April 12, 2010
Praise needs to go out to the Wall Street Journal for its highly informative article, Why Top Colleges Squeeze You Dry, in its April 9th edition. The author, Andrew Manshel, was a top-ranking college official in charge of finance and administration at a prominent college in the early 2000s. Manshel notes that [t]op private institutions charge what they do because a substantial number of people will pay it. Prestige schools have convinced parents that they hold the key to success for their children.
Manshel does a terrific job of explaining how these schools set tuition levels to maximize the percentage of students who accept college admission offers. He notes that schools do offer tuition reductions for some, [b]ut this pricing system enables elite institutions to charge a premium to those families able to afford it. Marshall describes how these long-term tuition hikes above inflation have led to very high salaries for senior faculty and administrators. Additionally, college building programs have become an educational arms race that waste enormous amounts of resources.
This tuition game might be tolerable if it werent landing recent graduates in mountains of debt. Manshel doesnt make enough of this problem, for he seems to think that financial aid covers the costs except for those at the top of the demand curve. From what I hear it doesnt come close for most. That said Manshel does exhort his colleagues with this closing:
[College] leaders need to take a sharp pencil to their cost structures; raise their endowment payouts; end annual cost increases in excess of inflation; and rededicate themselves to providing opportunity to the talented regardless of means, enhancing social mobility and fostering the production of knowledge.
Amen to that. Costs are out of control. The time has come to re-think the entire education model when we have low cost alternatives being made available through web-education, for example. If the Teaching Company can give me a 24 lecture course on the American Revolution on DVD (video) for $69.95 with a top-ranked professor (Allen Guelzo, Gettysburg College) ... something is out of whack.
However, I would add that parents need to reconsider the value of the educations their children will receive. Do you really need to pay Ivy League tuition and costs (approx. $45,000 per year) to study English anymore? The debt loads of the young not including those being created by government entitlement programs are massive. This debt will impair the ability of a generation to attend graduate schools, buy housing, and form families. Its time for a paradigm shift. Washington, are you listening?