College costs/prices

Long Tails in Higher Education

What do Chemistry 101 or Introduction to European History have in common with Harry Potter and the Half-Blood Prince or the latest singles from Green Day or 50 Cent?

They're all bestsellers in their domains. Education experts often wonder whether bestseller status among college courses might provide lessons about educational markets and planning, just as popularity shapes entertainment and cultural products. Such speculation has grown with the advent of online education. Some argue that by making the most popular courses virtual, colleges can slash costs, helping to pay for low enrollment courses.

The alternative has been to raise revenues for low-enrollment courses by adding enrollment. This "add seats" approach has become more attractive in the new world of online education. Which alternative makes more sense for colleges considering online versions of some courses?

Cost-cutting advocates suggest that great efficiencies may result from delivering online a small set of popular undergraduate courses. Courses such as Chemistry 101 or Introduction to European History would have large enrollments and "basic" curricula. These popular courses illustrate the "80-20 rule" -- 20 percent of a resource typically generates 80 percent of the possible benefits. Popular courses may not even constitute 20 percent of the catalogue's contents, yet they often represent 80 percent of enrollments. If that 80 percent can be served through automated, virtual means, that should release tremendous savings, offsetting the cost of courses that don't lend themselves as easily or cheaply to virtual delivery.

Sales data on books and music tracks cast marketing and planning issues in a new light. Chris Anderson, editor of Wired magazine, describes a new phenomenon first noticed in Web-based retailing of pop culture products such as books and songs: Very low-volume sales -- typically associated with backlist items -- can add up over time to stupendously large total sales. Anderson calls these large totals the "Long Tail." In Internet marketing and flexible warehousing, Anderson says, the Long Tail results in aggregate possible sales that can rival or surpass the total sales of popular items. The more books or songs available for purchase, the bigger the market opportunity.

A conventional marketer might carve out space for known or likely bestsellers and concentrate on selling those units -- the 80-20 rule. Selling the 80 percent of products that appeal to the slimmest markets simply costs too much. But the virtual marketplace makes it possible to reduce overhead drastically. For the low marginal cost of adding non-bestsellers, a business can make major gains from trickle-like sales of an enormous, traditionally neglected body of products. Call it massive multiple-niche marketing.

In higher education, the Long Tail view suggests that an 80-20 rule overplays the importance and benefits of moving online the 20 percent of classes that draw the highest volume. If we can find effective, high quality ways to make bestseller courses virtual, there are good reasons to do so. But there is also a broad and deep market for all those smaller classes-not in the individual instances but in the aggregate. We know this because so many of those courses are offered by colleges and universities, and so many such classrooms are reasonably well populated. Surprisingly, the Long Tail perspective suggests that, with Web-based delivery, potential exists for great expansion in specialized subject areas, as long as the costs of instruction (course delivery) resemble or improve on current rates.

An important distinction separates Long Tails in pop culture from those in higher education. It's possible to cut delivery costs for "niche appeal" units in entertainment but not education. Technology has an equal effect on pricing for all entertainment products regardless of bestseller status; the same is not so of educational offerings, which are inherently more specialized and expensive. This cost imbalance occurs since we are less likely to move high-end, low-demand educational offerings to an automated or virtual delivery mode-precisely because they are higher-end, requiring more intensive instruction.

Even if we did recreate them for virtual delivery, it would be at great cost. This suggests that a potential for profitable Long Tails may be unlikely in highly specialized university-level courses. But if current trends are any indication, this difference could have a limited lifespan. Three factors could create a Long Tail for course offerings:

  • Growing demand for higher education beyond undergraduate and professional education. This factor is seen in the great success of continuing education programs, reflecting demand for degree and non-degree programs alike.
  • Continued and diverse attempts to improve the quality and delivery of higher education online, by traditional, non-traditional, and commercial institutions.

Even if these factors intensify, many challenges lie in the way of a Long Tail market. No one has set a standard for a salable unit of online education -- entire courses, elements of course materials, or something else altogether? Should those units even be sold per se? Some approaches to these issues include: Open access to self-contained courses (Carnegie Mellon's Open Learning Initiative ); open access to curricular materials organized by courses (MIT's OpenCourseWare); open access to curricular materials organized into course modules (Rice University's Connexions ); continuing education courses for sale (the AllLearn project of Yale, Stanford, and Oxford); and program courses for sale (the eCornell project).

What really distinguishes high and low enrollment courses? Does the distinction simply consist of enrollment size? Advocates of small-sized, traditional classes argue that a highly specialized course requires an intensively personal approach that even a maximally "high touch" online learning experience cannot provide.

Even if these challenges are met, it's far from clear that traditional colleges and universities would willingly help bring about a Long Tail online market in higher education. From educational and economic perspectives, the outcome would not necessarily be positive. In literature or music sales, rescuing the backlist means exposing new audiences to unknown or forgotten worlds. By contrast, online delivery of higher education's "backlist" might well hasten consolidation of the market. How many different courses on Beowulf or Mallarmé can attain even tiny market share? With a drastic focusing of such "sales," the market could consolidate around colleges offering the best specialized courses, spelling an unhappy fate for institutions unable to compete.

Still, the potential for a Long Tail lies dormant in courses that are not yet offered online but can be found at 2,400 U.S. institutions. Year after year, a wealth of such courses, in highly focused topics such as Tagalog, Random Matrix Theory, and African traditional religion, appear in scores of college catalogues. This indicates a clear and widespread interest among current students in courses on diverse, super-specialized, arcane subject matter. There is no telling what the potential is for additional audiences of adult and returning students.

The 80-20 rule, then, is not a fixed picture, if it holds at all. The backlist 80 percent of courses represent an enormous number of classroom seats in their current, traditional mode of course delivery-and possibly many more virtual seats, if the transition is ever successfully made to online delivery. We're not likely to capture 80 percent of classroom seats by putting online 20 percent of all courses (this was obvious anyway, given that most courses taken by undergraduates are not giant lecture courses). Efficiencies may be gained by concentrating on putting large enrollment courses online. But we must be sober about the extent of those efficiencies-and about what is left out when online offerings neglect the backlist.

Is it really possible to deliver highly specialized courses online at the same levels of quality as traditional formats? Perhaps -- competent online courses or materials abound for focused topics ranging from Akkadian to causal reasoning to the history of the Jazz Age. But in case it is too costly to build those assets, colleges should look at what they are getting from ostensibly low-cost online versions of popular courses-the vaunted 20 percent. Should they demand more than "satisfactory" and "efficient" as grades of quality in those online courses-and would meeting those greater demands cost more?

Although in principle an "add sales" approach based on a Long Tail may beat a "cut costs" approach, low enrollment courses are not being created for online delivery in great numbers -- a notable exception being at MIT, where course materials alone are being digitized. As long as costs and quality remain perceived barriers to digitizing highly specialized courses, a Long Tail scenario in higher education may be a ways off. But it's worth contemplating how such a scenario might arise, and what it might mean for distributors and students ("consumers") of university-level courses. A Long Tail in niche-interest courses could build revenue opportunities for colleges and universities, consolidate markets among institutions offering such courses, and transform how students choose among courses and programs.

Saul Fisher
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Saul Fisher is director of fellowship programs at the American Council of Learned Societies. He is formerly a program officer at the Andrew W. Mellon Foundation, where he directed the Teaching and Technology Program.

Improving Learning and Cutting Costs

The continued rising cost of a college education threatens to put a high quality education out of reach for many Americans. It is incumbent upon America’s higher education system to figure out a way to resolve the seemingly intractable conflict between cost and quality. This is not news.

What is news is that there is now proof that colleges and universities can improve student learning while reducing instructional costs.

Thirty diverse institutions have been able to increase student success while simultaneously lowering the cost of doing so. How have they done it? Like most industries in the United States, these colleges and universities are taking advantage of the capabilities of information technology to improve quality and increase
productivity by letting go of an outdated, labor-intensive instructional model. They are proving, conclusively that, by redesigning the way in which we provide collegiate instruction, we can provide a better education at a lower cost. 

The name of this effort, which involved 55,000 students annually, is the Program in Course Redesign, led by the National Center for Academic Transformation. The center has been able to show how technology can be used to achieve quality enhancements and cost savings. In a recent review of the program presented to Lumina Foundation for Education, researchers showed improved student learning in 25 of the 30 projects, with the remaining 5 showing learning equivalent to traditional formats. All 30 institutions reduced their costs for the courses involved by 37 percent percent on average (ranging from 15 percent to 77 percent) and produced a collective annual savings of $3 million. Of the 24 that measured retention, 18 showed noticeable increases.

