College Costs Aren’t the Main Problem

By David Leonhardt

The ranks of top colleges have been suspiciously stable over time.

If someone asked your grandparents 50 years ago to name the country’s best colleges, they would have come up with a list that looks very much like the list you’d come up with today. Can you think of any other industry in which that’s the case?

Or go back only to 1983, the year the U.S. News college rankings began, and compare the stability in that ranking with the turnover in the Fortune 500 since then. The top of the 1983 Fortune 500 is filled with companies that don’t exist today (Texaco, Nabisco, Beatrice, United Technologies) or that have been humbled (General Motors, Ford, Chrysler, Xerox).

It’s hard to look at this picture and conclude that higher education is a bastion of intense competition.

No one knows how much students actually learn at different colleges.

We know which colleges admit the best-prepared group of high school graduates (Harvard and the other colleges atop the U.S. News ranking). We know which colleges have mediocre graduation rates (most of them). But we don’t know how much students actually learn while in college.

Do Harvard students learn more or less than M.I.T. students? More or less than University of Massachusetts at Boston students? At which University of California campus do students learn the most? The least? How do those campuses compare to the less selective California State University system?

A recent study by professors at New York University found that more than 36 percent of students in a representative nationwide sample made no gains over the course of their four years of college on a test of analytic reasoning, critical thinking and written communication skills. Some college administrators complained that the test was flawed. Maybe it was. But the colleges aren’t coming forward with any better data.

The cost of college isn’t nearly as high as is often suggested.

First, a vast majority of students attend public colleges that cost far less than elite private colleges or even than many flagship state universities. Second, even at those more expensive colleges, the actual price — net of financial aid — for middle-class and poor students is much lower than the sticker price (though that’s in part due to the recent increases in Pell grants, which Congressional Republicans have proposed cutting). Third, the returns to a college degree, for those students who graduate, remains quite high. Over the average graduate’s entire lifetime, the cost of college is less than zero.

Finally, while college costs have clearly risen, they have not risen much faster — if any faster — than the cost of other high-skill services. Robert Archibald and David Feldman are convincing on this point.

New technologies and new kinds of colleges offer some hope for change.

Most of these new colleges will probably fail to deliver what they promise. So far, at least, online learning does not live up to the hype. But that could change. In general, innovation usually comes from outsiders. Judith Scott-Clayton, in her first Economix post, has more on innovation.

My conclusions?

Cost is not the main problem for American higher education. What are the main problems?

The complexity of the financial-aid process is one, because it scares away many poor students; in the ideal system, up-front tuition costs would remain low, and students would pay back colleges with a percentage of their income.

The patchy — and often shoddy — quality of education at many high schools and colleges is a major problem.

It’s also a problem that we don’t know which colleges are doing a good job and which are not.

Finally, it’s a problem that Washington and the states spend billions of dollars subsidizing higher education but do not demand accountability. See this Daniel de Vise article in The Washington Post for more.

If policy makers began to tie funding to performance — both graduation rates and measures of actual learning — we might not drive down the cost of the good colleges. But I bet we’d stop wasting so much money on colleges that are doing their students a disservice. And I bet there are more of these colleges than we care to admit. With better data on learning, we could also figure out how to evaluate new kinds of schools that may indeed be cheaper than traditional colleges are.

It will be hard to improve higher education significantly — which is crucial to a faster-growing economy — until we have better information about what students learn and where they learn it.


Leave a Reply

Be the First to Comment!

Notify of