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The underlying cause of the high cost of college is an inability to objectively demonstrate quality or the value added by a college.  Currently, college rankings are determined by the amount of money they have and spend.  Those with more prestige are able to charge higher tuition.   Higher education institutions need to be incentivized to adopt a system which measures the knowledge and abilities of students and make those results publicly available.

This would involve organizing colleges to prioritize student success. They can reduce spending on programs which do not advance their missions of instruction and research.  This would include removing institutional support of intercollegiate athletics and frivolous research.  It would also entail eliminating student services which do not substantially improve the acquisition of skills or learning outcomes.  The federal government can fund the research necessary to determine what interventions will lead to the formation of a successful system and incentivize colleges to adopt them.

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The high cost of college prevents many from attending or causes others to go into debt at an early age and delay life plans.  

Why does college cost so much?  

Because there is no objective measure of quality, prestige is determined by how much money a college has and spends.  

Individual pricing by private colleges allows them to charge each student the most that student and family are willing to pay, now and in the future, to attend that college.  The steep increase in wealth of the top 5-10% enables them to afford the higher tuition.  Financial aid, loans, and tax policy make more money available.  Colleges are aware of this and want at least a portion of those funds.

State appropriations decreased in the 1990s and early 2000s forcing public universities to raise tuition.  But they raised tuition much more than the reduced funding.

Both private and public colleges have dramatically increased spending on intercollegiate athletics, research, buildings, administrators, and other programs related to societal issues and to the personal lives of students.  They then pass the cost on to students.

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Purdue University has frozen tuition for the last 13 years while improving its reputation.  This has saved students $6,000 per year, reduced the amount of debt, and improved graduation rates.  How did it do it and why don’t other universities do the same?

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The priorities of boards of trustees, administrators , and faculty are often different from those of the students.  Those students are paying into a system which directs funds into activities that do not align with their interests. They do not have the ability to opt out of services they do not wish to receive and those looking to enter or remain in the middle class do not have the option to forgo getting a college degree.

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Wealth inequality among universities enables the rich to get richer.  The design of college endowments limits the extent to which they can be used to reduce tuition for everyone.

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Climbing walls and lazy river pools are conspicuous and attract much attention but add relatively little to the cost of attendance.  On the other hand, colleges have been raising the prices they charge for housing at a rate much higher than inflation.  The building boom on campuses  has expanded space greater than the increase in student enrollment and has been very expensive. 

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Federal regulations and reporting requirements of colleges have grown in recent years forcing them to hire non-instructional staff to comply.  But this only accounts for a small part of the amount spent on administration.

Colleges have expanded their scope beyond the core missions of education and research. They are now more involved in the oversight of student life and health. They are providing more social support of students and they are addressing larger societal issues. In addition, information technology is a relatively new, growing, and sizable expense.

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Institutional support of sponsored research has grown at twice the rate of inflation for over 60 years and is an overlooked cause of high tuition.  The annual expense of unsponsored research is many thousands of dollars per student and may be an even larger contributor to rising costs.

This National Science Foundation website https://ncsesdata.nsf.gov/profiles/site  can be used to look up information regarding funding sources for university research.  On the left side click on "Search by institution name.”  Once the institution comes up, click on it and then scroll down to Data Tables.  Under R&D expenditures select “By source of funds and R&D field.”  

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Service fields such as higher education do not experience large improvements in efficiency so the cost of providing that service rises.  

The salaries of professors may contribute a minor amount to the rising cost of college; however, reduced teaching loads and other perks are more important factors which cause the price of tuition to go up.

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All intercollegiate athletic programs lose money, except for a few at universities with successful football programs  Students are charged up to several thousand dollars per year to make up the deficit.  Compliance with Title IX also adds to the cost.

Websites mentioned in this episode:

Office of Postsecondary Education website under Equity In Athletics: 
https://ope.ed.gov/athletics/#/institution/search

Knight-Newhouse College Athletics Database website: 
https://knightnewhousedata.org/

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