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Education
12:00 pm
Wed December 14, 2011

Does A College Education Have To Cost So Much?

Originally published on Fri August 3, 2012 1:17 pm

Transcript

NEAL CONAN, HOST:

This is TALK OF THE NATION. I'm Neal Conan in Washington. College tuition and fees rose over 400 percent between 1982 and 2007. Let me repeat that: 400 percent in 25 years. Many students get help from financial aid and scholarships, not to mention their parents.

Yet college costs spiral faster than anything except maybe health care. We spoke about the burden of college loan debt a couple of weeks ago. Today: Why does college cost so much in the first place? If you work in academia, call, tell us why is attending a four-year college so expensive?

Our phone number is 800-989-8255. Email us, talk@npr.org. You can also join the conversation at our website. That's at npr.org. Click on TALK OF THE NATION. Later in the program, the popularity of micro-philanthropy through social media. But first the cost of college. Richard Vedder is distinguished professor of economics at Ohio University and director of the Center for College Affordability and Productivity. Nice to have you with us.

RICHARD VEDDER: Glad to be with you, Neal.

CONAN: And would not economic theory suggest with so many colleges out there, the prices should be driving down, down, down?

VEDDER: Economic theory suggests that if we had free markets in higher education, that might well be the case. But that's not the case because higher education is different than virtually any other sector in the American economy. Everything is different.

We define an hour as 50 minutes in higher ed. Everyone else calls it - thinks 60 minutes is an hour.

CONAN: Well, not psychiatrists, but that's another issue.

VEDDER: Yeah, yeah, I know.

CONAN: I wanted to ask, you wrote an op-ed for CNN.com, "Why Does College Cost So Much," you argued essentially that colleges have absolutely no incentive to reduce costs.

VEDDER: That's right. Now, there are a few exceptions to that. The for-profit higher education sector is certainly a clear exception, but by and large, most colleges do not get rewards. The presidents of the universities, the senior officials, the key faculty do not get rewarded by being efficient, by teaching more students for the same amount of money or whatever, by using buildings efficiently, six, seven days a week, et cetera. There's no incentive in that for them.

So there's no great compulsion to reduce costs, and yet spending more money often has rewards. It can help improve your rankings in the magazine rankings that go on by magazines like US News or Forbes. And it is actually beneficial to colleges, or at least it's perceived to be beneficial to colleges, to spend more money: nicer facilities for students so you attract more students, better students, whatever, lower teaching loads for faculty so that they're happy and content and not likely to cause a lot of problems.

So the job of a university president is to raise a lot of money, tons of money, and distribute it, and not too much attention is placed on lowering the cost to the consumer.

CONAN: In fact you argue that the consumer, the student and then the student's parents, but they come last in a list that includes, you mentioned the faculty, key faculty members are bribed with lower teaching loads. You mentioned alumni, who are in a sense are bribed to make donations to the school through successful sports programs and other things like that, and trustees.

VEDDER: Yes, I think that's right. Remember, colleges and universities don't have the profit motive that compels people in the traditional private sector to cut costs, be efficient, try to get more bang for the buck, as it were. So that is sort of lacking. It's a nonprofit sector, and there's a lot of third-party payments, that is government money and also private, philanthropic money, that comes into universities that reduces the need to depend utterly, solely on the consumer to foot the bills, to pay the freight, as it were.

So the consumer, although not totally irrelevant in higher ed to be sure, is not as important. Now, I might add there's other consumers besides students in a major university. In research universities, there's a research component and so forth. But by and large, instruction is still the bread and butter of what puts American - the bread and butter of American higher education.

CONAN: We want to hear from our members of our audience who work at colleges and universities. Why is the cost of those - education at those four-year institutions so high? Give us a call, 800-989-8255. Email us, talk@npr.org. We'll start with Dennis(ph) and Dennis on the line with us from Rochester, New York.

DENNIS: Yes, I teach science and engineering at a couple of private schools, and I also, along with my wife, put six children through college. And so we have a firsthand knowledge of the costs having gone up and also why.

And first I'd like to agree with the guest that there's no incentive at all to reduce costs, and I do - and I say that as a comparison with private industry, in which I've seen tremendous cost-cutting over the last two decades.

I think a second factor is the physical plants, all the building. It means that the fixed cost of just keeping the university open has gone up a lot. I mean, you don't see buildings being torn down. You just see them being built. That's the second.

CONAN: It usually has somebody's name on it.

