"The Big Steal"

Prof. Peter Wood writes at NRO yesterday:

.... Why is college so expensive? Why does federal aid never really succeed in making college more affordable? These shouldn't be deep mysteries. For over a decade I participated in university meetings aimed at determining my university's annual tuition increases. The only real question was, "How much can we get away with?" And the only real worry was that, if we overreached, we might move to the dreaded top of the list for largest increases. Most years, it fell to me to draft a letter to parents from the Chairman of the Board explaining that the tuition increase reflected this or that combination of new construction projects and programs.

Title IV funds and other federal financial aid are seen by colleges and universities as money that is there for the taking. Tuition is set high enough to capture those funds and whatever else we think can be extracted from parents. Perhaps there are college administrators who don't see federal student aid in quite this way, but I haven't met them. But I don't mean to imply that college administrators are driven solely by profit maximization. One reason that many prefer sky-high tuitions is that it enables them to act as social engineers. The larger the income from tuition, the more money they have on hand for scholarships for students who cannot afford the tuition.

One might think that the easier way to expand access for impoverished students is to maintain low tuitions, and indeed some colleges do just that. But it isn't the prevailing pattern. Perhaps that is because many colleges and universities grow to like the pleasures of living large. Large sports complexes, star faculty members, big science, and a shimmering image mean a lot to college administrators and a fair number of faculty members too.

We seem to have devised a historical trap for ourselves. Most Americans believe a college degree is a prerequisite for a prosperous life; most accept that college is inherently expensive; most are grateful for the assistance that the federal government offers in meeting this huge financial burden; and most take a vicarious pleasure in the very institutional vanity that drives the price of college ever higher. Is there a way out of these mutually-reinforcing assumptions?...

You don't suppose, Faithful Reader, that analysis like this could provide some clue as to why health care is so expensive when so much of it is covered by third-party payers, do you?

Lane Core Jr. CIW P — Fri. 05/07/04 06:42:16 AM
Categorized as Social/Cultural.