Additional analysis of the data shows that course redesign increases the achievement of all students, including traditionally underserved ones (students of color, low-income students and adults), thus dispelling the myth that technology and underserved students do not mix.

The redesign projects focus on large-enrollment, introductory courses, which have the potential of helping significant student numbers and generating substantial cost savings. Undergraduate enrollments in the United States are concentrated heavily in only a few academic areas. Just 25 courses generate about 50 percent of student enrollment at the community college level and about 35 percent of enrollment at the baccalaureate level. Successful completion of these courses is critical for student progress toward a degree. But typical failure rates in many of these courses -- 15 percent at research universities, 30 to 40 percent at comprehensive universities, and 50 to 60 percent at community colleges -- contribute heavily to drop-out rates between the first and second year.

In order to have a significant impact on large numbers of students, institutions should concentrate on redesigning the 25 courses in which most students are enrolled instead of putting a lot of energy into improving quality or cutting costs in disparate small-enrollment courses.

The redesign projects are moving students from a passive “note-taking” role to an emphasis on reading, exploring, and problem-solving.

Demonstrable gains in student learning have been produced through: continuous assessment and diagnostic feedback; increased collaboration among students; computer lab hours in which faculty and or/peer tutors provide one-on-one assistance; and online tutorials. These instructional techniques are hardly revolutionary. What has changed dramatically is our capacity to incorporate good pedagogical practice into courses with very large numbers of students -- a task that would have been impossible without technology.

At the same time, the instructional redesign is helping institutions save money.

At many community colleges, it takes students an average of about two-and-a-half times to pass introductory math courses. Enabling students to pass key courses in fewer attempts generates considerable savings in institutional resources and in student time and tuition.

The major cost item in instruction is personnel, so reducing the time that faculty members and other personnel invest in a course and transferring some of these tasks to technology-assisted activities are key strategies to freeing up resources to be used elsewhere.

Among the most effective cost reduction techniques are: on-line course management systems, automated assessment of homework, quizzes, and tests, online tutorials, shared resources for course development, utilizing undergraduate learning assistants instead of graduate students, and using the Web to reduce classroom space requirements.

For example, Rio Salado College redesigned four online pre-calculus mathematics courses taught previously by four instructors. By taking advantage of instructional software by Plato Learning and a non-academic course assistant who monitored student progress and addressed all non-math-related e-mails (an astounding 90 percent of all interactions), one instructor is now able to teach 100 students concurrently enrolled in any of the four courses and provide more individualized help. Three instructors have been freed up to increase enrollment in these courses or to offer additional upper division courses. Most important, student retention in those courses increased from 59 percent to 65 percent.

Perhaps the biggest stumbling block that prevents institutions from embarking on a redesign program is the immediate response that most academics have when they hear the words "reducing costs." And, as you might guess, that response is rarely positive. Most academics (and most people in general) associate "loss of jobs" or "heavier workloads" with cost reduction. That's really not surprising since that's how costs have been controlled in higher education for at least the past two decades.

What's different about this approach to cost reduction is that rather than taking resources away from institutions, course redesign frees instructional resources to be used for other purposes such as developing new programs, serving more students or responding to areas of pressing need. What the institutions involved have in common is that insufficient resources have prevented them from doing all of the things they want to do. Course redesign lets you do what you want to do if you had more resources -- it lets you achieve what's on your wish list.

We need to change the national conversation about what is possible. Once we break the higher-quality-more-money nexus, we can unleash the creative energies of hundreds -- indeed thousands -- of faculty members, professional staff and administrators to work on redesigning courses.

The solution is not to throw money at the problem. The solution is to work together to re-think the ways we teach and the ways students learn. By building on these course redesign principles, we can create a 21st century higher education system that will serve our nation well.

Carol A. Twigg
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Carol A. Twigg is president of the National Center for Academic Transformation, which serves as a resource for colleges on how effective use of information technology can improve student learning while reducing instructional costs. This article is based on a paper Twigg wrote for the Lumina Foundation for Education, which is sponsoring a meeting in Washington today to explore college cost issues.

More Than Fiduciary Duties

Trustees of public and private research universities have a fiduciary responsibility to act in the best interest of their institutions. However, actions that appear to be in the private interests of their institutions may not be in the social interest and these institutions are also expected to serve society as a whole. In deciding what optimal policies are, trustees must weigh their institutions’ private interests against the interests of society as whole. Seven examples are provided below.

Undergraduate Financial Aid

Increasingly, and with a few exceptions (such as my own university), public and private research universities are competing for prestige in the market for undergraduate students by offering non need-based grants to admitted applicants. However, evidence suggests that the increased use of merit aid may “crowd out” need-based aid and lead to fewer students from lower and lower-middle income families enrolling at these institutions. How should trustees trade off enhancing their institution’s prestige as an undergraduate institution versus maintaining the social goal of remaining accessible to students from all socioeconomic backgrounds?

This is an important issue because our nation’s public and private research universities spend more per student on undergraduate education than their comprehensive university counterparts. Considerable research suggests that students who attend institutions at which more resources are devoted to their education achieve higher earnings after graduation and are more likely to be admitted to top professional schools, which also contribute to mobility and prestige, than comparable students who attend institutions at which fewer resources are devoted to their education. With few exceptions, the shares of students attending our nation’s most selective public and private research universities that are Pell Grant recipients are woefully low.

Similarly, to the extent that institutions are under pressure to enhance their graduation rates, because these are used as another metric of institutional prestige and success, they can do so by devoting more resources to help the most disadvantaged students that the universities enroll succeed. Alternatively, they can do so by reorienting the nature of their institutions’ student bodies; as an example a number of urban research universities are moving away from their roots as institutions that serve disadvantaged urban residents by building more on-campus housing and using merit aid to attract less disadvantaged students from outside their cities to their institutions. Trustees must ask which strategy makes most sense for the institution and which is in the public interest. Suppose that to achieve any given level of graduation rate success is cheaper for the institution if it goes the merit aid route, rather than spending resources recruiting talented students from lower income families, providing need-based aid to them, and then providing extra support services to help them succeed at the institution. From the perspective of a trustee, is the appropriate policy choice obvious?

Creating the Faculty of the Future

American colleges and universities, including our nation’s research universities are increasing their usage of adjuncts and other forms of contingent faculty. Partially, this has resulted from financial pressures facing the institutions and uncertainty about future budgets. Partially, it has resulted from research universities encouraging their tenured and tenure-track faculty to “buy back” their teaching time so that they can devote more time to research and generate more research ( and potentially more commercialization revenues) for the university.

While adjuncts and other non tenure-track faculty save universities money, research also shows that, on balance, they adversely impact upon undergraduate students in the form of reducing graduation rates, increasing drop out rates, and reducing student interest in taking subsequent classes in the same field . That’s not to say the adjuncts aren’t working hard and that many of them aren’t deeply committed to teaching -- but people teaching from semester to semester, frequently at multiple institutions and without offices or meaningful support, face great difficulties in being as effective in the classroom. In addition, the reduction in the share of undergraduate teaching done by tenured and tenure-track faculty at research universities deprives these students of role models who might encourage them to go on to Ph.D. study and the reduction in the share of faculty positions that are tenured and tenure-track at research universities reduces the attractiveness of pursuing Ph.D. study to undergraduates attending these institutions. Put simply, although each research university trying to maximize its research output is operating in its self interest, these employment practices may hurt undergraduate education and have contributed to the decline in Ph.D. going behavior of American college students.

Should trustees take a more forceful position and argue for the importance of having more of the undergraduate teaching at research universities done by the tenured and tenure-track faculty, even if this means that less research will be produced at the university? Should trustees argue for the importance of maintaining the number of tenured and tenure-track faculty so that their institution’s students will be more likely to go on for Ph.D. study, even if this is not the deployment of faculty that will minimize the cost structure of their university?

Tenure and the Absence of Mandatory Retirement

Research universities make a commitment to faculty members when they award them tenure. Tenure is important to both faculty and the university both because it protects academic freedom and because it provides an incentive for faculty members to work for the best interests of the university and to participate in faculty governance. However, with the passage of the 1987 amendments to the Age Discrimination in Employment Act, since 1994 tenure has become effectively a lifetime employment contract because tenured faculty members cannot be compelled to retire. The end of mandatory retirement for faculty surely has contributed to the growing use of contingent faculty.

