How To Reduce College Costs

This commentary originally appeared in Forbes on February 28, 2017.

This piece was coauthored with Ronald L. Trowbridge, Ph. D., Trustee, Lone Star College System and Richard K. Vedder, Ph. D., Director, Center for College Affordability and Productivity)

College costs have become staggering and continue to rise unabated.  Since 2002 in Texas, the median household income has risen 32 percent; college costs, 147 percent–five times greater.  In the past 25 years, average nationwide college tuition is up 440 percent.  Student-loan debt totals $1.3 trillion, surpassing total national credit-card debt.  These escalations, by any measure, are not acceptable.  Why, then, does it continue?  The answer is that an understood cartel collusion directs these escalations of costs, and colleges will continue to raise prices as long as they can get away with it.

The following are areas where costs can be reduced, with commensurate savings to students.

TEACHING LOADS

The average professor now teaches only two classes a semester.  A Freedom-of-Information Act disclosure in 2011 reports that at the University of Texas at Austin 80 percent of all professors at UT teach only an average of 32 students per semester.  This has become the standard throughout the country through an understood cartel.

RESEARCH

Regents and administrators should design some sort of metrics to determine the value of any research that requires reduced teaching loads, perhaps alone the lines of:  How does this research serve students?  Or how does this research serve wider societal needs?

TENURE

Abolish tenure for new hires, but not for those already on it, subject to attrition.  Replace tenure with multi-year contracts.  Tenure codifies permanent job security that for many professors enables expensive indolence with impunity.  The national cartel here, too, protects this abuse.

Tuition increases are also protected by the cartel.  How is it that many, if not most, universities raise tuition each year by roughly the same percentage? If all of them raise tuition, then each of them feels safe.

Derek Bok hit the nail on the head when he observed:  “Universities are like riverboat gamblers and exiled royalty:  their desires are never satisfied.”  Their thirst for more buildings, for more student amenities and luxuries are never quenched.

Raymund Paredes, Commissioner and head of the Texas Higher Education Coordinating Board, has warned against such boundless appetites:  “One of our [the Coordinating Board’s] primary responsibilities is to avoid unnecessary duplication of programs and unnecessary services.”  Paredes’ broader concern is the continual expansion of the state’s higher education enterprise in a time of tight budgets.  He says, “I’m concerned that universities are expanding their resources and programs beyond the state’s capacity to fund them.”

SYMBIOSIS WITH COMMUNITY COLLEGES

One ameliorating solution to high college expenses would be for legislators to implement a plan codified in the state of Virginia.  This legislature established a symbiotic relationship between residential colleges and community colleges.  Students can attend community colleges for two years, fulfilling introductory requirements, and then transfer automatically without further road blocks to residential universities for courses in their majors.

USE OF HUGE ENDOWMENT FUNDS TO REDUCE STUDENT COSTS

Texas can uniquely lower college costs to students, since literally tens of billions of dollars sit in vast endowment funds at the University of Texas and Texas A & M.  If a healthy proportion of those funds were dedicated to providing low cost or even free tuition for students, we believe very low cost (tuition fees of $5,000 or less per year) could be provided for more than 100,000 Texans attending these flagship state universities.  Nationally, research that Justin Strehle and Richard Vedder have done suggests that on balance every one dollar per student in endowment income leads schools to lower tuition fees by only 15 or at most 20 cents—most endowment income goes to support academic bureaucracies, pay higher salaries, lower teaching loads, etc.—not make college more affordable.  God and the Texas Constitution gave the universities the financial benefit of vast oil and gas resources—let them use it to help students that the endowment should be serving.

REDUCE ADMINISTRATIVE COSTS

Benjamin Ginsberg’s 2011 book, The Fall of the Faculty: The Rise of the All-Administrative University and Why It Matters, came as a thunderclap to the world of higher education.  Forty years ago, reports Ginsberg, “U. S. colleges employed more faculty than administrators.  But today, teachers make up less than half of college employees.” Adjusting for inflation, from l947 to l995, “overall university spending increased 148 percent.  Administrative spending, though, increased by a whopping 235 percent.”

Randal B. Smith, a professor at the University of St. Thomas in Houston, Texas, reports that in the period “between 2002 and 2006, while the average tuition at public research universities increased by nearly 27 percent, spending on each student only went up by one percent. . . . Tuition hikes have resulted in little if any new spending on classroom instruction.”

The foreboding bottom line is this:  “America’s universities now have more full-time employees devoted to administration than to instruction, research and service combined.”

The solution to administrative bloat in public universities is less a challenge to the intellect than to the political will and courage of university trustees, chancellors, presidents, and state legislators.

As economist Herb Stein once observed:  “What can’t go on forever, won’t.”  Now is the time for legislatures to do something about rising college costs because universities won’t if they can get away with it.