Comments on: why does college cost so much?

By: Kieran

Kieran — Mon, 26 Nov 2007 18:24:03 +0000

From economics you’d have cost disease and a positional-goods analysis as potential explanations.

By: jamybarab

jamybarab — Mon, 26 Nov 2007 16:03:22 +0000

The idea that it costs more because we’re willing to pay more implies that we value higher education more now than we did 20 years ago. That’s certainly true since the whole economy has shifted to the service sector and away from “trades” where non-college educated folks could make a good living. So, it cost less in the past because we valued it less. Some groups always valued college highly but now almost everyone does.

Also, I wonder how many students actually pay full sticker price? I did (rather my parents did)–at a respectable public university in the late ’80s, but it was so ridiculously cheap that I didn’t pursue merit-based aid and I didn’t qualify for need-based aid. Tuition was about $900/year.

By: olderwoman

olderwoman — Mon, 26 Nov 2007 15:45:00 +0000

Re the “what the market will bear” hypothesis, teaching colleges charge high sticker prices because otherwise people will think they must not be any good, but then deeply discount the tuition either for need or to attract better students. We did not qualify for any need-based aid, but our children qualified for merit scholarships at two excellent but not elite private teaching colleges, effectively paying about 60% of the sticker price.

Re labs etc., the implication of this hypothesis is that expensive science programs are effectively subsidized by the less-expensive teaching-intensive programs in the social sciences (and in some cases the humanities).

By: jessica

jessica — Mon, 26 Nov 2007 14:55:03 +0000

I don’t think that this has a one-size-fits-all explanation. I do think that people are willing to pay to make their kids’ lives “better” (and have all sorts of options - albeit few of them very good or financially sound - for providing money for an education) and that, because college is increasingly seen as a necessity, people are willing to pay dearly for it.

the bigger problem comes when they only stay a year or two

I think that this has changed education markedly as well. It seems to me (and I’ll admit that I haven’t thought much about this or researched it) that people are much more mobile in education than they once were, especially seniors, and this is expensive for schools (recruitment/moving/start-up costs), lab or not.

Let me take a moment, though, to thank BM for setting me up with a lab. :)

By: blue monster

blue monster — Mon, 26 Nov 2007 14:37:31 +0000

Jeremy beat to saying it, but two different questions–why is does it cost more and what are they spending it on? On the spending side, I don’t think faculty salaries, on the average, have gone up in step with tuition increases. So, I’m trying to think about what we are spending so much more money (proportionally) on in higher ed.

I think the biggest change in percentage terms are the insane laboratory start-up costs that come with hiring new faculty. Used to be more the norm that you’d work in someone else’s lab until you landed a big grant to get your own going. Now the universities are expected to pay for multi-million-dollar labs to get the person to come, not to mention the costs of moving a senior person. These people do need the labs to do their work, so there’s some justification there, but the bigger problem comes when they only stay a year or two and then get yet another university to pay to set up another lab.

By: jeremy

jeremy — Mon, 26 Nov 2007 13:47:50 +0000

An interesting part of the rise of tuition at private universities is that it accompanies a rise in money from endowments, so the overall amount of revenue increase at a private university is even greater than the tuition increase would suggest.

I don’t have any actual facts on reasons why tuition has increased, but since this is a blog I won’t feel ignorance encumbering me from assertively speculating. I think universities are sort of like the way people used to talk about post-Soviet Russia, where they will basically consume whatever money they are given. While the idea of the tax-and-spend liberal is overstated in American politics, it’s probably well suited to the liberal grove of academe. In any case, when a bunch of different universities have large pots of revenue, they can spend it competing with each other for faculty. So I don’t really think the explanation falls on the expense part of the ledger.

Instead, I think the main part of the explanation is on the consumer side. Higher education has become expensive because of what people are willing to pay for it. Elite colleges can charge an enormous premium because they have characteristics of an oligarchy. Plus, it’s people spending money on their kids, and on an expense that’s seen as absolutely focal to how the rest of their kids lives turn out. (Notably, certain economists who have argued that the economic value of an elite private education is overrated still sent their own kids to elite private schools despite the much greater cost.) So maybe the puzzle is really why higher education was not more expensive when you went to college.