The tenure system was originally adopted in the United States with mandatory retirement as an important part of the system. One would think that with the elimination of mandatory retirement that universities and their faculties would devise systems of post-tenure review processes to assure that tenure is not seen as an unfettered lifetime employment contract. Indeed, the American Association of University Professors position is that post-tenure review systems are consistent with a tenure system as long as the evaluations of faculty members are done by their peers, these reviews are seen as formative (seeking at the first level to improve performance) rather than summative in nature, the reviews are not used to shift the burden of proof from an institution (to show cause for dismissal) to the faculty member (to show cause for retention), and the reviews are conducted according to standards that protect academic freedom.

To date, post-tenure review processes have been adopted primarily at public universities, often under threat of legislatively imposed mandates. No president or provost at a private research university wants to even raise the issue with his or her faculty because of the concerns that doing so would cause the administrator to lose the support of the faculty (making it harder for him or her to lead the university) and that some faculty (but presumably not the most talented) would flee to other universities. So even though adoption of post-tenure review systems by all research universities would help to demonstrate that higher education is trying to maintain “quality control”, which is socially desirable, it is very unlikely to occur. Should the trustees of individual private research universities play the role that the legislatures play with respect to public institutions and urge the president of research universities to push for the development of post-tenure review system?

The 'U.S. News & World Report' Rankings and Controlling Costs

The annual U.S. News ranking of research universities as undergraduate institutions is partially based on the amount that each university spends per student. Any university that unilaterally cuts its spending or holds down the rate of increase in its spending relative to its competitors will fall in the rankings -- even if the spending cuts have no impact on the undergraduate experience. Previous research has shown that an institution that falls in the rankings finds in the next year that it receives fewer applications, has a lower admitted student acceptance rate, has lower SAT scores for its entering students and must increase the size of the financial aid packages that it offers to attract students, other factors held constant. No trustee should want to see his or her university fall in the U.S. News rankings.

While spending more per student does, on average, lead to better outcomes for undergraduate students (see my discussion above), given concerns about runaway costs and tuition in American universities, one would think that running an institution in an efficient matter and cutting out waste would also be a social goal.

Should trustees of public or private research universities put pressure on their institutions’ administrators to hold down costs as a way of increasing economic efficiency and reducing future increases in tuition? What is more important, their institution’s position in the rankings or operating the institution in a way that does not waste resources?

Commercialization of Research

The Bayh-Dole Act encourages universities to obtain patents on faculty research findings from research funded by government grants to provide universities with a financial incentive to speed the flow of faculty research findings into commercial use. Many research universities have established offices of technology transfer to facilitate the development of licensing arrangements and joint ventures to help accomplish this goal. While most universities actually have not yet shown a profit on such arrangements, a few have hit it big.

Even if such efforts ultimately enhance the revenue flow coming into universities, commercialization efforts may have downsides as well. These include limitations placed on access of other researchers to new research findings and limiting poor countries’ access to scientific breakthroughs that have the potential to improve their populations’ economic well-being and health. For example if the rights to market new strands of disease resistant crops or new medicines to combat serious diseases are licensed to third parties, there is no guarantee that these parties will sell them to poor nations at prices that are at all affordable. Should trustees of research universities encourage their administrators to seek commercialization contracts that would guarantee access to such discoveries to people from poor nations, even if this means a reduction in commercialization revenues coming into their universities?

Training Our Nation’s Teachers

A number of our nation’s selective private research universities have eliminated or deemphasized undergraduate teacher education programs. One reason is that teachers’ salaries are lower than the earnings in alternative occupations that graduates of these institutions enter and thus potential teachers may be unwilling to take on the large debts that are often necessary to finance attendance at these institutions. Another reason is that schools of education typically do not generate large volumes of external research funding and that the alumni of these schools typically do not have the financial resources to generate large gifts to the institutions.

A number of studies suggest that, on average, students learn more when they are taught by teachers with high academic ability. Other studies suggest that students from selective academic colleges and universities are more likely to enter teaching if there is an opportunity for them to become at least provisionally certified as a teacher as part of their four-year undergraduate program. Given concerns about the quality of elementary and secondary education in the United States, encouraging, rather than discouraging, bright college students to enter teaching careers is very important for our nation’s well-being.

Rather than reducing their role in training teachers, should research universities, especially the most selective ones, be developing programs to encourage their students to enter the teaching profession? One possible policy would be to develop loan forgiveness programs for graduates who enter teaching; these would be analogous to programs that a number of leading law schools have adopted for their graduates who enter public interest law careers. To develop funding to support these programs will require the development of increased annual giving or increased endowments for these purposes; to do so will invariable reduce the funding available for other initiatives that the institution may perceive to be in its private interest. Should trustees of research universities urge their administrators to move in this direction?

The Land Grant Mission

Many public universities were founded with explicit land grant missions and historically have received funding from state and federal governments to help them carry out these missions. Through agricultural, cooperative, and industrial extension services, they have been major transmitters of knowledge to American farmers, consumers, workers and industry. Cuts in state and federal funding have limited the ability of land grant universities to carry out their land grant missions. The universities cannot “load” the costs of these activities onto the backs of undergraduates in the form of higher undergraduate tuitions. They have been forced to become more entrepreneurial and to use the “profits” that they generate from groups that can pay for their services (e.g. large corporations) to subsidize the provision of services to underserved populations. However, forced to generate their own revenues, it is natural for them to spend a larger share of their time on commercial activities and less on serving the public at large.

If a land grant university were to devote more resources to extension and public service activities, these funds would again have to come from annual fund raising and from raising endowments to support these activities. More generally, if other public and private research universities are serious about their social mission, they too should be engaged in activities to benefit society more broadly, such as working to improve elementary and secondary education, and will need similar sources of funding to do this.

While a recent Washington Monthly ranking of universities took involvement in extension and public service activities into account, this ranking is currently not one to which many people pay much attention. So devoting resources to these activities will mean doing less of other things. How do trustees, who have fiduciary responsibility for operating budgets, decide what the appropriate balance is between these activities and what many view as the core missions of the university -- undergraduate and graduate teaching and research?

Ronald G. Ehrenberg
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Ronald G. Ehrenberg is th Irving M. Ives Professor of Industrial and Labor Relations and Economics at Cornell University, director of the Cornell Higher Education Research Institute, and a faculty trustee at Cornell. The views expressed in this piece are solely his own. A longer version, with citations, is available on the research institute's Web site as a working paper titled “Key Issues Facing Trustees of National Research Universities in the Decades Ahead.”

The 20th Century University Is Obsolete

Higher education, like the human species itself, is the product of evolutionary forces that produce structures -- the DNA if you will -- that enable one variant to thrive and cause another to falter.

The life form known as higher education was hatched in a monastic cocoon in the 10th century. From this beginning, higher education institutions took shape as an evolving species, changing form and mission in response to external forces. Familiar milestones on this evolutionary journey include secularization, development of academic disciplines, evolution of administrative structures, growth of the research university, and the concepts of academic freedom and tenure.

With the dawn of the Knowledge Age, the evolution of higher education has drastically accelerated so that the pace of change is now measured in years, not centuries. Higher education today is a global commodity with all the competition and product diversification that entails, including the splitting of the production from the distribution of knowledge. This is much like the movie industry, where a few companies make movies and many companies distribute them in theaters, on television, and on DVDs.

Research I universities that produce new knowledge thrive in this new environment, but they are now dependent upon strong financial links with the economic agendas of companies and countries. They are no longer the sole citadels for the production of new knowledge,  but rather just one node on a global network of corporate and national R&D sites.

The transformation of Higher Education Life Forms on the distribution side of knowledge is even more dramatic, evolving a new species that concentrates simply on distribution of currently available knowledge.

This new species features a small core of knowledge engineers who wrap courses into a degree to be distributed in cookie-cutter institutions and delivered by working professionals, not academics. There is no tenured faculty, no academic processes; the sole focus is on bottom-line economic results. These 21st century institutions are not burdened with esoteric pursuits of knowledge; rather, they focus on professional degrees for adults that have a fairly clear market value for a given career path.

The exemplars of this new species are the for-profit universities, which are cutting their teeth on the weakness of the 20th century universities. Though new at the game, in a few years they will be capable of hunting with lethal success. This new species is market-driven. Its key survival mechanism is the ability to rapidly evolve to new environments and to position in the market. Since they do not carry tenured faculty, they can rapidly jettison disciplines of study that do not penetrate market. Since they do not have academic processes, they can rapidly bring to market programs that can capture market share.

