Why Does College Cost So Much?

Why Does College Cost So Much?

Why Does College Cost So Much?

Why Does College Cost So Much?

Synopsis

Much of what is written about colleges and universities ties rapidly rising tuition to dysfunctional behavior in the academy. Common targets of dysfunction include prestige games among universities, gold plated amenities, and bloated administration. This book offers a different view. To explain rising college cost, the authors place the higher education industry firmly within the larger economic history of the United States. The trajectory of college cost is similar to cost behavior in many other industries, and this is no coincidence. Higher education is a personal service that relies on highly educated labor. A technological trio of broad economic forces has come together in the last thirty years to cause higher education costs, and costs in many other industries, to rise much more rapidly than the inflation rate. The main culprit is economic growth itself. This finding does not mean that all is well in American higher education. A college education has become less reachable to a broad swathe of the American public at the same time that the market demand for highly educated people has soared. This affordability problem has deep roots. The authors explore how cost pressure, the changing wage structure of the US economy, and the complexity of financial aid policy combine to reduce access to higher education below what we need in the 21st century labor market. This book is a call to calm the rhetoric of blame and to instead find policies that will increase access to higher education while preserving the quality of our colleges and universities.

Excerpt

This book is the result of ten years of active collaboration and perhaps twenty years of ruminations. We both teach in the economics department of the College of William and Mary. While it may be a surprise to some readers, William and Mary is a state-supported institution. Over the years we have watched the economic fortunes of the Commonwealth of Virginia ebb and flow. The fortunes of the college followed a similar pattern with one glaring exception. Dips in the Virginia economy were always followed by recoveries taking the state to new economic highs. On the other hand, the share of the cost of running William and Mary covered by the commonwealth would shrink when the economy dipped, but with the recoveries the state’s share of the bill did not return to its old levels. The finances of the college were slowly and somewhat erratically being privatized. Wags started to say that we used to be “state supported” but now we are “state assisted,” and visibly on the horizon we can see the outlines of a time when we will be only “state located.” Such talk annoys governors and state legislators. They counter that with economic recovery the actual dollar contributions of the commonwealth did return to and then surpass old levels. They argue that the share of the budget covered by the commonwealth only shrank because the costs of running William and Mary had grown so rapidly.

The College of William and Mary may be special in many ways, but this story is not an example of one of them. Most state universities are slowly being privatized as their costs grow more rapidly than state support. And the rapid growth in costs is not a public-institution . . .

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