Going Broke By Degree: Why College Costs Too Much

by Richard Vedder

Overview

Economist Richard Vedder examines the causes of the college tuition crisis and explores ways to reverse this alarming trend.

Product Details

ISBN-13:	9780844741970
Publisher:	Aei Press
Publication date:	05/15/2004
Pages:	259
Product dimensions:	6.42(w) x 9.24(h) x 1.06(d)

Table of Contents

	List of Illustrations	x
	Acknowledgments	xiii
	Introduction	xv
Part I	The Problem	1
1.	The Cost Explosion	3
	Rising Tuition Costs and the Ability to Pay	8
	Higher Education Costs vs. Other Consumer Goods and Services	11
	Net vs. Gross Tuition Costs	12
	Why Has Real Tuition Risen? Simply Supply and Demand Analytics	14
	Reasons for the Rise in Demand	17
	The Role of Supply	21
	Conclusions	22
2.	Why Are Universities Inefficient and Costly?	24
	Resource Allocation: Universities vs. Private Business Enterprise	24
	Four Reasons for Rising Costs	26
	Third-Party Providers and the Vicious Circle of Funding and Spending	26
	The Lack of Market Discipline	27
	Ineffective Price Competition	30
	Government Regulation	32
	The Future: Factors Restricting Spending Growth	33
	The Slowing Growth or Reversal of the College Earnings Differential	33
	Demographic Changes	35
	Slower Rise in Higher Education Participation	36
	A Slowdown in Third-Party Payment Growth	36
	Conclusions	37
3.	Productivity Decline and Rent-Seeking	39
	The Rise in Higher Education Spending	39
	Where Did the Money Go?	43
	The Increase in Personnel	46
	Is Productivity Falling in Higher Education?	50
	Instructional Productivity	52
	Research Productivity	56
	Employee Compensation and Rent-Seeking	60
	Is Real Faculty Pay Stagnating over Time?	62
	Additional Observations on Changing Faculty Compensation	63
	Conclusions	64
4.	The New Peculiar Institution	66
	Price Discrimination	67
	Other Forms of Discrimination in Admissions	73
	Tenure	74
	Cross-Subsidization	78
	Instructional Subsidization	79
	Intercollegiate Athletics	84
	Food and Lodging Operations	85
	Conclusions	88
Part II	Have Our Universities Lost Their Way?	89
5.	American Higher Education: Past and Present	91
	American Higher Education Today	91
	Graduate vs. Undergraduate Enrollments	95
	The Increase in "Nontraditional" Students	96
	The Globalization of American Universities	99
	The Feminization of the American University	100
	Racial Dimensions of Changing Enrollments	102
	Two- vs. Four-Year Colleges: Trends	104
	Type of Institution: Private, Private For-Profit, Public	106
	Interstate Differences in Participation in Higher Education	108
	American Universities in International Perspective	111
	Characteristics of American University Students	112
	Conclusions	114
6.	Why Do We Need Universities? First Principles of Higher Education	115
	The Dissemination of Knowledge	115
	The Production of Knowledge	116
	Why Universities?	117
	Economies of Scale Arguments	117
	Higher Education as a Screening Device	119
	Alternatives to Universities	120
	The Teaching Function	120
	The Research Function	121
	Conclusions	123
7.	Universities and Society	124
	The Positive Externality Argument and Its Weaknesses	124
	Equality of Opportunity Arguments	128
	Higher Education as an Investment	128
	Additional Testing	138
	Government University Support and Economic Growth: Case Studies	141
	North Dakota vs. South Dakota	142
	Illinois vs. Michigan vs. Ohio	143
	New Hampshire vs. Vermont	144
	Higher Education and the Quality of Life	145
	Conclusions	146
Part III	Solutions: The Future of American Higher Education	149
8.	New Alternatives to Traditional Higher Education	151
	For-Profit Higher Education	151
	The University of Phoenix--Higher Education's Financial Success Story	152
	Career Education Corporation	156
	Corinthian Colleges, Inc.	157
	DeVry University and Associated Businesses	158
	Strayer Education, Inc.	159
	Distinguishing Characteristics of For-Profit Colleges and Universities	159
	Distance Learning	162
	Alternative Forms of Certification	165
	Conclusions	166
9.	Evolutionary Change on the Campus: One Scenario	168
	Reducing Instructional Costs	168
	Increase the Student-Faculty Ratio	169
	Use Technology to Reduce Instructional Costs	172
	Change Tenure	173
	Cut and Consolidate Costly Programs	176
	Other Forms of Cost Reduction	177
	Reduce Bureaucracy and Noninstructional Staff	177
	Contracting Out and Privatization of Services	179
	Reform Intercollegiate Athletics	180
	End Formal Affirmative Action Programs	184
	Improving Productivity: The Output Side Matters as Well	185
	Academic Retention	185
	Issues of Academic Quality, Standards, and Scholarly Openness	187
	Change University Governance	187
	The British Experience	189
	Conclusions	190
10.	An Alternative Scenario: Systemic Reform	192
	A Tale of Two Paradigms	192
	The Optimal Solution: Defund Higher Education	195
	The Second-Best Solution: Reduce Public Support	196
	The First Paradigm: Scholarships (Voucherization) and Privatization	196
	Transitional Issues with Voucherization	201
	Ultimate Privatization	202
	The Second Paradigm: Other Regulatory and Financial Options	204
	Price Controls	204
	Tax Tuition	205
	End State-Subsidized Prepaid Tuition Plans	206
	Change Tax Benefits	206
	Subsidy Reduction or Realignment	207
	Mandated Cost Reductions	208
	Conclusions	210
11.	The Future of the American University	212
	Rationalizing Public Policy: Piecemeal Approaches	216
	Rationalizing Public Policy: More Systemic Reform	218
	Move to Student-Centered Funding	221
	The Ultimate Reform--Privatization of Higher Education	223
	Performance-Based Vouchers (Scholarships)	224
	New Approaches to Funding Research: More Competition	226
	Competitive Funding	229
	Alternative Delivery Systems for Research	230
	A Final Word	230
	Notes	233
	Index	245
	About the Author	259