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    Why Obama Won't Make College Cheaper

    Education reform in America is always an attempt to get something for free. It has been that way for at least twenty-five years. No matter what the scheme of the hour is (charter schools, Teach for America, No Child Left Behind, Race to the Top) or whether you're talking about K-12 or college, every reformer makes one of two promises. Either they promise to make education better without spending any more money, or they promise to make education better while spending less money. Education reformers basically say, "Four dollars is too much to pay for a hamburger. Bring me a three dollar steak."

    If you ask why the reformer expects this strategy to work, or how it could, you will be told to "be realistic." It is of course deeply unrealistic to expect taxpayers to increase spending on education. So the only "realistic" course of action is to create excellence through funding cuts. Since no solution but a three dollar steak is acceptable, we just have to figure out a plan that gets us an especially juicy, delicious, and healthy steak for three dollars. There's always a clever new three-dollar-steak scheme, no matter what happened with the last one, and you just have to give the new idea a chance. Twenty-five years on, education reformers are still talking about the newest, hottest plan. That's because none of the old plans did much good.

    President Obama's new college affordability plan is one of these reform efforts. He plans to make college cheaper for everyone, and to do this without spending any more money. Instead, he will shift around the money the federal government already spends to create incentives. College costs are a real problem, and Obama is right to want those costs lower. His plan will not actually do that.

    Why not? There is the problem of getting the plan through Congress.There is the problem that this plan (like No Child Left Behind) relies on crude and oversimplified metrics that pretend to measure complicated and slippery things, and then penalizes schools based upon that statistical pretense.But the real problem is that you can't set prices for things that you don't buy. Obama's plan won't change college prices, or colleges' underlying costs, because there simply isn't enough money on the table to make a difference.

    The federal government is the biggest individual player in American higher education, because it's the only entity that contributes, directly or indirectly, to nearly every college or university in the country. That means a lot of money, in absolute terms: the country has nearly 4500 colleges, universities and community colleges, with well over twenty million students. But the federal government isn't the most important contributor to any of those 4500 college budgets. It isn't the second-biggest contributor to those budgets, either. (The only exception is the service academies. The United States government pays for the entire budget at West Point and Annapolis, and they get to set the tuition: free.) We don't have a federal education system. Washington doesn't run our colleges, and doesn't pay for them. Instead, we have a vast decentralized system with thousands of schools competing in a free market.

    The federal government does pay enough money to influence college's actions. Title IX, for example, is enforced by a threat to strip all government grants and funds from schools that don't comply. Losing ten or twelve percent of your annual budget really hurts; think what a ten-percent pay cut would do to you. So paying ten (or twelve, or six) percent of every school's budget gives you a lot of say. What it doesn't give you is the power to make schools give up larger sources of revenue. Tuition is a bigger part of the budget than federal funding, hands down. A deep cut in tuition could very quickly add up to more revenue lost than the federal government adds. Even if you threaten to pull all of your financial contribution (and in practice the government would only be diminishing it, in gradual stages), that's not enough to make a school forgo MORE than what you're paying. If you tell a restaurant that they have to cut the price of a steak dinner in half or you'll stop leaving a fifteen percent tip, what do you think will happen?

    The reason no restaurant will sell you a steak for three dollars is that no restaurant can buy a steak for three dollars. People don't generally sell things for less than those things cost them. In fact, the only thing for sale in America for less than it costs is a college education. Colleges are already discounting tuition as much as they feel they can afford. Tuition never covers the full cost of operating a college, and the wealthier the school, the more it spends in excess of tuition. (The Harvards and Princetons of the world have the luxury of spending much more than they charge.) So college tuition is already being set significantly below cost. Tuition grows because costs grow. Why?

    If you want to be a successful education reformer, meaning you want to make a good living peddling your five-point plan for three-dollar steaks, your answer should be cast in moral terms. Costs are high because someone lacks character! High costs can only be a sign of laziness and corruption! After all, that's what makes those costs amenable to "reform." And of course, the moral explanation is satisfying, because it allows you to attack anyone who disagrees with you as a bad person.

    But if you look around America's 4500 colleges, you see almost all of them behaving the same way. There isn't a group of "virtuous" colleges holding down costs and another group of decadent spendthrifts charging 50% more than other schools. There are only slight differences between institutions. It is not that all 4500 colleges happen to be run by weak and depraved characters. When you see thousands of independent institutions behaving the same way, it's a sign that there are actual economic reasons in play. Colleges act the way they do because they're responding to real pressures that "character" will not make go away. Colleges don't spend money because somebody at the college was raised wrong. Colleges spend money because they believe they have to. Colleges spend what they need to spend to survive.

    Those costs keep growing for reasons that I'll try to explain in Part Two.


    Federal government could, if the congress had the will, to increase funding on education.  I don't see it as a failure of educators but a failure to invest dollars into education.  I am not alone on this.  Why is our President trying to come up with a new plan to rearrange the deck chairs on a ship that is taking in water?  I am tired of the unwillingness of Congress to invest in our country.  I am also not alone on this. 