Certainly, not all for-profit providers have the core capabilities to compete long term in the market. Some emerge quickly and as quickly become extinct, but others are proving quite adept at drawing strength from this globally competitive market.

As mass, longevity and a voracious need for large quantities of prey (resources) proved lethal to the dinosaurs in the stark environments created by global darkening, so the universities of the early 20th century may face serious thinning or perhaps even extinction in the new globally competitive environment of higher education. Universities rooted in the early 20th century are intrinsically inefficient in today's environment of market valuation and brand identity. Given the current internal structure of tenure and faculty governance, these universities lack the capability to respond to market forces in a timely fashion -- to close out product lines no longer playing in the market and rapidly bring new and more efficient product to market.

Still, these once elegant life forms persevere, but for reasons having nothing to do with innate capability to embrace change. Instead, at the undergraduate level it is the instinctual and perhaps irrational desire of many parents to see their children prosper in a traditional liberal arts environment, and so their willingness to spend inordinate amounts of money for education. At the graduate level, the "brand name" is the driver. The reputation of leading institutions, established in an era before global market competition, is based on a footing much different from that used today to obtain market position, but it still works to sustain the life form, at least among a few elite universities.

In addition, traditional universities have benefited from some serious slack in the evolutionary rope. The Industrial Age required a few knowledge workers and a lot of folks doing heavy lifting, whereas the Knowledge Age requires vast numbers of educated workers. Almost overnight, this has led to a massive spike in global demand for education, with motivated consumers increasing perhaps 100-fold. What was the privilege of a few has become the expectation of all.

But global supply falls far short of meeting demand. With a population of 295 million, the United States has only 15 million active seats in the higher education classroom; China, with a population of 1.2 billion, has 2 million seats available; Brazil, with a population 170 million, has 2.5 million seats available.

This imbalance between supply and demand has creating a robust market for all providers. Suppliers of higher education simply have to dip their nets in the water to catch students. There is not yet the fight-to-the death competition for market share, and inefficient institutions have received a short reprieve from their evolutionary fate. But at some point, as with all markets, a saturation point will be reached, with supply outstripping demand -- perhaps in 5, perhaps in 15 years. When this inversion occurs, those life forms with the required flexibility to quickly adapt to a fiercely competitive environment will survive and the others will fade from memory.

As there is private health care for those who can afford to pay at any price point, so there will continue some form of higher education that will meet the need and the check book of those wealthy enough to afford it. But for most now driven to higher education to meet the requirements of the Knowledge Age, it is value (the ratio of perceived quality over price) that will be the key determinate of what institution they will choose for their tuition dollar. To further stress the current market, state funding is not keeping up with inflation or enrollment growth, forcing higher education institutions to rely more on tuition and donations. Thus higher education is being pushed to stand on its own financial bottom rather than be a subsidized commodity, once again forcing the value proposition.

So what will be demanded of 20th century universities to survive when market supply reaches or exceeds demand? As in every market, those producers that have driven efficiency into their production system and responsiveness into their market positioning have at least a change at surviving. But the challenge is daunting because the 20th century university is trying to play serious catch up in new markets -- adults, women, diversities, the under privileged -- while using the same mentalities that allowed them to attract the 18 to 25 year old male.

As with IBM, which played in the personal computer market, but really lived in the mainframe business market, there is no fire in the belly of 20th century universities for these new markets. These institutions have not changed the way they go about their business to serve these new markets; and if there has been some change, it has been accompanied by the widespread grumbling of the faculty: Why do we have to teach at night? Why do we have to teach at multiple campuses? Why do we have to provide support services in the evening? Why do we have to teach students who aren't educated the way we were? Why do we have to schedule classes so students can maximize their employment opportunities?

Meanwhile, 20th century universities are running average price increases twice the inflation rate and carrying multiple overheads of unproven value to the buying market. Walk into the library of any university today that has ubiquitous connections to the Internet, and you will find the stacks empty of both faculty and students. Is the traditional library a value add or a costly overhead? As with IBM, 20th century universities believe their brand will sustain price increases. "No frill, just degree" competitors are producing product without the high cost of minimalist full-time faculty workloads, large libraries and multiple staff intensive manual processes. As with the personal computer, will the buying market ultimately see any difference between the products except the name on the plastic and the price on the sticker?

What will be the destiny of the current life form we have called the 20th century university? It consumes far too many resources for what it returns to the environment, and though there are vast resources (markets) available, its structures do not let it tap these resources effectively. Its evolutionary tardiness has provided opportunity for a new species to take hold - the profit driven university. As the evolution of the human race has picked up the pace with each passing millennium, a future life form that has little resemblance to current higher education life forms will emerge much sooner than the usual eons it takes for evolution to create the next iteration of life.

The 20th century university is indeed obsolete and faces extinction.

Rev. John P. Minogue
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Rev. John P. Minogue is senior lecturer at the Center for Higher Education and Organizational Change at Benedictine University and was president of DePaul University from 1993 to 2004.

What Princeton Tuition Freeze Means -- and Doesn't Mean

For the second time in seven years, a highly visible and prestigious private institution has announced a decision not to increase tuition. In 2000, Williams College announced a tuition freeze for the coming academic year, and in 2007 Princeton University did the same. In both cases, the institutions cited substantial endowment gains as a central reason allowing them to hold tuition constant for one year. What are we to make of these episodic pricing decisions?

In the Williams case, I was familiar with the thinking of the leadership, and I believe it was a clear attempt to send a signal to peer institutions that price increases in the face of sharply increasing institutional wealth were undermining public trust in higher education. I wrote at the time that, “If peer institutions do not follow suit, Williams will almost surely be forced to resume tuition increases next year. And, within a couple of years, the entire incident will be forgotten.” Indeed, that is precisely what happened.

I am not privy to the thinking that motivated the Princeton decision, but I do not sense from their public statements that they are trying to send market signals, or  to lead others to emulate their behavior. In fact, the purity of their tuition decision was complicated by a large jump in room and board charges, so the net effect is to raise their total charges by $1,780 (4.2 percent), an increase greater than gains in the CPI. I see no reason not to take their public explanation at face value -- they have experienced excellent endowment returns, and in 2006 their board authorized increased spending from the endowment. With non-tuition revenue rising, they were able to meet anticipated financial needs for the coming year without an increase in tuition. They used this opportunity to bring expenses of room and board more closely in line with revenue, thereby reducing a subsidy they had been providing to room and board in recent years. In short, they took advantage of a favorable moment to (in their words) “‘true-up’ their operating budget.”

While Princeton is larger and may carry more punch in the world of higher education than Williams, I will be very surprised if this decision triggers an onslaught of emulation. Only a tiny number of extraordinarily wealthy institutions could even consider following, and it is unclear why they would do so. The distributional consequences of the Princeton decision could be viewed as analogous to the early Bush tax cuts, in that the benefits will accrue to the very wealthy parents who pay full tuition, not exactly a blow for greater equity. If a small number of similarly wealthy colleges and universities did the same thing, it is hard to work up much enthusiasm for the virtue of the resulting redistribution of income.

Leaders of those institutions that could afford the same decision have to consider the opportunity costs involved. Might there not be better uses of the extra dollars raised by tuition? For example, not all wealthy institutions have followed the lead of Princeton and others in providing full scholarship support to those low-income students who are admitted, but cannot conceivably afford to attend without full support. Allocating funds to that purpose would seem to be a far better use than simply freezing tuition for all enrolled students for one year. Wealthy universities might also take this as a year to provide direct assistance to high schools -- especially those that can’t afford to provide good college counseling that might make the difference in whether an exceptionally able high school student who doesn’t come from a college-going family can find out about the opportunities to attend a Princeton or another top college. One can easily imagine socially beneficial uses of funds that would compete strongly against a tuition-freeze at highly selective universities.

One counter-argument to the above takes us back to the motivation behind the Williams decision in 2000. If the entire Ivy League plus Stanford, Northwestern, Chicago, Emory, Amherst, Williams, Swarthmore, and other similarly wealthy colleges and universities were to fall in line with the Princeton decision, pressure to contain tuition would be felt further down the chain of institutions, and might slow the rate of tuition growth for all. Would that be a net benefit to society at large?

