Going Broke By Degree: Why College Costs Too Much

Going Broke By Degree: Why College Costs Too Much

by Richard Vedder


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Product Details

ISBN-13: 9780844741970
Publisher: Aei Press
Publication date: 05/15/2004
Pages: 259
Product dimensions: 6.42(w) x 9.24(h) x 1.06(d)

Table of Contents

List of Illustrationsx
Part IThe Problem1
1.The Cost Explosion3
Rising Tuition Costs and the Ability to Pay8
Higher Education Costs vs. Other Consumer Goods and Services11
Net vs. Gross Tuition Costs12
Why Has Real Tuition Risen? Simply Supply and Demand Analytics14
Reasons for the Rise in Demand17
The Role of Supply21
2.Why Are Universities Inefficient and Costly?24
Resource Allocation: Universities vs. Private Business Enterprise24
Four Reasons for Rising Costs26
Third-Party Providers and the Vicious Circle of Funding and Spending26
The Lack of Market Discipline27
Ineffective Price Competition30
Government Regulation32
The Future: Factors Restricting Spending Growth33
The Slowing Growth or Reversal of the College Earnings Differential33
Demographic Changes35
Slower Rise in Higher Education Participation36
A Slowdown in Third-Party Payment Growth36
3.Productivity Decline and Rent-Seeking39
The Rise in Higher Education Spending39
Where Did the Money Go?43
The Increase in Personnel46
Is Productivity Falling in Higher Education?50
Instructional Productivity52
Research Productivity56
Employee Compensation and Rent-Seeking60
Is Real Faculty Pay Stagnating over Time?62
Additional Observations on Changing Faculty Compensation63
4.The New Peculiar Institution66
Price Discrimination67
Other Forms of Discrimination in Admissions73
Instructional Subsidization79
Intercollegiate Athletics84
Food and Lodging Operations85
Part IIHave Our Universities Lost Their Way?89
5.American Higher Education: Past and Present91
American Higher Education Today91
Graduate vs. Undergraduate Enrollments95
The Increase in "Nontraditional" Students96
The Globalization of American Universities99
The Feminization of the American University100
Racial Dimensions of Changing Enrollments102
Two- vs. Four-Year Colleges: Trends104
Type of Institution: Private, Private For-Profit, Public106
Interstate Differences in Participation in Higher Education108
American Universities in International Perspective111
Characteristics of American University Students112
6.Why Do We Need Universities? First Principles of Higher Education115
The Dissemination of Knowledge115
The Production of Knowledge116
Why Universities?117
Economies of Scale Arguments117
Higher Education as a Screening Device119
Alternatives to Universities120
The Teaching Function120
The Research Function121
7.Universities and Society124
The Positive Externality Argument and Its Weaknesses124
Equality of Opportunity Arguments128
Higher Education as an Investment128
Additional Testing138
Government University Support and Economic Growth: Case Studies141
North Dakota vs. South Dakota142
Illinois vs. Michigan vs. Ohio143
New Hampshire vs. Vermont144
Higher Education and the Quality of Life145
Part IIISolutions: The Future of American Higher Education149
8.New Alternatives to Traditional Higher Education151
For-Profit Higher Education151
The University of Phoenix--Higher Education's Financial Success Story152
Career Education Corporation156
Corinthian Colleges, Inc.157
DeVry University and Associated Businesses158
Strayer Education, Inc.159
Distinguishing Characteristics of For-Profit Colleges and Universities159
Distance Learning162
Alternative Forms of Certification165
9.Evolutionary Change on the Campus: One Scenario168
Reducing Instructional Costs168
Increase the Student-Faculty Ratio169
Use Technology to Reduce Instructional Costs172
Change Tenure173
Cut and Consolidate Costly Programs176
Other Forms of Cost Reduction177
Reduce Bureaucracy and Noninstructional Staff177
Contracting Out and Privatization of Services179
Reform Intercollegiate Athletics180
End Formal Affirmative Action Programs184
Improving Productivity: The Output Side Matters as Well185
Academic Retention185
Issues of Academic Quality, Standards, and Scholarly Openness187
Change University Governance187
The British Experience189
10.An Alternative Scenario: Systemic Reform192
A Tale of Two Paradigms192
The Optimal Solution: Defund Higher Education195
The Second-Best Solution: Reduce Public Support196
The First Paradigm: Scholarships (Voucherization) and Privatization196
Transitional Issues with Voucherization201
Ultimate Privatization202
The Second Paradigm: Other Regulatory and Financial Options204
Price Controls204
Tax Tuition205
End State-Subsidized Prepaid Tuition Plans206
Change Tax Benefits206
Subsidy Reduction or Realignment207
Mandated Cost Reductions208
11.The Future of the American University212
Rationalizing Public Policy: Piecemeal Approaches216
Rationalizing Public Policy: More Systemic Reform218
Move to Student-Centered Funding221
The Ultimate Reform--Privatization of Higher Education223
Performance-Based Vouchers (Scholarships)224
New Approaches to Funding Research: More Competition226
Competitive Funding229
Alternative Delivery Systems for Research230
A Final Word230
About the Author259

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