DENNIS: Exactly, the money is contributed for, usually for an edifice of some kind. And then I think the third thing is the burgeoning administration. I remember a story, I was talking to a Cornell professor at one time, and he said when he started there, the dean of engineering had two assistants and that when he retired he had 56, there were 56 on the staff. And, you know, that's the kind of - so I think the amount of administration has gone up as quickly as the cost of tuition, which has gone up, since I was in school, by 3,000 percent.

CONAN: And I assume that there was some considerable sticker shock between your oldest going to college and your youngest.

DENNIS: Yeah, that's right because there was actually nearly a 20-year difference in their graduation years. And so yes, it was a substantial increase. And we actually handled that by having him find the best state universities, which are still a bargain. And then they go to private universities in grad school, when they, you know, can get teaching assistantships and this kind.

CONAN: All right. If you had one idea to reduce the costs, Dennis, what would it be, every time you have to build a new building, you tear down an old one?

DENNIS: Well, I think as long as enrollment is not increasingly, yeah, I think that's a good idea. But also, I believe that they need to really bring in people who know how to analyze us and, you know, do some benchmarking with private institutions, whether it be companies or whatever, and begin to copy that because, you know, one thing they're not saving money on - or they are saving money on is paying the adjunct faculty.

You know, more than half, maybe even three-quarters, of all humanities courses are taught by adjuncts, and they hardly get paid anything, so - definitely not teacher salaries.

CONAN: That's as opposed to the tenured professors. Dennis, thanks very much for the call, and our condolences on your loan payments. We appreciate it. He said something very interesting, though, Richard Vedder: As long as they keep the same number of students.

Colleges, to get more prestige, have to be very selective.

VEDDER: Yes, I made the point in the newspaper story that you referred to or the CNN piece that you referred to that colleges are the only institution I know where prestige, where success is often measured by turning customers away.

We - Harvard is considered a great school because for every student that's admitted, there are about 10 others or more that are not admitted. And so Harvard flourishes by turning students away, that they're viewed as selective, they're viewed as the elite schools, and they get high rankings, whereas if you were to go talk about Wal-Mart or McDonald's or some company like that, the opposite strategy is at work.

They want all the customers to come. There's no admissions committee to decide who can shop at Wal-Mart. Anyone can shop at Wal-Mart who has the dollars, and so there is a real big difference between higher ed and almost every other sector of the economy, including even medical care in this respect.

CONAN: I wanted to read one paragraph from your CNN.com piece: Once as department chairman, I successfully battle for more faculty members to do the same amount of work, thus lowering productivity. The result: My faculty evaluated me highly, so I got a nice raise. Where else do the employees get to decide who their bosses will be or how much they will be paid?

VEDDER: Yeah, think about it, it's true. Talk to the former president of Harvard, a very distinguished gentleman, Larry Summers, a very prominent official in the Obama administration and so forth, former secretary of the treasury, former president of Harvard University.

He lost his job because the faculty didn't like him, and so in effect, the employees have a strong control over the employer, which - or over the boss, so to speak, the president. So the president, in order to maintain job security, has to appease the faculty. And again, that is a somewhat unique feature.

By the way, your caller, your last caller, made a very interesting point about physical facilities. Most physical facilities of major universities lie dormant most of the time. They are empty in June, July and August. They are empty on Fridays, on Saturdays, rarely used in the evening. There's very little - a very low rate of physical space utilization.

And we could enormously expand our offerings and so forth if we just used the space better.

CONAN: Just use the space, and some people have said wait a minute, why do we have those summers off? You could get another semester in there.

VEDDER: Yes, I'm under - it's my understanding, I think Steve Trachtenberg is going to join you - is that correct - in a little bit.

CONAN: He is, yes, in just a few minutes.

VEDDER: Yeah, well, talk to Steve about that because Steve, as president of George Washington University, a very distinguished university president, one of the nation's premier university presidents, said: Well, gee, we don't really harvest the crops in the summer anymore. Maybe we ought to have three semesters a year, three 15-week semesters rather than two. We could do that in 52 weeks easily.

And he got blown out of the water by his faculty, but talk to him about that, not me.

CONAN: Well, he'll join us in just a moment. We're talking with Richard Vedder, distinguished professor of economics at Ohio University; director of the Center for College Affordability and Productivity; an adjunct scholar, that means he doesn't get paid very much, at the American Enterprise Institute; and co-author of an opinion piece, "Why Does College Cost So Much" that was published at CNN.com. You can find a link to that piece at our website. Go to npr.org. Click on TALK OF THE NATION.

We'd like to hear from those of you who work in academe. Why does four-year college cost so much? 800-989-8255. Email us, talk@npr.org. Stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.

