Tuesday, September 21, 2010

It's Only A Matter of Time

Froma Harrop
Thank you, Froma Harrop, for proving that people who are fed up with the high cost of college are not all right-wing anti-intellectual zealots. Harrop, a left-of-center columnist and editorial writer at The Providence Journal, posted a terrific column today on the cost of higher education on RealClearPolitics.com.

Large state universities and the elite privates are bloated with administrators, including presidents who often make in the seven-figures, with campuses that look more like country clubs than institutions of higher learning.
That was a pleasant stroll across the Ivy League campus of Brown University, in Providence, R.I. I saw the gardening crews, the maintenance trucks, the pricey restoration work on Faunce Arch. I passed the skating rink, the president's mansion and the new Department of Facilities Management building.
Plus, you know those big-time basketball and football teams that, we are told by their apologists, make money for the universities? Well, it turns out that of the nation's 629 college football teams, only 14 turn a profit. And you remember when your college professor was entitled to apply for a sabbatical only every seven years? Some colleges have lowered that to three years.
Harvard has 48 history professors, and 20 of them are somewhere else this year.
To top it off, as I have pointed out elsewhere on this blog, infusions of federal money have distorted the market, giving the colleges fewer incentives to keep costs down.

I could go on and on, but this is an outrage. Not to worry. As was the case with the housing market a couple of years ago, the higher education bubble will burst, replaced — in part — by online universities that offer quality courses at a fraction of the cost.

Market upheavals are always painful. Lots of people will lose their jobs while the industry reinvents itself. It will be ugly. But it will be a necessary evil.


  1. Look, Terry, I know you're not going to get off your high horse any time soon on this, and I don't agree with everything here -- sure, maybe some colleges and universities are top-heavy in administration, and sure, you can always find excesses in just about anything, anywhere (may he who is without sin...?) -- but as long as we're now talking about my own alma mater here, let me just ask, What's so wrong with gardening crews, a maintenance building, a skating rink, a president's mansion, and restoring an arch? I almost have to laugh at your (or the writer's) naivete. I mean, how many students does Brown have these days, between 5,000 and 10,000 maybe? (I don't really keep up.) What are they supposed to do -- walk under crumbling arches, not have physical recreation or fun (or a hockey team), maintain their buildings with toothpicks, walk around in weed-filled quads, and burn down probably centuries-old "mansions"?

    Let me further ask you, Do you know what Brown's admissions policy is? That's right: It's need-blind, meaning any student who is accepted can get in, regardless of the level of financial need. And the result of that policy, and aggressively successful fund-raising and marketing led by an African-American female president (overpaid, you will no doubt argue), and positive institution-building, is that Brown is one of the most dynamic, impactful (yes, I said it, just for you), DIVERSE, and downright popular universities in the world. The competition for admission is probably the most intense of any school, including all the Ivies. And the people who get in and CAN afford to pay will pay top dollar to go there because they believe in the value of the education and the degree (and, by the way, did you see, ahem, the article in today's news linking college degrees to higher-paying jobs?).

    I said earlier, and I won't go into this in great detail again, that the main reason for rising tuitions has been the boom years economy, which produced students who could afford to and were willing to pay the sticker price (just as happened in the home market etc. etc.), students who came to want and expect a high return for their money (including perks, some excessive, certainly, but if they could pay for them, why not?), and a philanthropic community that could pony over 8 and 9-figure gifts at the drop of a hat (and surely, my capitalist-booster friend, you're not going to argue with that, are you?). And when the economy hit the skids, they got the rug pulled out from under them (well, not Brown nearly as much, but many others), and yes, you could blame them for a poor business model, but as I asked you before (and you haven't answered), who saw it coming? You? Ben Bernanke? The millions of Americans who freely maxed out their credit and blew their home equity?

