining practical ways colleges can make themselves do more with less --and become more affordable.

We hope to gain new insights on the most interesting development in American higher education --the for profit sector. We will have the resources to sit down and talk with entrepreneurs in the field, and see what motivates them and why they think the profit motive leads to lower, not higher, costs per student after adjusting for quality.

And what are the barriers to innovation posed by regulation, especially the quasi-self regulation of accrediting agencies? We are going to do some in depth investigation into the world of accreditation, and see if the barriers to entry that some for profit entrepreneurs tell me exist are truly sizable, and if they are justified on any qualitative grounds. Lumina has provided us the means of looking at these questions over the next couple of years, and we take this challenge seriously. A big thanks to Lumina for its confidence in us.