(SOUNDBITE OF MUSIC)

CONAN: This is TALK OF THE NATION from NPR News. I'm Neal Conan. More than $17,000 a year, that's the average sticker price on a four-year public school. Thinking about a private university? That's nearly $40,000 a year, on average. We're talking today about what's driving those costs higher and higher and what, if anything, can be done to contain them.

If you work in academia, tell us: Why does(ph) attending a four-year college so expensive? 800-989-8255. Email talk@npr.org. You can also join the conversation at our website. That's at npr.org. Click on TALK OF THE NATION.

Our guest is Richard Vedder, economics professor at Ohio University, director of the Center for College Affordability and Productivity. And joining us now is - from Madrid in Spain - is Stephen Trachtenberg, the aforementioned professor emeritus and University Professor of Public Service at George Washington University. He wrote an op-ed called "College: The Halfway House" last month in the New York Times Room for Debate. Nice to have you with us.

STEPHEN TRACHTENBERG: Thank you, it's fun to be with you.

CONAN: And you've run an institution of higher learning. How come it seems like nobody tries to make these sorts of economies?

TRACHTENBERG: Well, actually, the distinction between sticker price and actual price I think is very important. And I think it's also important to recognize that probably only a minority of the students enrolled pay the posted price. The rest are discounted considerably with scholarships and all sorts of work study and loans and a variety of things, which means that we get a broad socioeconomic group attending universities.

And I frankly don't have any problem with Mr. Rockefeller paying full tuition, and I like the idea that working-class kids can come at prices that their parents can afford. So it's a little simplistic to use the data the way it was used at the opening of the show.

Additionally, I think it's important to recognize that the university of today is not the university of 20 years ago. They are continuing to be labor-intensive, but there's an extraordinary amount of technology that is now used on universities, and it doesn't come cheap, and it has to constantly be renewed because it becomes obsolescent very quickly.

And university education is one of the last hand-made items we have in today's marketplace. You take a course in music at many institutions, the faculty-student relationship can be one-on-one.

Moreover, we provide all kinds of services that weren't provided when I was in college - counseling, for example. We get more and more students who come into the university, they're on one kind of medication or another. This becomes manifest after they're matriculated, we don't know about that before they enroll, and then they need counseling services of one sort or another.

Security services - you can imagine what's gone on on university campuses since the tragedy at Virginia Tech, the first tragedy, now the second, to maintain security, the need to provide daycare programs for the children of faculty, to make it possible for us to recruit women.

The whole sociology of America has changed. An awful lot of our faculty are now women, and they need to be supported. We need them as part of the faculty, and they need to be supported in distinctive ways. So it's a little bit mindless to say the tuition was this 20 years ago, and it's this now, and how come.

CONAN: We still see students graduating with tremendous student loan debts.

TRACHTENBERG: Yes, and when the economy was good - and you surely can't blame the universities for the state of the economy - those students went out and got jobs and paid those debts off. The reason that we are seeing such a burden now is that the students are graduating and are not finding employment.

Look, tuitions could be a lot lower if we had a national health plan and the universities didn't have to provide the health insurance. We see the same problem, by the way, in the manufacturing of cars in the United States. Cars that we make in the United States are more expensive than they are cars made abroad because you have to build in several thousand dollars in health costs into every American vehicle.

CONAN: It used to be but not anymore. They renegotiated those contracts because they couldn't compete with competition from overseas. When you - George Washington is one of the most expensive schools in the country. I suspect that was the case when you were there as well. Was any part...

TRACHTENBERG: I'm the cause of that. I'm personally the cause of that. I'm a believer in high tuition and high discount rate. I think that people who can afford to pay for a quality private education ought to, and some of that money ought to be used to discount the tuition for outstanding students who can't otherwise attend.

CONAN: So might a more meaningful figure be the average price?

TRACHTENBERG: Well, there's a more meaningful figure. Forty percent of the students pay the list price, and about 60 percent are discounted, to a greater or lesser extent depending on their ability to pay.

CONAN: Richard Vedder, does Stephen Trachtenberg make valid points, do you think?

VEDDER: Some of the points that Steve makes are ones I would agree with. We - it is true the sticker price on higher ed is a bit simplistic as a measure of the cost. But of course the true cost of higher education to society, it's not just the cost to the students but the total cost that society pays to run the higher education enterprise.

In the mid-'60s, when Steve and I were both young and able to get around a little better than we are now, America spent about one percent of its national output on it's a higher education. Today it spends between three and three and a half percent. So even if you look at things in a broader sense, we're spending a lot more.