Certainly such a move would gain political plaudits for a sector that has been sharply criticized for years for its pricing behavior. On the margin, access and opportunity might be modestly increased for potential students of limited means. It is far from clear, however, that such an across-the-board approach would be as efficient as more effective targeting of financial aid on those with substantial need. The majority of private colleges that depend heavily on tuition would be hurt, and some might close.  As a former president of Kalamazoo College and board member at Goucher and Sweet Briar Colleges, I can attest that the vast majority of private colleges are far more dependent on tuition than is Princeton. To provide perspective, a typical private college endowment would be in the range of $130 million, while Princeton’s $13 billion is 100 times larger.

And, to be effective, the group of institutions exercising this price leadership would have to commit to a multi-year form of restraint, such as a group decision to limit tuition increases to no more than some objective index, such as the CPI. Holding tuition unchanged for only one year would not do the job.

The implausibility of coordinated decisions by multiple independent boards of trustees willing to commit to a 5- or 10-year tuition limitation to break the back of the “arms race” in higher education must give one pause. Competition in higher education simply does not work to control prices as happens in most for-profit industries. Colleges are not seeking market share, but rather increased quality and prestige. Families and students seek institutions that provide those attributes, and are willing to pay for them. My essay about the Williams decision in 2000 referred to the “Cockeyed Economics of Higher Education,” a phrase that is still apt.

I conclude, therefore, that the Princeton decision in 2007 is another one-time event with little lasting significance. A year from now we will hardly remember it, and nothing fundamental will have changed in the financing of higher education. And, as the remarks above suggest, I am at best ambivalent about that likely outcome.

David W. Breneman
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David W. Breneman is University Professor, and Newton and Rita Meyers Professor in Economics of Education, and dean of the Curry School of Education, at the University of Virginia.

The Hidden Access Crisis

As some 17 million college students begin fall semester, "access" is front and center on people's minds. Countless reports and commentaries argue that spiraling tuition is making college less affordable, particularly citing costs in our public universities, and therefore limiting access for qualified applicants. Affordability is an important concern, to be sure.

But with so much attention drawn to college access or, more accurately, financial access, a broader, more insidious problem -- let's call it educational access -- lingers in the shadows, garnering less discussion. Preserving our nation's civic and economic health requires us to recognize, and then address, this hidden crisis.

The cost of college is significant for many students and families. Education officials understand this, and are working to make sufficient aid available. Even so, for the vast majority of students, the sacrifice will pay off handsomely. Notwithstanding the substantial societal benefits of an educated citizenry, college graduates themselves will earn 70 percent more, on average, than high school graduates, and generally enjoy better health outcomes and connections to supportive communities.

Despite these benefits, far too many students graduate high school unprepared for higher education, and a startling number simply don't graduate from high school at all. For these students, financial affordability is not a genuine barrier to college; no amount of financial aid and remedial help will make up for the inadequacy of the skills and experience needed to benefit fully from postsecondary education.

How do we know the system is in bad repair? High school on-time graduation rates -- hovering below 70 percent nationwide -- have been stagnant for two decades. And according to the National Center for Higher Education Management Systems, for every 100 young people who enter 9th grade, less than one-fifth will receive either an associate or bachelor's degree within 150 percent of the expected time.

Numbers are far worse for students from underrepresented minorities. Only 7 percent of Hispanic men and 15 percent of African-American men earn a college degree by age 29, as compared to the national average of over 28 percent. Today, only 8 percent of all students from families in the bottom quarter of income will ever get a four-year degree, whereas the top quartile sees a 75 percent college graduation rate.

Aside from the cost to individuals, it's not clear we have begun to acknowledge the societal cost of this crisis, or appreciate how the United States, already short on the knowledge workers that drive today's economy, will compete globally when roughly one-third of our students don't even earn a traditional high school diploma. We must, because if the trend persists, our national prosperity is in peril.

Ideally, college should be part of an education continuum, a "pipeline" that begins in childhood. In many of our nation's public schools, however, the pipeline is broken. Success will come only when all education sectors advance a common mission to prepare young people for citizenship and economic success, and then build a seamless pipeline to take them there.

One piece of a solution is for institutions of higher education -- especially our public universities, where service to the community is part of the mission -- to work with educators to strengthen the pre-K-16 pipeline. There are, as well, important roles for the private sector and community organizations. A positive first step, for example, could be a landmark national summit that convenes leaders from all of these groups to define the crisis and agree on action steps for addressing it.

In America, public education is intended to be the great leveler. But that promise remains far from fulfilled, especially for some of our most vulnerable populations. Considering the importance of education to economic success in the 21st century, our country needs urgent attention to this pervasive issue.

If an affliction were as widespread in our society as the persistence of low educational attainment, public health officials would consider it an epidemic. Collectively, we would call on communities, government agencies, academia, and the private sector to collaborate on a solution to the crisis. But the education deficit is widespread and defies simple solutions. "Casualties" of this epidemic rarely have a voice in the public debate. A recent report by the Bill & Melinda Gates Foundation termed this the "silent epidemic."

Once we acknowledge the size and impact of the epidemic, though, we cannot remain silent. It is impossible to maintain the economic and civic health of our society while we tolerate the creation of educational haves and have-nots. By making educational access to college every bit as important as financial access, our society has the potential, and the moral obligation, to fulfill the promise of a quality education for all.

John B. Simpson
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John B. Simpson is president of the University at Buffalo, State University of New York, and is a member of Gov. Eliot Spitzer's New York State Commission on Higher Education.

Looking Under the Hood of Public Higher Ed

Last week, the College Board released its annual Trends in College Pricing report, finding that tuition at the nation’s public four-year colleges and universities had risen 6.6 percent, which is roughly equivalent to previous years but continues to far outstrip inflation and increases in family income.

Media coverage of college affordability almost invariably takes its cues from this report, focusing on the “sticker price” that colleges and universities charge students. But tuition alone is a relatively superficial measure that hides as much as it reveals, since it responds to changes in state allocations, political factors and fund raising success.

What has gone mostly undiscussed is escalating spending on college campuses across the country. A public discussion focused on tuition – the price of the education – gives institutions a free pass on how they spend the money they raise. Furthermore, this discussion reinforces the assumption that spending increases follow some sort of natural progression. But this is not the case. Spending can and must be contained if the price of college is to be brought under control.

This message is falling on deaf ears today in part because last year was a good state appropriations year for colleges and universities. But even in bad years, public institutions are raising spending. Today, higher education is a “seller’s market.” Demand for college has never been higher, and families are willing to take on dangerous amounts of debt to get their children through.

However, the willingness of families to reach deeper into their pockets is reaching a breaking point. Recent polling by my organization, the National Center for Public Policy and Higher Education, and Public Agenda shows that the public is concerned about how colleges and universities spend their money. Most Americans (83 percent) believe that today’s colleges should be doing a much better job of keeping their costs down. More than two out of three (68 percent) believe that colleges and universities could reduce their costs without hurting the quality of the institutions.

The American public is onto something. But many institutional leaders have not been willing to look under the hood of higher education expenditures. Typically, leaders have used a range of excuses to deflect questions about spending. Some common excuses, and my responses to them, follow:

Increases in tuition reflect the high demand for postsecondary education and financial aid keeps the net cost to families under control. Public college and university leaders think there is no crisis in higher education so long as there are students and families willing to pay. But tuitions at four-year public institutions have risen 22 percent in the past five years, after adjusting for inflation, while family incomes have increased only 8 percent. What’s more, need-based financial aid is not keeping up with increases in tuition, pricing many poor families out of higher education. Continual price hikes may respond to market forces, but do not honor the public mission of state colleges and universities.

Higher education is a labor-intensive industry and faculty salaries and health care costs are behind most of the recent run-up in spending. Because institutions use humans to pass on knowledge, historically a greater proportion of their budgets have gone to salaries and benefits than in other industries. But this is not where most of the spending growth is occurring. Faculty salaries have barely kept up with inflation for the past 10 years. Last year, faculty salaries rose on average 1.3 percent after adjusting for inflation – the first inflation-adjusted increase since 2003-2004. In addition, the use of cheaper part-time faculty is growing fast, now making up 48 percent of all faculty, according to the American Association of University Professors. On the other hand, universities are spending huge amounts of money on construction – for new dorms, new athletic facilities, and new student centers– as part of an “amenities arms race.” And administrative overhead at many universities has ballooned, due to an explosion in niche student services and fund raising apparatuses. It is doubtful that these developments have improved student learning.

