Monday, April 13, 2015

Cost of Higher Education: New York Times and Slate Editions

Recently, New York Times published an op-ed opinion piece entitled "The Real Reason College Tuition Costs So Much" (the piece). The piece assigns a single factor to the cause of the rising college tuition, that is, the bloating university and college administration. The piece is interesting to me. I would like to drop a note on the piece.

The piece definitely won many praises -- who does not hate rising college tuition cost? I would like to say that the piece is an excellent piece simple because the piece certainly garnered many serious discussions. A few readers wrote to the New York Times expressed their opinions toward the piece. Among the opinions, some counters the argument made in the piece by arguing some university administration has become more efficient, and some argues that the bloating administrative cost is partially a result of the complexity of the higher education business, such as, the increased complexity of regulatory compliance. The Inside Higher ED has a blog post on this piece as well. The blog post refutes the center thesis expressed in the piece.

The discussions on the piece that I enjoy reading and listening the most are an article in and a podcast from The article and the podcast point to a few important questions.

  1. Is the cost of college education really rising? If it is rising, how much rising is it?
  2. What are the factors driving the rising college education cost?

To answer the first question, we have to come out some metrics. There are at least two metrics.

  • Total higher education expenditure (or cost), including tuition & fees paid by students and government expenditure and subsidy
  • Higher education expenditure per Full-Time-Equivalent student (FTE)

It appears that we can have the following observations.

  • The article and podcast suggest that the total higher education expenditure indeed increases over time. However, so does the number of students enrolled. Then, although the higher education expenditure per FTE is rising, it does not rise much.
  • Indeed, the university & college administrations have gotten bloated. It is a contributing factor of the rising cost of higher education. However, the bloat is partially a result that universities and colleges must deal with increased complexity of regulatory compliance.

One may ask the question, whether we can make higher education more efficient by reducing the cost per FTE.

  • We do not seem to have a solution to reduce the cost amid recent technological advancement in delivering education content and service. Some cites the so-called Baumol Effect to explain why we cannot be more efficient. Nn article in Forbes has a discussion on the Baumol Effect.
  • It is questionable that universities and colleges have any real incentive to reduce the cost per FTE. Some points out the prestige and ranking of a college is positively correlates to the tuition -- the more expensive a college is, the higher rank or reputation the college may enjoy, which is important to recruit more and better students.
  • Some blames the Federal Financial Aid program, such as an Wall Street Journal article and the Forbes article just mentioned above.

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