Grade Inflation: The More We Spend on Higher Education, the More We Spend on Higher Education

By Beato, Greg | Reason, February 2011 | Go to article overview

Grade Inflation: The More We Spend on Higher Education, the More We Spend on Higher Education


Beato, Greg, Reason


WHEN IT COMES to reforming Big College, give the federal government a C+. Throughout 2010, grade grubbers in Congress, the White House, the Department of Education, and the Government Accountability Office (GAO) worked hard to investigate and regulate the booming for-profit college sector. Among other sins, they accused the schools of predatory recruiting practices, inflating grades to keep students eligible for federal aid, and charging too much for degrees that ultimately have little value in the workplace.

Given that the approximately 2,000 for-profit colleges in the U.S. rely on federal aid for a huge portion of their revenues, such scrutiny is clearly warranted. Still, the $25 billion in federal grants and loans that flows to them each year represents just a fraction of the $113.3 billion the government made available to higher education as a whole in 2009-10. And not all of the $89 billion or so that non-profit institutions collected in federal aid went toward teaching the nation's youth such career-enhancing skills as how to deconstruct soap operas from a Marxist perspective.

Indeed, while college tuition and fees keep rising, it sometimes seems as if the higher education industry is investing in everything but education. Cornell brags about its "remarkable" 4,800-square-foot climbing wall, which "is the largest indoor natural rock climbing wall in North America." Rutgers, Carnegie Mellon, and many other universities have all invested in eSuds, an "innovative online laundry system" that allows students to see if their socks are dry without leaving their dorm room.

The continent's biggest indoor climbing facility is unique, but costly amenities have become typical college perks these days, along with rec center jacuzzis, registered dieticians, and even tanning salons. So it may come as something of a shock that college is actually more affordable today than it was five years ago.

Yet according to the College Board, a nonprofit membership organization that creates and administers the SAT and other tests, that's indeed the case. In part, this is because institutional grant aid from colleges has increased from $26.2 billion to $33.3 billion since 2005-06. But the federal government has been even more generous, increasing Pell Grants from $12.7 billion in 2005-06 to $28.2 billion in 2009-10 and converting the program into an entitlement. In addition, the government guarantees hundreds of billions in student loans and has increased tuition tax credits for low- and middle-income families. Because of these goodies, the average net cost of tuition and fees for a college student at a public four-year college was $1,540 in 2010-11. In 2005-06, the average net cost, adjusted for inflation, was $2,080.

Long before gourmet meals and high-tech laundry surveillance entered the higher education canon, college was a pretty fun way to spend four years. And its benefits to individuals and society at large remain widely touted. Education Pays 2010, a report issued by the College Board, states that "median earnings of bachelor's degree recipients working fulltime year-round in 2008 were $55,700, $21,900 more than median earnings of high school graduates." Americans with a college degree also do more volunteer work, vote more often, and have lower blood pressure than those who don't.

But while it may be an American tradition to pay for the nuts and bolts of higher education--the salaries of instructors, the construction of libraries and classrooms--is it really a national priority to ensure every 19-year-old has equal access to luxury dorm rooms and top-notch diversity coordinators?

In a 1992 essay for Commentary, the economist Thomas Sowell identified a disturbing trend: The cost of college was going up not because the cost of teaching students was going up but rather because "colleges and universities [had] been greatly expanding what they do." Between 1975 and 1985, Sowell noted, college professional support staffs increased by more than 60 percent. …

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