There is great competition for applicants nowadays, and we have to spend to compete for the best students. This is probably the most common excuse offered by leaders at state flagship universities, but they are not referring to competition with other state institutions. Rather, leaders at public research universities are increasingly viewing themselves as competitors with private research universities such as Duke and Stanford, or even Ivy League institutions. These leaders feel that they can only “compete” if they offer the same amenities and practice the same aggressive recruitment tactics, including lavish merit aid for high performing students, which takes resources away from low-income students. Instead, they should refocus on their educational mission, and the advantage that public institutions have always had: the availability of need-based financial aid and the opportunity for a great education. Prospective students seeking high quality education at low cost will be smart enough to know the difference between style and substance.

There’s no political incentive to take on cost containment. Most institutional leaders don’t want to touch this issue because it almost inevitably leads to faculty concerns that they will be expected to do more for less. Faculty will revolt, if “cost containment” means across-the-board budget cuts. In cases where institutional leaders have contained spending and reinvested savings in teaching and learning, faculty have been very supportive. The University System of Maryland is a case in point. Chancellor William E. (Brit) Kirwan got faculty support for the Effectiveness and Efficiency Initiative, which identified areas for cost savings and redirected those savings toward priorities such as increasing enrollment capacity, containing tuition increases, and improving academic programs and services for students. Even though faculty teaching loads increased 10 percent, faculty largely supported the measure, because it was focused on improving student learning.

At the state level, lawmakers and system heads don’t want to engage cost because it requires a restructuring of higher education finance. States base appropriations on students enrolled, which encourages spending on amenities and recruitment -- not students graduating.

Where there have been incentives, universities have proven capable of cost management. In the 1990s, the Illinois Board of Higher Education established the Priorities, Quality, and Productivity initiative, which re-evaluated all academic programs with an eye to institutional priorities. Elimination of duplicative programs, technology enhancements, and administrative streamlining resulted in savings averaging $36 million annually. As at Maryland, faculty came to support PQP because the savings generated were reinvested in instruction. These funds were most often used to reduce class size and reliance on graduate teaching assistants; support minority student achievement; improve technology; and expand need-based financial aid.

My hands are tied, because the biggest decisions are made at the state level. Big decisions about allocations are made at the state level, but institutional leaders have a lot of discretion about how that money is spent. While there aren’t many incentives for cost containment now, there also isn’t much oversight of spending requests. Institutional leaders have lots of room to maneuver on this issue.

Cutting spending hits disadvantaged students hardest. Cutting spending only hits disadvantaged students hardest if need-based financial aid is the first target. In fact, cost containment, if it focuses (as it should) on increasing instructional spending, boosting degree completion, and streamlining administrative processes, can make public higher education work much better for disadvantaged students. That is because these are the students most likely to have trouble completing degrees and to have the most interaction with administrative offices.

There is another major reason why colleges are not acting on this agenda. There is too little data about how spending impacts learning. In contrast to business or the military, how inputs affect outputs is poorly understood in higher education. New research being conducted by the Delta Project for Postsecondary Costs to be released next year will set the basis for looking at the relationship between spending and student success.

But the lack of data is no barrier for action. We don’t need to wait for longitudinal studies to know that more spending on full-time faculty and need-based financial aid will impact student learning more than a glitzy new dorm.

Taking a hard look at the evidence shows that it is time to focus on college spending patterns and that there is a lot college leaders can do right now to contain the spending that drives up college prices. Many of the problems originate at the state level, but bold leaders will take action regardless of incentive structures and political rewards. It is time to expect more of college and university leaders than we do now.

Patrick M. Callan
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Patrick M. Callan is president of the National Center for Public Policy and Higher Education.

On College Costs, Be Careful What You Wish For

The latest blood sport in American public policy appears to be the unmasking of the purported link between containing the cost of higher education and rigorous fiscal accountability. Stringent accountability is forwarded by critics of American higher education not only to know better "precisely what they are getting" (the assumption being that the public isn’t getting much for its investment), but also to contain escalating college costs and the price passed on to students, their families and the American taxpayer.

Extravagant spending once revealed, so goes the argument, will cause universities on the basis of public outcry to lower costs and pass less of the financial burden on to students, state legislatures and the federal government. All well and good in theory. But this causal connection has yet to be proven. This expectation assumes there is a viable business model in higher education that restrains costs, advances minimal tuition increases and continues to produce all of the components of an undergraduate educational experience to which American society has become accustomed -- and, in fact, demands. Such is not the case.

Current higher education business models are grounded in students’ and the public’s expectations of a comprehensive educational experience and the continual generation of new knowledge—both of which depend on rising revenues. There are, however, two existing business models that could be more widely introduced to appease those critics who perceive rising tuitions as arbitrary and a poor return on investment.

Nonprofit colleges and universities could adopt, for example, the business model of the rapidly proliferating for-profit universities. Colleges and universities could go totally online -- no buildings or accompanying campuses. Athletics would be eliminated as would student life. Gone would be those pesky sources of purported extravagance in American higher education.

There would also be no expectation of original research by faculty or students -- ironically the essential source of content for the for-profits to use in instruction. The course of study would be narrowed to include only those subjects that are more applied than those in a liberal arts curriculum and match more closely specific occupational needs -- business, nursing, social work, health technology, information technology, and so on. The curriculum would eliminate those courses without immediate applicability to the workforce -- English literature, poetry, art and art history, music, dance and theater. There would be no need to engage in "silly" research that deviates from what "someone" has determined a priori as essential topics of inquiry for a productive life. There would be no reason to invest in costly scientific equipment or the laboratories in which to house it.

Numerous for-profit universities have taken these steps. This model is most appealing to busy adults who are both working and trying to advance themselves through education in the most convenient way possible. It fulfills an important "in-time" professional need. For-profits compete with other for-profits and non-profits solely on the competitive basis of tuition and still accomplish their mission fully. Their business model works because they forgo all the "extras" delineated above that non-profits must support through a combination of tuition, public support, private fundraising and cost efficiencies.

But can American higher education -- indeed, can America as an enterprising, entrepreneurial nation -- afford to have all its colleges and universities so defined? Is the for-profit business model more widely acceptable to the American public -- especially for the undergraduate education of its 18-21 year olds? Wouldn’t some valuable defining elements of a distinctively American higher education -- a global market asset -- be lost in this brutal confrontation between cost and accountability?

Would we as a nation accept no college sports? Would we accept the total absence of our effort, albeit sometimes frustrating (and understandably highly inefficient) to advance students in the practice of citizenship within a 24/7 residential community? Would we accept the total absence of student life -- fraternities and sororities, club life and other extracurricular activities? Would our "consumer-students" accept residence halls, student centers and science complexes that were lacking in contemporary amenities and instrumentation?

Would we as a nation accept a curriculum that offered only those courses that translated directly to current workforce needs and neglected the arts and humanities -- defiantly unaccountable courses of study? Would we accept a college or university that restricted its faculty from engaging in research, thereby keeping them one step removed from what they teach in the classroom?

I think not. To do so would completely undermine the global market distinction that has come to define American higher education. It is no coincidence that countries such as Germany and Britain are currently seeking ways to "Americanize" their universities. As central governments cut their considerable subsidies, they are finding it necessary to increase tuition -- and along with it, the types of "amenities" that 21st century students demand. They are coming to rapidly understand that the American college experience in its totality creates an emotional identity among the student body, an identity that translates into a lifelong sense of ownership and a willingness to "give back" to their alma mater. This is an extremely powerful source of support for American higher education and it is necessary component of our business model. Why would we jeopardize this?

If higher education institutions wanted to contain escalating costs and price, they could also look to a second business model that would, in essence, put a "cap" on new knowledge. When American universities were first founded, the course of study was an unchanging corpus of knowledge that was judged finite and comprehensible in its totality. This position was inherited from our European predecessors and practiced there for centuries. In the words of Anthony T. Kronman in his recent book, Education’s End, "The classicist view of antiquity was essentially static. It paid little or no attention to its historical development ….[M]eaning and value of that world …[ resided] … in a set of timeless forms, transparent to the intellect and permanently available as standards of judgment…." Indeed, such a static view of knowledge and its the accompanying "business model" kept cost -- and tuition -- down by ignoring that pesky cost driver, new knowledge.

