Up, up and away

Colleges have no market incentive to control costs, writes Richard Vedder, an Ohio University econ professor, in the LA Times. As a result, college tuition is the fastest-rising part of the consumer price index, outpacing health care.

In 1958, when I entered Northwestern University, annual tuition was $795, an amount equal to a bit less than two months of gross income for a typical American family. This year’s Northwestern freshmen will pay tuition of $29,940, or more than six months income for a typical family.

While the cost of college has tripled, quality hasn’t improved, writes Vedder. The problem is that most students are subsidized by government or private aid, making them less sensitive to price. So colleges have been able to expand staffs, raise pay and build new facilities without worrying about not filling the seats.

. . . only about 21 cents of each increased dollar of funding for American universities over the last generation has actually gone into instruction. Universities have actually lowered the portion of their resources devoted to teaching undergraduates, instead putting more into research, administration, graduate instruction, student services, intercollegiate athletics and other things that don’t directly translate into better classes for students. Third-party grants that used to subsidize undergraduate instruction now increasingly fund smaller teaching loads for professors, research projects, burgeoning university bureaucracies and higher-profile athletic teams.

Students now live in nicer surroundings, with Internet connections and telephones in their dormitories and country club-like recreational facilities. Yet there is little evidence they are learning more. Average scores on the Graduate Record Examination, taken by graduating seniors considering graduate school, are slightly lower today than in 1965. There has been a reduction in class hours attended, and students increasingly take five or six years to get their degrees.

“College costs cannot continue indefinitely to grow faster than family income,” Vedder writes. Universities are losing market share to for-profits, like the cost-conscious University of Phoenix, and job-specific training programs. Eventually, non-profits will have to cut fat to control costs.

The Onion reports on the scandal of colleges selling worthless degrees.

One alleged victim of the checks-for-degrees scandal is 25-year-old Michael Trumbull, who purchased an art-history degree from the University of Michigan, making his first payment in January 2002. Trumbull currently works the front desk of a Lansing Comfort Inn.

“Not once has a customer asked me about the innovations of Edouard Manet, or whether politics and aesthetics make good bedfellows,” Trumbull said. “They’re much more likely to ask me to bring them a plunger or give them a wake-up call.”

Trumbull, who owes more than $40,000 in student loans, added that he must use a calculator to perform even simple math.

Students who just barely made it through high school are going on to college these days, but they’re not likely to earn a degree. Many take on loans they’ll have trouble repaying.

About Joanne


  1. The Onion is a satire… Sometimes a bit too close to reality, but a satire….

  2. AnotherScott says:

    College “education” shows many signs of being a bubble in the economic sense. Its market value (tuition) as risen, partially fueled by easy money (easy govt. grants and loans) while its inherent value (i.e. what it teaches) has not risen or has even fallen.

    If I were a charlatan, I would simply open a college market to low income students, encouraging and helping them to apply and get loans. Since turnover would be high, my most important staff positions would be recruitment/registrars. As for teachers, I guess I could get some English majors cheap (or perhaps American Studies).

  3. Bob Diethrich says:


    I am sure Joanne knows it is a satire. What I find funny is just how true to life it reads as a straight up news story.!

  4. jeff wright says:

    As I look back over the years since high school and college graduation, it occurs to me that I don’t really remember if I got a top notch college education. I do know, however, that I got a superior education all of the way through HS—aided and abetted considerably by my parents and the adults around me—and found college not all that daunting. Was the degree worth it? You bet. I’ve made literally hundreds of thousands of dollars more with that piece of paper. Even at today’s inflated prices, it would have been a bargain.

    IMO, the real problem with college education these days is that many students really shouldn’t be there. ISTM that an 18-year-old should be able to read and write well in English, express him/herself orally while eschewing expressions such as “you know,” or “totally,” and generally come across as a civilized human being. Far too many HS graduates fail this test.

    I continue to be amazed that so many kids (and their parents) pay these high prices when reality is that the kids are doomed to failure. Should we blame the colleges for accepting them? Well, maybe, but think what tuition would be if only truly qualified kids were admitted.

    This really isn’t a hit on the public schools. We’ve seen a general coarsening and dumbing down of society over the past generation; kids merely serve as the canary in the coal mine. This country is in serious trouble and NCLB and all of the other political nostrums aren’t going to help. In fact, money isn’t the answer. For some reason, parents have just stopped giving a shit about their kids. And the rest of society doesn’t care either: they’re just another market segment.

  5. greeneyeshade says:

    i think jeff wright’s conclusion that ‘parents have just stopped giving a shit about their kids. and the rest of society doesn’t care either.’ may be a little off.
    i can’t prove it, but i suspect the moving force behind the ‘coarsening and dumbing down of society’ wasn’t indifference or selfishness so much as conscientious, even idealistic, choices by us boomers and possibly our parents. a lot of us resolved as adolescents that when we had kids we’d treat them as we wanted our parents to treat us … and we did. if we’d ever heard of wendell berry’s observation that parents owe it to their children to be old-fashioned, we’d have rejected it. (come to think of it, doesn’t every paper in the country have an aging-boomer columnist who can’t come to terms with the fact that he _ sometimes she _ isn’t a hip young rebel any more?)
    well, we’re more or less trying to follow berry’s advice w/our kids, and so far we seem, crossed fingers, to be doing all right. and judging by the numbers in joanne’s next post, the one on federal stats on kids’ lives, maybe the rest of society is too.

