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Thursday, October 11, 2012

Why Does College Cost So Much?

When John Hennessy gave his talk on MOOCs at the CRA Snowbird meeting he recommended the book Why Does College Cost So Much? by Robert Archibald and David Feldman, both economics professors at William and Mary. I've never seen a good answer to the title question so I read through the book. To overly simplify their main thesis: It's not that college has gotten more expensive, it's that most everything else has gotten cheaper. Technological advances in manufacturing and shipping have made greatly lessened the cost of goods, and the rate of inflation is calculated based on a basket of goods. So service industries, particularly those that require highly educated people and don't benefit directly from technology, look expensive in comparison. College costs closely map to medical and dental expenses, and closely followed broker expenses until technology made brokerages cheaper.

Archibald and Feldman even argue that there isn't a college affordability crisis for the majority of Americans: They are still better off than 30 years ago even if we take out college expenses. Hardly the doom and gloom scenario that Hennessey was portraying.

Their main point is that one cannot increase the number of students to faculty without decreasing the quality of education. That's where MOOCs come in, supposedly the solution to allow faculty to be far more efficient in the number of students they can teach without reducing quality. Might help control college costs but could harm research at top tier universities and many other universities might cease to exist.

Alas perception is reality and the public sees college expenses growing dramatically compared to the general cost of living and blames wasteful spending at universities. Curing this "disease" might kill the patient.

20 comments:

  1. I believe Stanford's president is named "John Hennessy", not "John Hennessey". Possible typo.

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  2. Seriously? You can write that whole post without pointing out the obvious: state aid to universities and colleges has been severely cut in the last 10 years. That's the most substantial factor in the rising costs.

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    1. cost has nothing to do with who pays...

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    2. People are talking about the cost to the students/families. By the way, if government didn't bail out wall street with mega billions they'd have more money for education.

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  3. I would hardly say MOOCs allow scaling without reducing quality. A MOOC experience is very far from an actual college classroom experience.

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  4. Another comment. If the main reason is the cost of staff, then the cost of keeping said staff should have risen as quickly as college costs themselves.

    I would rather think that most professors would consider themselves very, very lucky if their salary had climbed at this rate, but I admit I don't have any numbers.

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  5. How does one explain that universities elsewhere in the world cost so much less?

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  6. Part of the answer, which no one here will like, is that the modern university has coupled scientific research with education. Both are important social efforts, however I see no reason that students should have to help subsidize the salary of top researchers who devote a (comparatively) small amount of their energy to teaching. Conversely, I don't see why our highest paid researchers should have to spend their time teaching calculus 101, when adjuncts are willing to do it for a fraction of the salary. The only reason this model persists is that researchers have yet to find an alternate funding model. If we did come up with separate funding mechanisms for the two, I think both students and researchers would be much happier in the long run.

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    1. It is interesting to note that in France (for instance) they have the CNRS positions and also separate professor positions, although it seems that researchers can teach if they want to, but they do not have to. Of course researchers in France (the non famous ones at least) do not get such high salaries, but they job security and they get to do what they want, which I think is very desirable. Maybe researchers in the US are stuck teaching because we want freedom to research what we want AND we want to get paid alot of money.

      In terms of the argument that the cost of college is reasonable because medical costs have increased at the same rate (if this is the argument), this is not an argument that the cost of college is reasonable: One of the major causes of bankruptcy in the US is medical costs. So how does this imply that college costs are reasonable?

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  7. @Anon: Most of the research is funded by NSF, NIH, etc. and not by student tuition...

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    1. "@Anon: Most of the research is funded by NSF, NIH, etc. and not by student tuition..."

      With claims like that you could be running for president. Consider the following concrete example: The top person in my department gets paid around $350K+ from university sources (that is before external "summer salary") and doesn't count "chair funds" provided by the university to support the individual's research. The individual does have an endowed chair, however the endowment is on the order of a $1 million. If you assume a 5% return (generous in today's environment) that still leaves the university supporting $300k. The individual does bring in a lot of grant money, however I doubt the annual "indirect support" amounts to $300k a year (which, in any event, is meant to cover other research expenses such as library and laboratory expenses and administrative costs). Perhaps you might be able to make the case that this isn't coming from tuition dollars, but at the end of the day university funds are fungible. The department could likely cover the same teaching load with about $25k / year in adjunct services (since it would be about half an adjunct's schedule).

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    2. I don't know about your university, but in mine a prof making $350K a year is bringing over a million dollars a year in grants, which at an overhead rate of 30-50% more than covers the non teaching part of the salary.

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    3. In any private business, 35% commission for a sales person would be consider very very generous. Why not here? Getting grants is their job. Why should they get such a big "cut" out of it?

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  8. Look towards the amount of "middle management" on campus spending their time making themselves look like they are worth paying.

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  9. There are strong arguments for having strong researchers teach, and great teachers do research.
    Among other things, current research directions inform teaching, and help keep curricula relevant. Clever students may ask good questions, and having to explain and justify basic notions forces researchers to think about them again.

    Re:Anonymous 11:32,
    350K is not a typical salary in Theory, nor are huge grants frequent. This level of compensation seems to imply considerable administrative duties, and administrators are often well paid both in academia and outside of it.

    One of the best things about a great university is its intellectual climate: dedicated, hard-working students and faculty, with easy and frequent interactions. We have yet to discover how to make personal interactions cheap. In particular, for faculty, this is best done with full time appointments. Most adjunct faculty are too busy, too insecure, and too temporary to become part of the university community.

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  10. UM tuition: $3,587
    UM room&board: $4,946
    UM "fees": $ 866 (around $500 of which is welfare for other programs like sports)

    cut the perceived costs in half by having your kid live at home

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  11. Really?

    See this article on the university president who consciously raised tuition (and started the trend), or this one about why college costs have increased (interestingly, he makes the same point as one of the commenters does about separating teachers and researchers).

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  12. Having not read the book, I'm not sure about the data with which the authors claim that Americans don't face a crisis in educational costs.

    Nevertheless, if bodies A and B move away from one another in space, stating that A moved from B or B moved from A doesn't alter the fundamental point: the distance increased between them. These economics professors mention everything else dropping in cost, but do they mention that they're including human labor? Another poster aptly pointed out that household median income has increased much more slowly than education costs; in fact, real wages have stagnated for 30 years for the majority of Americans.

    Elite support for public institutions has steadily eroded for decades; a good article I read some months ago is here.

    Finally, will online education be a boon for students? Likely not; I feel that the intimacy one can obtain in a brick and mortar university provides a much better educational experience than watching a static film stock of a professor, then submit homework to a robot for grading.

    One way to save the university is to move away from the corporate model, back to the social contract/public trust model. Tax the fabulously wealthy to support the public trust as was the norm in the 1940s and 1950s, during which we experienced the greatest growth and prosperity in American history.

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  13. College costs and the response to MOOCs have been discussed a lot, including by several thoughtful people from GaTech. See in particular Rich deMillo's http://innovate-edu.com/2012/05/31/what-is-driving-up-the-cost-of-college/ and http://innovate-edu.com/2012/06/04/three-myths-about-rising-college-costs/ and http://innovate-edu.com/2012/10/09/where-does-the-money-go/ and also Amy Bruckman's http://nextbison.wordpress.com/2012/10/07/the-future-of-universities-everything-a-mooc-is-not/

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