David W. Kirkpatrick Columnist EdNews.org
Senior Education Fellow U.S. Freedom Foundation

On Saturday, February 10th, the ABC-TV Evening News reported on the soaring costs of higher education, George Washington University (GWU) in Washington, D.C., the most expensive as its charges became the first to exceed $50,000 per pupil. That's $1,000,000 to educate a group of 20 students.

The program raised, but did not answer, the question why costs are so high. Some suggested it was because higher education is unique. That's typical of higher education apologists giving an non-answer.

For one thing, higher education is not unique. In essence it is structured very similarly to K-12 education, but with steeper costs. Also, the United States increasingly has a service economy, with a declining percentage of workers in fields that actually construct something, such as automobiles and houses.

Furthermore, accepting for the moment that higher education is unique, that still offers no rationale for the wildly extravagant sums charged for services. Being unique does not by itself explain anything about costs.

Then, too, if the segment is unique what explains the vast differences in what institutions charge for their services. Some are apparently more unique than others. Costs range from full scholarships (equivalent to $21,000) for all 1500 students at Berea College in Kentucky to GWU's more than $50,000.

In the past some claimed it was necessary for higher education to raise tuition in order to catch up with the cost-of-living. That argument has been heard less lately, and for good reason. As the newscast said, in the 20 years since 1985-6 the cost-of-living has grown a bit more than 80%. During this same period, with slight differences in the percentage increase of public institutions and private ones, and considerable differences in actual tuition dollars, in each case their tuition has grown about three times as fast as the cost-of-living. So much for catching up.

The ABC report suggested faculty salaries, a major cost for schools at any level, might be a factor. It is true that salaries have gone up since the mid-1990s. But, as is common, the news report just mentioned salaries generically with no specifics as to what this means. One report that did give specifics has said faculty lost $5,000 in purchasing power in the 1980s and 1990s. That is, instead of causing major price increase in college costs, faculty salaries have not kept pace with inflation, much less with increases in tuition.

It's forgotten now, but from 1928-1948 Harvard did not increase tuition. In 1948 it was $455. Increases were modest through 1958, reaching $1,250 in 1958. Nor was Harvard unusual. In 1975-76, the average tuition at private colleges was $2,333; while at public ones it was a mere $513. Then rapid rises began.

Why? It has been suggested that the cause may be the growth of student aid. In constant dollars it rose from $18 billion in 1971 to $65 billion in 2003, which made possible even higher rates of increases in college tuition and fees. Student aid might be better viewed as aid to institutions and harm to students. ABC news said the average college student is $20,000 in debt upon graduation and interviewed one student who owes $100,000. Years ago it was more common for students to graduate owing no, or little, money.

As Karen Heller wrote in 2002, a review indicated that colleges increase fees because they can. Former college president Howard Bowen indicated the same when he said there are two rules for colleges raising money: 1. raise all the money you can; 2. spend all the money you raise. GWU is a good example of this. A news report some years ago said the university hired a firm to evaluate the school's operations. The final report said they were doing very well and it made only one substantive recommendation: increase its tuition. Not because it needed the money, it didn't; but because it would raise its prestige. Apparently that works.

Capitalizing on the recommendation and the public's belief in the fiction that prices are always a true indication of quality, GWU eagerly accepted the suggestion and has moved from somewhere down in the pack to top dog, outdoing even Harvard and the other Ivy League schools.

# # # # #

I think we can say confidently that if large-scale state aid to higher education had never been tried, the universities would be more wholesome places today...and that so long as universities remain free of any need to earn a living by charging students the full cost of each and every course of study, they will continue to act as they act now." p. 192, David Frum, Dead Right, NY: BasicBooks, 1994

Published February 17, 2007