  6. AnotherScott;

    It’s been done.

  7. Michael says:

    I was intrigued, but not surprised, to see that Prof. Vedder pays no attention to changing sources of funding or to real market competition. His back-handed and faintly snotty mention of “nicer surroundings” for students does not say that those nicer surroundings are often a necessary part of a college’s marketing itself to students who do have choices. Given the choice between a school that has ethernet connections in each dorm room and one that doesn’t, students usually choose the former. The same thing holds true for exercise facilities. Prof. Vedder also doesn’t discuss levels of state funding for state universities. Where state support goes down, tuition will rise, since it’s about the only variable, once fat has been trimmed.
    Suffice it to say I’m not convinced.

  8. Tim from Texas says:

    The first four years in most colleges and universities should be called high-school-plus.

    We pay good money for K-12, especially costly is the 9-12. Then we pay through the nose to send them to college to learn what they should already know.

    The BA/BS degree is just another tax.

  9. Tim from Texas:  Then perhaps we should be using market incentives to fix the problem, such as compensating students who graduate from high school already knowing things like English, physics and calculus (and their high schools).

    Randall Parker (futurepundit.com) has opined that accelerated instruction is one excellent way to reduce overall costs and make people productive more quickly.  I am forced to agree.

  10. Richard Brandshaft says:

    “eschewing expressions such as ‘you know,’ or ‘totally,'”

    Ah, the endless complaint of the older generation. The youngsters just don’t talk like we do.

    Here’s an explanation I read many years ago (I don’t remember where):

    We talk faster than we can think of what to say. I don’t mean all those “Oops, I shouldn’t have said that,” occasions. I mean we talk faster than we can form coherent sentences. This means we have to insert fillers while our brain catches up. For my generation, it was “..umm…”, “…uh…” or starting the sentence over. When we listen, we automatically filter this out. Read verbatim transcripts of testimony or press conferences — anything where people don’t read from scripts — and it usually reads like inarticulate stumbling. And remember, people whose remarks are transcribed are usually the more articulate among us. (I know there are exceptions.)

    Language drifts, sometimes seemingly at random. The filler phrases change. Older people’s listening filters don’t block out the new fillers. This leads to complaints about how the younger generation didn’t learn to talk properly.

    On a higher level of abstraction, I recently had the efficiency of mental filters bought home to me. I was in England during an important soccer game series in Europe. I was bombarded by news of it. I wondered if there is as much fuss in this country about the World Series and the Superbowl. I realized I didn’t know. Not being interested in sports, I have learned to ignore most sports fuss. In England — different context, different newspapers, different phrasing, etc. — my filter failed.

  11. Tim from TEXAS says:


    If the student graduates from high-school with the same skills acquired from the present day BA/BS degree, which can and should happen, then the student and the parent have already saved anywhere from 25 to 125 thousand. This should be incentive enough. The only “reward-lesson” he/she misses is Beer-guzzling-girl-boy-gauking-chasing 101 thru 302, which is another lesson that should be taught and learned before college.

    We’ve allowed adolescence to last until the age of 27 and in some cases beyond. I like to call it the adolescent-adult-support tax.

  12. Robin Roberts says:

    The Onion purports to be satire … but sometimes one wonders.

  13. Tim:  I saved a pile of money that way myself (I skipped about 2/3 of my freshman year from AP exams) but where is the incentive for schools to offer those opportunities to their students?

    One downside is that high-school work does not count against your college GPA, no matter how good you were on the basic material.  This gives students an incentive to take the same class over again, wasting money but racking up credential points.

  14. Tim from Texas says:

    Engineer-Poet, I’m speaking here of changing our school system drastically to a state where much more is expected of a high-school graduate than is now, that is to say, for all practical purposes, the need for a BA/BS degree is eliminated. Then the student is ready to go on his or her own steam, at the age of 18 or 19. Then if he/or she wants to be educated more, then I say fine, but it shoudn’t be absolutely necessary. By the time a person reaches the age of 19 or possibly 20 they should be weaned. I’m not against true higher education, but I am against paying for learning that should have been taught and mastered by what I call the weaning time.

    Delaying adulthood until someone reaches the age of 27, 28, or longer is a huge drag on our society, and I think we should stop it.

  15. AnotherScott says:

    Annoying Old Guy. I know, I was being a bit fecicious. The most egregious example I might point out it Kaplan (of test prep fame, owned by WashPo). They ‘recruit’ students via direct mail and, before no-call, by phone, and have just the sort of help-you-get-loans program as I described.

  16. mike from Oregon says:

    Fascinating, I’m have a similar discussion on another board. Basically a discussion regarding the price of college (going up) and the fact that some of the liberals think we need to tax more to support higher education (heck, many of them want to tax to a point that Oregon would GIVE a college education to everyone that wanted one).

    I pointed out several methods of obtaining a college education with little or no debt. However, since it involved “work” the ideas that I suggested have been hotly disagreed with. Interesting.