When College Becomes A Risky Investment

Economists mislead families by framing college attendance as an issue of capital investment rather than one of affordability. Telling parents and students that they should choose the college with the highest net present value, or predicted return on their tuition investment, encourages them to choose the most expensive college they can. Since colleges work to convince the public that quality and cost are directly correlated, the investment framework is a good complement to marketing strategies.

In fact, no objective data support the hypothesis that higher cost means higher quality in education. The data are lacking because colleges and universities provide few objective measures of quality, even though the market has called for that evidence for decades.

Colleges have no incentive to provide high-quality information and every incentive to keep "quality" measured by soft, ambiguous rhetoric. Colleges benefit when the public is uncertain in that regard: As long as people cannot measure the quality provided by individual institutions, they cannot make rational cost decisions among competing enrollment options.

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THE CHRONICLE OF HIGHER EDUCATION