Links for 2/9/10

Arthur M. Hauptman

The Pell Grant has not had much effect on tuition levels in part because the amount of the awards does not vary with where a student enrolls. Institutions cannot affect how much a student receives, and the institutions that charge the most enroll the fewest Pell Grant recipients.

By contrast, despite the argument that there is no proven causal relationship between aid and price increases, there are several good reasons to believe that student loans have been a factor in the rising cost of a college education. Tuition has increased by twice the inflation rate for the past three decades while annual loan volume has increased tenfold in constant dollars.

Unlike Pell Grants, as part of the aid packaging process, colleges have some control over how much students borrow as loan amounts. Moreover, just as one couldn’t imagine house prices being as high as they now are if mortgage financing were not available, it is difficult to believe that colleges and universities could have increased their charges so rapidly over time without the ready availability of students’ ability to borrow.

Jill Laster

Portland State University is investigating a tenured professor of economics who is reported to have accused a student during class of being an FBI informant and selling weapons to other members of the class…

John B. Hall, stopped teaching in the middle of a lecture … Mr. Hall said an FBI informant was in the room and pointed at one of their classmates, Zaki Bucharest.

Mr. Hall then went on to say that Mr. Bucharest had served as a sniper in the Israeli army, tried to sell weapons to members of the class, and worked with the FBI, among other claims, the students said. Mr. Hall also showed students a letter he had written to the FBI.

Uwe E. Reinhardt

a modern university is a prepaid, staff-model, pedagogic group practice – the educational analogue of a staff-model health maintenance organization, or H.M.O., like the Kaiser Permanente Health Plan…

But suppose universities operated instead on a piece-rate compensation basis, like the current health system…

A “comprehensive initial consultation on a senior thesis,” for example, might cost anywhere from $150 to $300, depending on the student...

The faculty in the natural sciences and engineering would own the laboratories used by their students and charge a facilities fee for each use, along with a professional fee for faculty supervision and set-up costs…

Each time a student used the reserve library to read the voluminous material assigned by the professors, there would be a separate charge… Reading lists in the humanities would be especially long, leading to endless library charges for assigned chapters in archaic books found only in the library…

Students would be charged a professional lecture fee for every class they attended along, of course, with another facilities fee…

Upon requesting a fee schedule from the dean of the college, the latter would patiently explain that different prices had been negotiated with different parents and that all of those fees are proprietary information…

If universities conducted their business in this fashion they, too, might provoke endless rancor and suspicion, endless lawsuits and, sooner or later, much government regulation on how they conduct their business. It may be the reason universities prefer to function like staff-model H.M.O.’s.

And has this approach produced poor quality, as physicians devoted to the hallowed fee-for-service system have so often alleged of H.M.O.’s? It does not appear so, as universities do compete fiercely for students and faculty on their overall reputation…

Jake with a graph of unemployment by educational attainment.