The marketplace of higher education is special, unique, and provides something unlike any other enterprise. But, it is a marketplace nonetheless. Universities are subsidized by the state and therefore are obliged to respond to the social and economic needs of the state. Unfortunately, that is not always the case.
“The discipline of colleges and universities is in general contrived, not for the benefit of the students, but for the interest, or more properly speaking, for the ease of the masters.”
– A gallon of gas cost 36 cents. The average price in 2011 was $3.50, an increase of nearly 1000% according to the US Department of Energy.
– The average home price in the U.S. was $25,000. When the bubble burst in 2006, the price topped $300,000, and has now shrunk to about $250,000, another 1,000% hike says jparsons.net.
– One ounce of Kellogg’s cornflakes cost 2.1 cents. Those same cornflakes are now 31.6 cents per ounce, an increase of 1,500% reports foodtimeline.org.
– Typical tuition and fees at public four-year institutions was about $425/year, now approximately $8,900/year, a 2,000% increase according to The College Board. Adding salt to the wound, they say “Average published tuition and fees at public four-year colleges and universities increased by 19% beyond the rate of inflation over the five years from 2003-04 to 2008-09, and by another 27% between 2008-09 and 2013-14.”
None of these prices are adjusted for inflation. If the market forces at work are similar across all enterprises, it appears that universities are like cornflakes.
While the price of college rises, increases are not inconsistent with the costs of other goods and services in the marketplace. This is not to suggest that universities should relax or take comfort. A 2010 Goldwater Institute study says, “Universities have in recent years vastly expanded their administrative bureaucracies, while in some cases actually shrinking the numbers of professors.” In the five years ending in 2007, enrollment rose by 14.5%, but administrators and bureaucrats per 100 students rose 38% and spending on non-teaching personnel by 66%.
Prices, fueled by omnipresent loans for any student wanting one, and universities willing to accept any student with a loan, have allowed a form of leadership and management slovenliness to prevail, compounded by increasingly laborious reports purportedly to assure accountability. Adam Smith’s masters seem asleep at the switch and awakened only to personal proclivity, rather than being purposefully responsive to market demands. All this accompanied by a throbbing disregard for the welfare of the student shrouded in trumped-up national purpose and the social/economic benefit of college degrees for all. The appearance of accountability absent real results yields little to nothing except increased costs.
Caroline Wolf Harlow, of the Bureau of Justice Statistics of the U.S. Justice Department says, “68% of state prison inmates did not receive a high school diploma.” This brittle phenomenon buoys leaders who proclaim that people with university degrees will not end up in prison. Therefore, it makes good policy to get more people degrees regardless of ability, preparation, motivation, or field of study: a limp cornflake.
Until recently state and federal taxpayer funds flowed freely to universities to offset rising prices, meet social demand for a better educated workforce, and, some would argue, inflate the cost of higher education just because the funds were there. In many states, post-secondary institutional funding is increased or decreased regardless of mission or effectiveness.
Gas, housing, and cornflakes impact the cost of university operations but labor costs — especially those of faculty and administrative salaries — account for the greatest increases, too frequently regardless of performance. To be sure, facilities add to the mix, some essential, such as libraries, classrooms, labs and technology, some less central but of value: athletics facilities, better housing, and improvements to the grounds. These are funded by long-term debt or the state, paid for by increased student tuition and fees in the first case and tax dollars in the second. The Goldwater Institute suggests that disproportionately puffed up salaries and administrative costs raise the price of college. Who can argue that? Smith’s masters may have lost track of purpose.
Our universities must responsibly serve authentic markets. Leadership should focus every ounce of attention on students and doggedly reward achievement.
We are not making or peddling cornflakes.