More on college tuition as a bubble

I blogged a couple weeks back about the similarity of college tuition and health care costs (up, up, up). I then linked to story about High Point University, and its highly leveraged play to recruit students.

There were several interesting comments about these stories, and many others are weighing in on related issues lately (Josh Barro, Ezra Klein, I am sure there are more).

My main thought about the escalation of college costs and worrying if it is “a bubble” is as a producer of college, a Professor; I worry that the cost structure of what we produce is too high, and that Universities will be too slow to adapt. I suspect that universities will have to look for non-traditional ways to generate revenue from non traditional students. The move toward providing free on line classes could be understood as a back door way of doing this by saying yes we are expensive, but we are providing benefit to those who cannot pay, get in, or who don’t want to do so, making the myriad subsidies “worth it”.

A series of important questions are relevant, many of which were raised by commenters to my post and to others.

  • What is the goal of college? (better educated citizenry, get a job, mixture) This story of Duke Classics professor Peter Burian retiring after 44 years is interesting and relevant to this discussion. I sense a shift at Duke anyway toward the purpose of college being a credential for a job.
  • How should the research mission of major Research universities be paid for? It it generally a given in a place like Duke that researchers bring something extra to the classroom because of their research work? Is this true? Does it make sense for researchers to teach undergraduates?
  • What is the value of colleges to the taxpayers who subsidize us in many ways, but whose children will not go to college? This question is especially important for public Universities.
  • Just as Harvard and MIT moving to provide free online courses, with Stanford having done similar will lead to copy cats (there has been discussion at Duke). Any move made by the so-called SHYMPs (Stanford, Harvard, Yale, MIT, Princeton) will have great impact, especially on places like Duke that are below these in prestige. I suspect one of these 5 will someday soon drastically cut tuition for everyone. The actual average amount of tuition received per pupil might not change much given financial aid, but this will have cascading effects for other private Universities, who don’t have as large an endowment as those 5.

In addition to the fact that both tuition and health care have risen consistently faster than other parts of the economy for many years, I think there is a similar avoidance of the hard questions this fact raises by those producing/providing these services. In short, neither Professors in the case of college, nor doctors and other leaders in health care want to focus on the notion that there is likely a cost side problem in our enterprise. I think we in universities better get out in front and not simply defend the status quo. That is what I meant by college tuition as a bubble.

About Don Taylor
Professor of Public Policy (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute), and Chair of the Academic Council at Duke University . I am one of the founding faculty of the Margolis Center for Health Policy. My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

7 Responses to More on college tuition as a bubble

  1. DShea says:

    How about this one: Why have the administrative costs at universities risen so much more rapidly than the cost of instruction or research?

    • Don Taylor says:

      it is a great question. The proliferation of Deans and vice deans and associate deans and associate vice deans since I came to Duke in 1997 is noticeable. My guess is that one issue is profs who are bored with their research and looking for something else to do/way to advance. Also, there seems to be inordinate attention paid to ‘student life’ so far as I can tell, which often seems to mean being worried about what students do when they aren’t studying, etc. Not saying there aren’t any issues, but I remember being 19 and a certain amount of mayhem is to be expected and I doubt the ability of a 50 something prof to be able to come up with a way to stop this. The best hope is for the academic enterprise to be as engaging, interesting and relevant as possible and provide different outlets for those students wanting them. A particular issue for Duke is that many come who didn’t get into Harvard, Yale, Princeton, etc. or they did and chose Duke because they wanted a ‘balanced college experience’ by which they mean partying and basketball. So, that is actually Duke’s niche… can’t program it away.

  2. DShea says:

    I would venture a guess that there are similarities between health care and higher ed here, too. Because of the lack of transparency on both outcomes and prices in both markets, suppliers compete on other dimensions. In both cases, visible signals to consumers (expensive medical equipment, fancy gyms and dorms, high cost physicians/professors, etc., ) are expensive administrative costs.

    Third party payment, in both cases, divorces consumers from bearing the full brunt of those costs, muting the market discipline to prevent excessive and unproductive admin costs.

  3. I will be very interested to see how schools compete in the new free online format and what impact that will have on people’s access to education. And whether potential employers and graduate schools will recognize these classes. Such an interesting and promising new development.

  4. Don Taylor says:

    I agree that it seems like a big moment. Harvard and MIT putting it out free would seem to cut out anyone else trying to do so for pay, unless there was a move to provide some sort of ‘light’ credential. I was thinking about recording all my lectures in my intro to US health system class this coming fall and link them up here, and there had been discussion of whether a prof could do so or not. Harvard and MIT doing it will get rid of that barrier

  5. Pingback: Does where you go to college matter? « freeforall

  6. Pingback: Posts on the cost of college « freeforall

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