Blame the Schools!

If you read enough books and articles, or watch enough news segments (or this movie) about why colleges cost so freaking much (and supposedly deliver little for the price), a consensus emerges that tends to include the following premises:

  • Every college or university is trying to be Harvard (or move up the list of US News and World Reports rankings) and will spend whatever it takes to get there.
  • Tenured faculty are paid like executives, but are rewarded for doing things other than teaching undergraduates
  • College administrations are swollen with highly paid bureaucrats who, having ceded academic decision-making to the faculty, content themselves with huge and expensive building and expansion projects
  • Students are lured to schools that offer gold-plated amenities, such as restaurant-quality cafeteria food (vs. the swill they served us in my day), wireless in every corner of the campus, and extensive (and costly) athletic facilities which include that iconic symbol of waste: the climbing wall.
  • Finally, this ever escalating hiring, building and spending spree is only possible thanks to (1) rich people willing to pay whatever it takes to get their kids into the best schools; and (2) non-rich people taking advantage of cheap money in the form of scholarships or subsidized/guaranteed government loans
But with all this money available, "greedy colleges" can't help but raise their rates (i.e., their tuition) in order to not leave a single dollar on the table. So in our haste to make college available to all (by encouraging everyone to go and subsidizing anyone who does), we have inadvertently fueled a business model that must lead to ever-escalating prices (at least until the cash spigot is turned off).

All of this adds up to the "Our Greedy Colleges" hypothesis first articulated by Former Secretary of Education and conservative columnist William Bennett in an article of that name he wrote in 1987 (yes, we've been having this same argument since then - actually since well before then). And Bennett has recently expanded on what he humbly calls "The Bennett Hypothesis" in his 2013 book on the subject called Is College Worth It.

Despite its origins, this Bennett hypothesis seems to undergird most critiques of American higher education coming from both Left and Right.

This might be because his claim is fairly intuitive. After all, who among us wouldn't say yes to someone offering to pay more for our car than we thought it was worth? So why blame schools for simply charging what the market will bear? And you don't have to fully buy into the conservative mantra that says subsidizing behavior creates more of that behavior to accept the fact that no industry would constantly raise tuition and fees at twice the rate of inflation if there was not enough money to allow someone to pay those prices.

This common wisdom also provides enough room to assign different people the role of villain. For Bennett, the bad guys include government unwilling to address the unintended consequences of its well-intended policies, pampered professors and students, and schools ready to take advantage of a heavily subsidized educational economy. And if you don't like that set of bad guys (or don't want to be associated with a former Reagan administration official), you can always condemn profligate college administrators, stingy state governments, or rapacious for-profit schools for allegedly wrecking a system of educational subsidies that otherwise could have worked.

But what if the premises underlying this entire economic argument are wrong? What if college was destined to go up and up in price, regardless of whether or not government subsidized paying for college in any way?

This decidedly un-intuitive theory is the subject of another book on the cost of college, one I'll turn to starting next week.