    Coincidentally, I ran across this link in the comment section of another blog. It's kind of a, "the rent is too damned high!" rant, and the problems he cites are by no means limited to education, but some of it sounds like what you've observed before. I was curious about your take on it:

    a. In the past 30 yrs., a caste of administrators has usurped control of higher education. Using the ideology of free-market fundamentalism, a cadre of management professionals has garnered to itself the lion's share of revenues (from skyrocketing tuition costs, which these same admins initiated), and political influence (from contributions, corporate partnerships, and cronyism).
    b. As a result, the profession is over 50% "part-time" faculty who teach twice as much as do their "full time" colleagues, for a fifth of the pay, with no benefits. That percentage is growing all the time.
    c. A certain kind of distance learning program (but by no means all distance learning programs) has contributed to the outsourcing, downsizing, de-skilling, and degradation of the professoriate. These are based on the use of mandatory pre-recorded courseware content; over-regulated syllabi; and wages that are even further below the poverty-line than those you're paid for adjuncting live.
    a. In "good" schools, as few as 10% of those who teach undergraduates are tenured faculty; since tenure is a vetting process, this seems disadvantageous to the clientele since they pay to be taught by persons who are unvetted in this regard, many of whom still lack the PhD and are quite new (sometimes, utterly new) to teaching. Tuition costs are astronomical at such institutions.
    b. Wherever you go to college, online or live (but especially live), the cost is huge. Little of it goes to the people who do the actual teaching; it goes to pay enormous salaries to presidents and provosts and deans. Their job is to raise money and spend it on everything except paying faculty or lowering tuition. Construction projects, stock schemes, personal enrichment, sports arenas, endowment building, whatever. That's why tuition is so high.

    Maybe you'll get to this in part two, but I'd say that there is plenty of inefficiency in the college system. It's not driven by laziness and corruption but rather systematic market forces.

    The steak analogy is an interesting one. In an economic boom, there's lots of money for upscale dining. Fancy steak dinners become a status symbol. Could the restaurateurs sell cheaper cuts? Of course. But the public is willing to pay, and there's cache to selling the most expensive, most (perceived) delicious steak to the high-rolling bankers.

    Recession hits, money dries up, price of steak drops. Unnecessary costs leave the system.

    Many American colleges are like high-end steakhouses. They compete to provide the nicest dorms, plushest libraries, fanciest faculty, most successful sports teams, etc. Do students need to live in a country club to get a great education? No. But as long as they're willing to pay, the college's keep pushing to the limits to out-fancy their competitors.

    So if you could somehow force colleges to operate with less revenue, I think you see leaner but just as effective institutions. How you do that, I don't know.

    The wingeing here would do credit to a boatload of Poms.  Tuition too expensive?  Two solutions:

    1- Find a cheaper, reputable  foreign university.  (Examples:  McGill in Canada, Cambridge in England, Technion in Israel.)  See what they do differently from US institutions, and copy it exactly.

    2- If you or your children are applying to college, apply abroad.  You will benefit in many ways.  Besides saving on tuition, you may find living costs are lower.  Plus, living abroad for a few years is an education in itself:  you will return more rounded, with wider horizons.  Your host country will benefit by the influx of foreign currency.  Your university will benefit by helping to fill its multicultural quota of foreign students.

    Once American colleges see their rolls (and income) dropping, they will be faced with a situation of change or die, and will have to stop prevaricating and procrastinating, and actually lower their fees or raise the quality of their product.  This will benefit future American students.  Everyone benefits in this system.

    The above assumes that foreign education is as good as American.  If you think US universities are better, then what are you complaining about?  You pay more, you get more.

    I am pleased to read that McGill has reached parity with Cambridge. My Grandkids all applied to Cambridge but my American Express points were insufficient to fly them back and forth so they opted for various academic programs in our great state of Missouri and are now loaded down with liberal arts degrees and mountains of student debt which makes me feel guilty for splurging on a tooth implant. Thanks for posting.

    Tuition at NM universities is paid for with state lottery revenues  so even though we have the same accelerating cost problems as others the students are subsidized. Tuition is only one part of the expense of getting an education so my son still has sizeable debt to pay even though he worked and received grants. Luckily for him and his parents he choose a degree in computer science and has a great position in Cambridge Mass. Liberal Arts degrees used to at least get graduates a good position in teaching but now that we are privatizing all levels of education their options are limited, would you like fries with that diploma?

    I listened to an interview of the CEO of Morgan Stanley and it's my recollection that they were recruiting entry level people with liberal arts degrees and that their acceptance rate on offers made was 90%.

    With McGill, Cambridge and Technion, we're talking about schools that rank among the world's top 20-30 in at least their primary fields. Cost aside, good luck getting in.


    But I googled their tuition and fees, just to get a rough baseline. For undergraduates from outside the country, Technion starts around $8,000 a year; McGill and Cambridge are double that, with Cambridge rising to $50,000-plus for med school. Then there's the expense of living abroad. Yikes! And it's not like these universities aren't government-subsidized.


    Back in the '60s (yes, I'm that old), I lucked out to live just a longish commute between my mother's home cooking and a world-class school -- which cost me about $500 a year. Plus I got to live in the '60s!

    Hate to say things like this but those were the good ole days. I worked for $1 an hour in a steel mill and saved enough money in the Summer to pay for all my expenses for the year except for tuition.

    I meant that McGill and Cambridge are both reputable;  not identical.  (McGill has a better medical school, Cambridge a better rowing team....)

    Not strictly on topic but about a union victory for faculty which involves, among other important issues, the union also report that it won average salary increases of nearly 12 percent over the two years of the agreement and minimum salaries for non-tenure track faculty. Someone will pay but the focus of the article is on other issues.

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