Some of America’s colonial colleges did manage to survive on tuition alone. After the American Revolution, however, the likes of Dr. Benjamin Rush and Thomas Jefferson introduced "new" knowledge into the curriculum -- contemporary foreign languages and the natural sciences -- and with that, the demand for constantly evolving discovery of knowledge in all fields as a defining characteristic of excellence and distinction in American higher education. This demand only accelerated as the connection between new knowledge and economic competitiveness became increasingly apparent. As the value of exploration and discovery rose, the cost of higher education increased proportionately. And this defining characteristic of an American higher education became even more pronounced with the founding of research universities such as Johns Hopkins and Stanford after the Civil War.

New knowledge -- or "progress" -- costs money, especially in an economy that is driven largely by technology and science. New knowledge, moreover, does not develop in a constricted environment, but rather in one that values wide intellectual exploration and does not a priori assume clarity about what remains to be discovered and learned. Academic effort that produces new knowledge is conducted in the context of limitless parameters and, thus, seeming inefficiency.

Excellence in American higher education rests squarely on the unending and inestimable pursuit of new knowledge. Our graduates’ creativity, flexibility and spirit of innovation are widely acknowledged as the wellspring of our nation’s global competitive advantage. Mediocrity -- defined as killing the pursuit of new knowledge -- is a far cheaper path for American higher education to pursue. But is this a viable alternative? If accountability pushes us to impose, in essence, a "cap" on new knowledge, we could well forfeit American higher education’s historic global advantage and our nation’s competitive edge.

Accountability -- and its twin, transparency -- can, and should, play a major role in this public dialogue. Holding higher education institutions to a high standard of accountability and demanding transparency can, and should, reveal how these enterprises expend their funding and why they are a sound investment. Rigorous accountability may result in some cost efficiencies. But I would argue that these savings will be minimal in the larger scheme of things. Higher education costs will only be seriously curtailed if we adopt radically different business models, such as the two suggested above.

If I am correct that Americans would not accept these two extreme, but proven, methods of containing college cost and price -- the trade-off is too steep -- we must return to the premise that fiscal accountability will somehow accomplish the task. But accountability in and of itself does not restrain cost. Indeed, there exists no business model that can adequately contain cost and price and still accommodate the public’s ever-increasing demand for athletics, residential and recreational facilities, a wide range of extra- and co-curricular activities for students, the emotional bond between student and institution, and the relentless pursuit of new knowledge.

We must, in sum, engage in the discussion about heightened accountability for higher education with extreme caution. Accountability certainly has its place. But if pervasive quantitative accountability reduces the vibrancy and expanse of the curriculum, inhibits the pursuit of new knowledge, and limits access to the arts, humanities, and student life activities that advance citizenship, then we as a nation and as a people will be profoundly diminished.

William G. Durden
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William G. Durden is president of Dickinson College.

Coming Clean on College Costs

All too often, especially in lean economic times, students and families disregard private institutions out of hand because of the perceived cost. But in the battle for talented students, private liberal arts colleges will win the day by showing students and families considering higher education that “private” doesn’t mean “expensive.”

A few weeks ago, my institution, Juniata College, released a new policy, guaranteeing our students the ability to graduate in four years, or the fifth year is on us.

Well, from the reactions of some of the public universities in Pennsylvania, you might have thought I had suggested eliminating college sports. The fact is, private liberal arts colleges excel at giving students the tools to maintain momentum toward graduation within four years.

National statistics bear this out. The National Association of Independent Colleges and Universities says nearly 80 percent of students at private colleges who finish graduate in four years, compared to about 50 percent at public institutions.

Juniata did not decide to guarantee that almost all our students will graduate in four years as a cheap marketing ploy designed to take shots at state universities. Rather, it’s a call to arms for all colleges and universities to start their own affordability comparisons.

Our numbers have been splashed across newspapers and read over the airwaves. You can Google them at will. They are: Juniata’s tuition of $28,920 per year goes down to $13,786 per year once our financial aid package kicks in. That makes the four-year bill, after we add in yearly education-related fees, $60,536.

Compare that with what U.S. News & World Report noted in the November 5 issue: “Since it is now taking the average public university student more than six years to graduate, the cost of a public college degree is now more than $90,000, about 25 percent more than it was for the freshmen of five years ago.”

When we compared our figures to the publics, we also added a cost not many people talk about: the earnings a person would have made if he or she had graduated on time. Based on a very conservative annual earnings estimate of $21,000, two extra years in school will “cost” an extra $42,000 above tuition.

So, if you consider lost earnings, that “state school” education isn’t looking so affordable, is it?

Juniata was able to make our “four years and out” guarantee because our “Jun-ique” educational mission and curriculum gives our students great flexibility in accomplishing their goals.

Instead of traditional majors, we use programs of emphasis, in which students can design their own educational plan. If they change their minds about a career path once (or even twice), they won’t lose momentum by taking new prerequisites. Our study abroad programs -- 40 percent of our students study abroad -- focus on programs that offer courses and credit applicable to our students’ programs. Finally, we use internships within our curriculum to offer students academic credit and experiential learning without sacrificing extracurricular time or activities -- 85 percent of our students have at least one real-world internship.

And before anyone sniffs at our flexibility as somehow a lack of “standards,” that favored panacea of bureaucrats everywhere, our results speak for themselves: 96 percent of graduates over the last five years either secured employment or went to graduate school within six months of graduation.

In 2006, 96 percent of those Juniatians who graduated, did so in four years or less. Over the past few years, 92 percent of our graduating students have done so in four years or less. In our system, in which two faculty members advise students throughout their college career, there is very little retracing of steps and no wrong turns -- mainly because our curriculum is highly adaptable.
In reality, our guarantee isn’t much of a gamble because we are already succeeding beyond many of our private college peers and well beyond the state universities. Instead, it makes policy the good work that has long been practice at Juniata.

To those forward-looking institutions willing to take the challenge with us, to do everything we can to ensure the affordability of a great education, let us put our numbers on the table and let our constituents decide.

Thomas Kepple
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Thomas Kepple is president of Juniata College, an undergraduate liberal arts college in Huntingdon, Pa.

In Need of a Persuasive Story

Late last year I was in Washington, D.C., listening to government officials and policy analysts discuss the state of higher education in America. The tone of those conversations, as has been the case since the advent of the Spellings Commission, was troubling. I left with the clear impression that there is widespread distrust of colleges and universities in Washington on both sides of the political aisle.

That means suspicion of higher education is not a partisan issue and that the era of accountability and cost sensitivity will not end when the Bush administration leaves town. Key public officials like Massachusetts Sen. Edward Kennedy and California Rep. Howard P. (Buck) McKeon will probably continue to rail about rising college costs. And the higher education sector will probably continue to be hampered by its inability to tell a believable story about why tuitions keep increasing at rates higher than inflation.

To a certain degree, suspicion and distrust of colleges and universities are problems of the higher education sector’s own making. College and university leaders, most of whom were faculty members at some point, have the professor’s reflex against simplified explanations. Professorial skepticism toward neat, tidy, simple (but often inaccurate) answers is understandable and admirable. But politicians and reporters like to hear coherent and compelling narratives that are easy to understand and easy to retell to their constituents and readers. Higher education has often failed to grasp this. And it shows in the explanations higher education gives about the rising cost issue: They are all too often defensive or obfuscating -- leaving the public scratching its head in perplexity.

The stories being told in Washington about higher education, as everyone working at a college or university knows, are not flattering. The dominant stories coming from the mouths of politicians and the pens of reporters portray America’s colleges and universities in an arms race to out-compete each other on rankings, wealth, prestige, student diversity, scholarships and financial aid, faculty compensation, teaching loads, and non-academic facilities. College professors are depicted as disinterested in students and eager to have decreased teaching responsibilities. College administrators are pilloried as overpaid, unnecessary bureaucrats -- although, ironically, government intervention nearly always requires colleges to hire more administrators to comply with the reporting requirements imposed by legislators. And who hasn’t read or heard stories of dormitories overbuilt in the image of four-star luxury hotels or of million dollar-climbing walls? Tales of the latter have become the stuff of urban legend.

The dominant meme describes American colleges and universities as institutions driven by their own self-interest rather than by the interests of students or of society. Lost in the debate is any sense of the public’s interest in anything other than the politics of resentment, which builds its persuasive case through portrayals of colleges and universities as bloated, elitist, inefficient, unworthy of tax payer support, and lacking the ethical high ground. If only colleges and universities were run like a business goes a common critique that warms the hearts of the for-profit higher education sector and its key Congressional supporters like Ohio Rep. John Boehner. Applying business principles is the panacea according to this simplistic but seductive narrative that has put colleges and universities on the defensive since the beginning of the Reagan administration.