    It's easy to cast those stones at easy targets like bloated administrations, and paint a nice picture (for conservatives, that is) of fat cats on the government dole (wait, doesn't that apply to just about every industry, starting with the banks, the car companies, the oil companies...?). But I submit that these are distortions and misdirections, insignificant in the larger picture, and you have neither answered nor refuted my assertion in regard to the primary drivers of college tuitions.

  2. Sorry, I honestly meant to say in the first graph, "don't disagree..."!

  3. I figured you would get your knickers on a twist over this one.
    So let me get this straight: the poor universities are victims (after all, "who saw it coming?")? They got caught up in "in a poor business model" and "got the rug pulled out from under them." Gee, I thought the universities are where all the smart people are. Are you willing to cut the banks and the financial experts the same slack? I'm not. There's an old saying: "If it sounds too good to be true, then it probably is."
    What's wrong with the high-priced fancy digs is that they drive tuition up. No one is saying colleges shouldn't maintain their campuses and provide adequate facilities. But when you build those titanic edifices -- even if done through a capital campaign and not floated with bonds -- it adds to the cost of keeping the place going. You seem to be saying that universities have to build these country-club structures because donors are willing to fund them. I don't know about Brown, but my school has a gift acceptance policy. We do not accept gifts if they're not in the best interests of the institution. It can be painful but sometimes donors have to be turned away. Imagine that ... sometimes the powers-that-be have to consider long-term costs.
    That's nice that Brown has a needs-blind admissions policy. So does my grad school alma mater, Wesleyan. But that kind of policy comes at a cost. Why should everyone else's tuition and fees be driven up because of that policy? Why should other students be saddled with higher debts because Brown does not want to discriminate on the basis of socioeconomics? How about setting tuition at a realistic level? Then fewer students would have such an acute need for financial aid.
    You may think it's an "easy target," but how do you explain the fact that the number of administrators per student at colleges has almost doubled over 30 years? Oh, sorry, they have to hire additional admins to watch over the new substance education center made possible by an 8-figure gift that the institution didn't really need.
    I have just refuted most of your assertions of the primary drivers of high tuitions, but here's one you have not answered (although I'm sure you will also claim it is "insignificant in the larger picture" -- or perhaps altogether spurious). It is undeniable that as the flood of federal money made its way toward higher education, tuitions started their upward spiral. Colleges saw no need to contain their costs because they knew the government would increase aid to help consumers cover their confiscatory prices. And, of course, to top it off, the vast majority of the universities' real property holdings are exempt from taxation. Hmm ... tax breaks for the wealthy? This whole thing is a great scam on a cleverness par with AIG's derivatives racket or perhaps Bernie Madoff (didn't Bard lose $20 million with him?).
    This is the exact same thing that happened to the housing industry. If, as you say, no one saw that one coming, then the colleges should see THEIR crash coming because the housing collapse is still fresh enough to be staring them in the face -- if they're actually paying attention.
    I am a defender of the free market, as you know. Brown and others like it are at full enrollment and they should enjoy it while they can. It will not last.

  4. Great point Terry. I wonder how many of these Admins work 40 hour work weeks. Actual work. Every business in the country has reduced management head count-except for our schools and colleges.

  5. There are many reasons that I do not like the education system in this country, but the tuition cost seems to be in keeping with the rest of the economy.

    The piece that I dug up on the web says two to three times the Consumer Price Index, but when you look at the prices for everyday living expenses it seems pretty close.

    (1980 to 2002)
    Since the early 1980's, college prices have been rising steadily, at two to three times the Consumer Price Index (CPI). Since 1980, through this year, after adjusting for inflation, the average tuition of the nation's 4-yr public institutions has increased by nearly 128%. For the private 4-year institutions, tuition prices have increased by over 130%.

    (1980 Prices)
    Cost of a new home: $76,400.00
    Cost of a new car: $
    Median Household Income: $17,710.00
    Cost of a first-class stamp: $0.15
    Cost of a gallon of regular gas: $1.25
    Cost of a dozen eggs: $0.91
    Cost of a gallon of Milk: $2.16