Now, to be sure, there are more people going to college. One thing I would take some - I would add a little bit to what Steve said, while it is true the recession has aggravated things and caused some job problems for graduates, there's no question about that, we have gotten to a point in society, I think, where by pushing everyone to go into higher education, to go to four-year schools and so forth, we now have a mismatch between the number of college graduates and the number of jobs of the traditional kind reserved for college students, college graduates - managerial jobs, technical jobs, professional jobs.

And so now we have a world where we have 19,000 parking lot attendants with college degrees in the United States or where nearly one in four airline attendants is a college graduate. Now, there's nothing wrong with having college graduates among airline attendants, but I'm not sure that that's an absolute - that the education itself necessarily is that critical to perform that kind of vocational undertaking.

CONAN: Let's get a caller in on the...

TRACHTENBERG: I'd like to think we have a stronger embedded democracy because more people are educated, and again, we have a much broader socioeconomic group attending colleges and universities than we did when Richard and I went to school. And I remember as an undergraduate at Columbia, if there were four persons of color in my class, I was astounded. Today you visit that campus and you see black and Asian and Indian and all sorts of people from all over the world attending and a vast array of socioeconomic groups.

We have a higher percentage of the population going to universities than we did when we were kids, and many of them come from poor homes and are supported with financial aid, which gets built into the base operating budgets of the universities.

CONAN: Let's get - I just wanted to give a caller a chance to get in on the conversation.

TRACHTENBERG: Oh sure, yeah.

CONAN: Cynthia's on the line with us from Menominee in Wisconsin.

CYNTHIA: Hello there. I just couldn't take it anymore. Your first guest, I think he is totally out of touch in what is happening on campus. I retired six months ago from the University of Wisconsin system, and I am a graduate of the system. And to say that our buildings are sitting empty, not at all. To say they are not entirely utilized, not at all.

We don't leave buildings sitting empty. We don't build buildings to put names on them. The biggest cause of the problem and the cost is the diminished support for education. More and more of the costs have to go to the students. We have a wider and wider diversity of students that need many more support systems to help them compete in a global economy.

CONAN: When you talk about reduced support, you're talking about state institutions from the legislature.

CYNTHIA: Right. When I went to college, I graduated in '72, our tuition was not even $1,000. I'm paying $500 a credit to go to graduate school now. Financial aid has not kept up. The figures are still based on housing costs from the '60s.

CONAN: We should point out we were talking with Stephen Trachtenberg. The George Washington University is a private institution. Richard Vedder, do the same criticisms that Cynthia raises apply to public institutions?

VEDDER: Well, first of all, I want to say that I just think that there's some empirics here, empirical evidence here that needs to be examined. Cynthia made the point that financial aid hasn't kept track, kept up. In 1970, roughly, the federal government spent roughly one billion dollars on student financial aid in higher education. Today, if you add student loans and Pell Grants and everything together, it's well over 100 billion dollars.

CYNTHIA: OK. Well...

VEDDER: Now, adjusting for inflation, enrollment increases and everything, it isn't that dramatic of an increase, but it - there certainly has not been a lack of public support for American higher education. It is true in the last few years state legislatures have reduced their support, and there is a problem there, and I would agree with that. But I think the empirical evidence is somewhat different than Cynthia suggests. And I suspect that if you went to - on a typical American university campus today, Wednesday, December 14th, and walked around the corridors of the buildings, you will find that many, many classrooms are empty. In my building, every one's empty because we've already started Christmas break, which will last for several weeks. And I suspect that's true in many other places as well.

CYNTHIA: Can I add...

TRACHTENBERG: Well, I think Richard makes a good point. We do not use our facilities as fully as we might. The idea of using the university all year round, 12 months instead of eight, having three, 15-week semesters a year would obviously make our facilities more productive. And, frankly, it would also give professors a chance to earn more money, if they chose to, by teaching more or alternatively, at the very minimum, provide more jobs for Ph.D.s who are desperately seeking employment and finding it daunting in this contemporary market.

CONAN: Cynthia, you were trying to get in.

CYNTHIA: I don't think he understands the complexity of scheduling those classrooms. Professors are being pushed. We look on at education as standing in front of the class. Professors need time to do research to enable them to teach. We don't have teaching assistants teaching our classes. We have professors standing in front of those classes and they have to have time to meet with people.

CONAN: I think, Cynthia, you do know that that's not always the case in every school.