Magazine and newspaper articles increasingly depict a college education in business terms, as a consumer good to be purchased. Customers (students and their parents) are encouraged to seek the best deal, to bargain, to devise strategies to pay the lowest price for the highest quality. The ubiquitous so-called merit scholarship, which in most cases is nothing more than a price discount to lure another customer, makes it nearly impossible for any five parents with children at the same college to know how much the others are paying. The situation is akin to the airline industry where invariably no two seats on the same plane are sold for the same amount.

The emphasis on cost to the paying customer casts a college education squarely in the realm of commodity. And to be sure, there has always been an inherent commodity aspect to the experience of getting a college education. Most American colleges have never been free, and historically most students have entered college seeking upward economic and social mobility. But too much emphasis on college as commodity, voiced by students or by colleges, corrupts higher education, leading colleges and universities to be seen primarily as businesses churning out product rather than as places that inspire, enlighten, and uplift society. Even the colleges themselves have encouraged this kind of thinking to justify why students and parents should be willing to pay the rising cost of college--as institutions often cite studies showing a $1 million lifetime earnings advantage for college graduates over non-college graduates.

On the issue of rising tuitions, colleges and universities, as they have exuberantly embraced marketplace paradigms, have let themselves get defined as money-driven, price-gouging wealth-accumulating firms rather than as cathedrals of learning. This has happened because colleges and universities have not been bold in telling their collective story. Instead, colleges and universities have let themselves end up in the defensive position of rebutting the unflattering stories and simplistic caricatures about why college costs so much. Those stories and caricatures, when left unchecked, undermine the public’s trust in higher education.

There are potential opportunities for colleges and universities to begin shaping the story from within higher education rather than simply reacting to stories from without. But the first step is to craft accurate, uncomplicated, and believable narratives.

The case for the small liberal arts college offers one starting point. Providing an education at a small liberal arts college is a highly individualized process. The liberal arts college classroom is more akin to an artisan’s workshop or an artist’s studio than to a factory floor or an assembly line. If higher education must be forced to adopt the language of the business transaction, then perhaps the small liberal arts college must make the case, as Reed College’s President Colin Diver often has, that consumers always pay higher prices for, and are more willing to make sacrifices to afford, handcrafted goods in comparison to mass-produced goods. Diver’s argument is compelling because it is self-evident to most consumers that craftsmanship is synonymous with quality.

Nor is it a stretch to claim that a liberal arts education is the product of craftsmanship, the result of a slow, labor-intensive process that produces individually unique student learners whose lives have been transformed for the better by four years at the institution. One enduring image of the small college education has the eminent 19th century Williams College professor Mark Hopkins on one end of a log and a student on the other end. The Hopkins image came to symbolize the intimate small college transmission of knowledge from sage to student.

Colleges that Change Lives, by the former New York Times education editor Loren Pope, has garnered a following due to its message that small costly private colleges, like Earlham and Reed, perform a kind of educational alchemy not easily broken down into bottom-line terms but somehow able to deliver on the promise of the book’s title. Pope’s book has drawn attention to 40 colleges that are not the household names invoked by politicians trying to make hay out of critiques of higher education. Yet Pope’s 40 colleges are collectively one example of the kind of compelling story that, if told more often, might help private higher education regain the public’s trust.

When justifying the high cost of college, is it enough to assert, as countless presidents of private liberal arts colleges have, that the actual production costs of educating a student are sometimes double the tuition charge? I do not think so. In fact, I suspect that the public hears such arguments and imagines that higher education is wasteful. After all, what product costs twice as much to produce as its sale price? What firm survives producing such a product? Discerning consumers wonder how much of that double-the-sticker-price true cost pays for the hidden costs of fund raising, public relations, student recruiting, and athletic programs; that is, enterprises not regarded as being at the core of most colleges and universities, but precisely the areas that many people immediately associate with the runaway cost of higher education.

Rather than change the subject when politicians rail about the so-called non-academic costs that get passed on to students in the tuition bill, colleges need to hit the issue head on. Straight talk about non-core costs might be appealing to the public and disarming to higher education’s critics. There are potentially persuasive ways to justify the non-academic costs of running a college or university. For example, why not just assert that the expenses incurred by college fundraising and endowment management enterprises are examples of how colleges gather non-tuition revenues to keep their tuitions from rising even higher? College leaders can say with authority that those revenue-chasing expenditures, rather than being cited in the cost of educating a student, might more appropriately be charged off against the endowment and fund raising returns. The public might then understand that, without the marginal dollars netted through fund raising and endowment returns, tuitions would be much higher.

Similarly, colleges can justify their public relations and recruiting expenditures as the price of bringing in quality students and faculty as well as the price of enhancing the perceived value of the degree the student will earn. Finally, colleges can argue that they provide their students a unique lifetime affiliation that accrues benefit long after the last tuition check gets paid. How many firms can say that about their product?

And if none of those arguments work, colleges can do what they have been loath to; that is, point to the students and parents in the consuming public and say, in the words of an old Toyota commercial, “you asked for it, you got it.” That’s right. College tuitions have gone up because students and their parents expect more from the college experience than ever. Meeting those expectations does not happen when institutions run in place to hold down costs. To get less expensive colleges, the public will have to accept less expansive college degree programs and facilities. There is no evidence that the public is willing to do so; nor should it. In any case, both are points that higher education needs to make early and often.

Candor and transparency about the costs they charge is something colleges and universities will have to practice soon enough as Congressional interest in a “College Access and Affordability Act” has made it into the next reauthorization of the Higher Education Act (HEA). The next HEA will call for colleges to provide students and their parents with more transparent and detailed explanations of the costs they charge. The emphasis on explaining and justifying costs will, in the hopes of some members of Congress, influence colleges to hold down future tuition increases.

Higher education has already taken notice of suggestions in Congress that massive college endowments ought to be taxed and that the nation’s wealthiest universities should draw upon their billion-dollar endowments to eliminate tuition altogether. Perhaps as a result of such rhetoric, Harvard and Yale have announced increased financial aid for families with incomes between $120,000 and $180,000. Expanding eligibility for generous grant aid to families with upper middle to upper class incomes, notwithstanding all the mostly good publicity it has brought to Harvard and Yale, raises as many concerns about college costs as it addresses.

For example, are Harvard and Yale’s expansive new financial aid policies just a veiled price discount (like merit scholarships elsewhere) for families that can afford to pay? And is it not obvious to Harvard and Yale that expanding financial aid eligibility to encompass families in the top 5% income bracket -- based on the argument that if they need help everyone does -- is the latest evidence that colleges and universities charge amounts beyond the reach of most American families? Many of us in higher education, while we applaud Harvard and Yale’s increasing interest in providing access, wonder how candid those universities will be about their motives as they defend the new initiatives going forward.

Making a candid case regarding college costs is an approach I have seen work for Reed College. In information sessions, when I have justified Reed’s tuition charges using images of artisans and craftsmen to describe what goes into a Reed education, I have seen the description resonate with audiences. I believe that those audiences have responded positively because they understand that they usually pay more for individually tailored and handcrafted items that have an inherent quality advantage built into them. Just as most people recognize the value of seeing or being part of a live, rather than a recorded, performance or of getting a poem or artwork created specifically for them, rather than receiving a mass-produced card, they understand the value of a handcrafted education.

The students and parents I speak to seem to appreciate that Reed addresses the high cost issue directly and offers an explanation that sounds consistent with the values and the day-to-day academic life of the college. They also seem to understand that a small college like Reed provides a highly personalized education -- where every student has the apprentice scholar experience of a thesis -- that cannot easily be replicated at a lower cost. The idea that life changing goes on in addition to degree acquisition is a powerful closer -- to use sales parlance -- for Reed.

In the midst of brick throwing at colleges over rising costs, Reed has chosen to make its here-is-why-we-cost-so-much case by citing the value of its handcrafted education. The approach works for Reed because it reflects the college’s mission and communicates institutional values. But the approach also works because Reed has constructed a narrative about college costs that makes sense and sounds believable rather than like defensive back pedaling or dissembling. Perhaps by tying their explanations of rising college costs to their distinctive missions and identities other colleges and universities can craft similar persuasive narratives.

Paul Marthers
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Paul Marthers is dean of admission at Reed College.


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