Philadelphia Reflections

Paying for College I

It's almost two platitudes that during the Nineteenth century America changed from a largely agricultural nation into a largely industrial one. And toward the end of the Twentieth century, we are going on from an industrial economy toward a service economy. This latest shift of direction is one of the main causes of soaring college tuition costs. Demand for first-class college education grows faster than price increases, competition, and internal efficiencies can seemingly control.

College Cost

Tuition costs at the top of the educational pecking order have now reached $52,000 annually, with room and board and other costs sometimes adding another fifteen thousand. Attending college already costs well in excess of the average after-tax income of working Americans, perhaps even in excess of the average income of college graduates. College costs regularly exceed the disposable income of undergraduates' parents and must be temporarily subsidized while the nation collects its wits, but subsidy cannot be a permanent solution to a problem so large. Average incomes of college graduates do exceed the average income of those who only finish high school. That extra income is gamely said to justify the investment, even taking into account the invisible loss of 4 years of earnings, perhaps even a trailing six-figure indebtedness. However, a meaningful score can only be toted up in retrospect, after inflation and taxes work their way into a net-net appraisal. Faith in some postulated answer to this accounting puzzle colors various belief systems, like: How much should we worry about widening income gaps between any income segments? What is the particular value to society of income redistribution between those who pay full tuition and those who receive financial aid?. There could be legitimate questions about many other values throughout the whole system. During the Vietnam War, many uncomfortable questions were raised about the educational system, even leading to riots on college campuses. It was often implied that many students were in college merely to escape the military draft. While that may have been precisely what was in many minds, the scramble for elite college admissions has intensified since the end of the draft, seemingly proving a college education has other merits. Steadily rising tuition costs are rapidly narrowing the income advantage, so one supposes the intrinsic merits of higher education can soon be measured by whatever enthusiasm for admission survives the bursar's bite. There are a few reasons for doubt, many reasons for anxiety.

In the first place, undergraduate tuition charges are poorly related to underlying instructional costs. It is natural to expect some markup for any product on sale, and some cushion for the unexpected. However, the difference between the tuition for night school and day school is a pretty disconcerting example. Comparatively few universities offer the same undergraduate courses as night-school courses, but a number of them do. The tuition for regular undergraduate courses is about average, somewhere around $5000 per course, but the tuition for night school is around $1200 per course -- same teacher, same textbook, same exam. Without access to the accounting data, one is led to suppose the tuition for night school comes pretty close to the true instructional cost of these courses. And therefore led to the supposition that the 300% markup for undergraduates implies that undergraduates, blue jeans and all, subsidize a great deal of unrelated activity throughout the university. This sort of discovery does not enhance the image of justice in academia.

In the second place, colleges can as easily re-direct surpluses into the endowment fund as out of it. They batter the concept of donor intent in both directions, breaking the linkage of tuition to underlying costs, and the linkage of donations to needs. Ultimately universities may be defined as mere steps to a higher income for wise investors, and cannot complain if proof of adequate return is demanded. Such accountability might even be a wise precaution, based on observation of the way Great Britain has made Oxford and Cambridge dependent on government subsidy, then subsequently allowing class warfare antagonisms to degrade the government contributions. These prestigious universities are now much humbled by transforming income inequality into a mark of shame. Unless American universities are designed to follow the same path, they will be forced to choose between competing for the way businesses do, or the way churches have traditionally done. Unfortunately, there is a reason to fear which was a college president will tip, with a cash register in one hand, and a begging cup in the other.

America is almost unique in its large proportion of small liberal arts colleges. No doubt, many of them would prefer to remain as they are, but it seems attractive to encourage thirty to fifty of them to become universities. When asked the differences, one college president replied the main difference is the presence of graduate students. Judging from the competitiveness of admission, the demand for graduate students is much closer to supply than at the undergraduate level; some tuition distortion reflects an effort to increase the supply of college teachers. Income prospects after graduation are probably an influence, but since the main occupational opportunity for graduate students is to teach undergraduates, increasing the openings for college graduates in a service economy must also imply matching the increase with more people to train them. However, only a minority of university undergraduates go on to become graduate students, so creating fifty universities also rebalances the incentives to become teachers. There are observers who advocate replacing teachers colleges with universities, a proposal which necessarily collides with the present informal dual-track system. High school teachers are mainly trained in teachers colleges, while university professors are products of graduate schools. The two streams are kept carefully separate because the commotion created by mingling them would probably be considerable. Nevertheless, this may be the rate-limiting step which will have to be addressed.

Mention of secondary education must be made, however, in order to grapple with the issue of automating education. It must be obvious that one distinguished Shakespearean scholar could replace thousands of lesser teachers of the same subject by the use of video recordings of the distinguished lecturer at work, both for introductory college courses and more advanced levels in high school. True, a small handful of pure scholars needs to be segregated away from the mass of college teachers, most of whom might prove to be graduate students. Face to face interaction is essential at every level of education of course, but automation holds such huge financial promise that greater experimentation and innovation seems inevitable. The education industry needs to make much more strenuous efforts to reduce its costs through greater adaptation to information technology if only to improve its ability to teach such adaptations to entrants into other industries. Shortening the school year, wider expansion of the Junior year abroad, and employing graduate students to teach, are debatable methods for reducing the cost of education; but an enthusiastic embrace of the computer revolution must improve educational quality before other nations leave us in their dust.

And finally, caution must be mentioned. Some degree of specialized focus of college courses is inevitable; we cannot develop scientists and engineers without it. But we must not eliminate the liberal arts, carelessly calling them luxury in a busy age. To a probably excessive degree, universities have replaced religions as a secular place to examine and teach young people how to live and behave. In little more than a generation, universities have a determined (long) hairstyle and (blue jeans) dress style, sexual morals, and political belief systems, mostly in a libertarian direction. That is not why we have colleges, or at least not why students must pay a quarter of a million dollars to experience them. There is another layer of intangible value in a liberal education, perhaps only perceived by personal experience. As I look back on a great many decades, I realize that almost every important step upward in my life was unexpected, almost unwelcome. Someone came out of the blue and offered it to me. Other people were watching and judging from behind some social bush. By contrast, almost every advancement that was strived for mightily, perhaps even a little too competitively, was to some degree gratuitously thwarted by others, often quite openly. Unobserved headhunters are watching for many qualities, particularly the ability to play this game. Spending some extended time learning what our society is all about through liberal education is a technique for self-advancement, too; universities would impair their customers' main chances in life by disturbing it.

Originally published: Monday, March 08, 2010; most-recently modified: Friday, May 31, 2019