CYNTHIA: I know, and I think you're generalizing and giving the public the wrong idea because if you're looking at a private school and the research - the Ph.D. schools, the doctoral schools is one thing. But you cannot lump the baccalaureate and master's program schools with the private schools. We are struggling to provide what students need and give them better access. Students are not being sent to school for four-year degree necessarily. They all need post-secondary because at the public school level, they're not getting the employability skills. I'm working on a master's in career and technical service. And this infuriates me because we do so much generalizing and we forget the needs of the student.

CONAN: Cynthia, thanks...

CYNTHIA: ...and needs of society. And if we don't have universities accessible, we're not preparing our students for global economies.

CONAN: Cynthia, thanks very much for the call. We're talking about the costs of college. Our guests are Richard Vedder, a distinguished professor of economics at Ohio University, and Stephen Trachtenberg, professor - president emeritus and university professor of public service at George Washington University. You're listening to TALK OF THE NATION FROM NPR News. And let's go to Andrew. Andrew with us on the line from New Orleans.

ANDREW: Yes. I'm a graduate assistant, and I just don't think what the - raising of all the costs, that it benefits the students. I'm not going to be able to pursue a Ph.D. because of how much it costs and that I can't get the funding for it, and it just doesn't benefit me to pursue any higher degree because I'm not going to be able to get a job that's going to help pay for my student loans and pay them off because of how expensive it's getting. So no matter how bad I want to go for a Ph.D., I can't afford it because of the rising costs. And there's nothing to benefit me from pursuing these higher degrees because I'll spend all my money in my job, my salary to pay off student loans. And the school that we get to - we also - they raise tuition but also got rid of Fridays.

CONAN: Andrew, we heard about that. Stephen Trachtenberg, go ahead.

TRACHTENBERG: Well, you know, we're going around circles in a way because when we gets that job, he gets the Ph.D., he gets a job, he doesn't want to be a volunteer. He wants to get paid. So he's going to have a salary. And he wants dental benefits. And he wants a laboratory, or he wants other kinds of expensive facilities to assist him in his research and in his teaching. And so in one way or another, the mother's milk of academia turns out to be money. And so you can't on the one hand say I don't want the universities to charge tuition; on the other hand, I want a job at a university and I want to be compensated.

ANDREW: Now, do you all find that the higher ed - the Ph.D.s, for me, I'm looking at actually going into the public schools because I'll have more job security. There's no tenure tracks for any of the schools that I've been to. They no longer have tenure, so it makes no sense to teach in the college world, you know? It's more about going back to the high school level because that's where the job security is.

CONAN: That may be overstated somewhat, given recent decisions in several states around the country, Andrew. But thanks very much, and we wish you good luck.

ANDREW: Thank you.

CONAN: We'll go to this email from Minda(ph): I work as a tenure track professor in education at a large state university. Most universities use their facilities year round at all times of the day and days of the week. We also offer classes when students sign up for them. The main thing I wanted to say is that higher education is costly because of how our system works. Students expect to have an expert who teaches them, and universities want expert teachers and researchers. This is different from how a K-12 education works in this country, where teachers only teach. If we were to advance scholarship, we need to research. We need time and expertise to do this. This doesn't even take into account all the other services provided by universities - counseling police departments, et cetera.

As faculty, we don't get paid much, no one is getting rich in higher ed. It would make as much, if not more, as a K-12 teacher, and I have a Ph.D. Well, Richard Vedder, this is again, difference between different kinds of schools. One of the things when you were that department head and got permission for your teachers to teach less, presumably that was for research.

VEDDER: It was, indeed. And I think we - and I'm a great believer in research. I've done a lot myself. I think I've written eight or nine books myself - based largely on lower teaching loads, I might add. But I do think we need to maybe re-assess is all of the research we're doing at the margin having a payoff? Do we really need 21,000 papers written on William Shakespeare in the last 20 years? Maybe - could we have gotten by with 5,000? And so I think even the research function needs to be re-assessed somewhat as we move ahead and try to get costs under control.

CONAN: Richard Vedder, thanks very much for your time today. Appreciate it.

VEDDER: Thank you.

CONAN: Our thanks as well to Stephen Trachtenberg, president emeritus and university professor of public service at George Washington University. Thanks for staying up late there in Madrid to speak with us.

TRACHTENBERG: Thank you. It's a great opportunity. It's my birthday today, so wish me happy birthday.

CONAN: Happy birthday. Coming up...

TRACHTENBERG: Thank you.

CONAN: ...social media offers a new way to give and receive. It's changing the world of charity. We'll talk about microphilanthropy next. Stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News. Transcript provided by NPR, Copyright National Public Radio.