Monday, April 05, 2010

Leveling the Playing Field

by Daniel L. Bennett

New research from the Parthenon Group reveals that the societal cost of producing a positive outcome (defined as a completion or transfer) is quite comparable for community and for-profit colleges.
When schools’ total revenues are considered (agnostic as to source of funding) and compared against the positive outcomes that are generated, private sector and public sector 2-year (or shorter)institutions look a lot alike: they take in roughly $25,000 of revenues to produce a positive outcome of graduation or transfer. This neck-in-neck cost to society clearly needs to be evaluated against the value of those degrees.
I'm not all that surprised about the results of this analysis, as I previously suspected that the true cost per student of public colleges (once we account for subsidies) is likely not all that different than what for-profit schools charge. While this research is quite compelling, it falls a little short of revealing the full societal cost, as it fails to account for implicit costs, such as lost property tax revenues due to the non-profit status of public institutions, and the opportunity costs of government subsidies.

The research also portrays the costs in terms of positive outcomes. In measuring the societal cost, I would think that we should account for both positive and negative outcomes. Despite a few shortcomings, the results are very interesting and suggest that further research needs to be done. Stay tuned.

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