Later On

A blog written for those whose interests more or less match mine.

Oddity: technology drives education costs down, college tuition goes up

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Odd indeed. Kevin Carey investigates:

On August 6, 2008, the Washington Post reported that tuition and fees at public colleges in Virginia will increase by an average of 7.3 percent this year. The article was four sentences long and ran in the Metro section, below the fold, in space reserved for unremarkable news. The drumbeat of higher education price increases has become so steady in recent years that it barely merits attention. But the cumulative effect is enormous: the average price of attending a public university more than doubled over the last two decades, even after adjusting for inflation. The steepest increases came in the last five years.

And there’s nothing routine about the way college costs are weighing down lower- and middle-income families. Students are still going to college—in this day and age, what choice do they have? But some are getting priced out of the four-year sector into two-year colleges, while others are trying unsuccessfully to simultaneously hold down a full-time job and earn a degree. More students are going deeply into debt, narrowing their career options and risking catastrophic default. The lightly regulated private student loan market, which barely existed ten years ago, now controls about 20 percent of loan volume, burdening financially vulnerable undergraduates with high interest rates and few legal protections. State and federal governments have poured tens of billions of new taxpayer dollars into student aid programs, only to see them swallowed up by institutions with a seemingly unlimited appetite for funds.

For years colleges have insisted that rapidly rising prices are unavoidable because higher education is a labor-intensive business that cannot become more efficient. A forty-minute lecture takes just as long to deliver today as it did a hundred years ago, they say; a ten-page paper takes just as long to grade. Because efficiencies in other industries are driving up the overall cost of skilled labor, colleges have to offer salaries to match, which pushes productivity down. (Economists call this “Baumol’s cost disease,” after the New York University economist who first made the diagnosis.) Regrettable for students, of course, but what can be done?

In fact, this premise is false.

Colleges are perfectly capable of becoming more efficient and productive, in the same way that countless other industries have: through technology. And increasingly, they are. One of the untold stories in higher education is that the cost of teaching is starting to decline, but virtually none of those savings are being passed along to students and parents in the form of lower prices. Instead, colleges are pocketing the difference, even as they continue to jack up tuition bills.

This is a classic unsustainable trend. Higher education prices cannot grow faster than inflation and family income forever. If colleges use productivity gains from technology to restrain prices, they’ll continue to thrive in a world that values their product more than ever. If they don’t, they’ll be hammered simultaneously by a frustrated public and new competitors eager to steal their customers. To avoid that fate, colleges will need to do more than just teach better for less. They’ll also need to compete in a whole new way.

To see just how much technology is changing undergraduate education, drive to Virginia Tech University, nestled in the mountains of southwest Virginia about four hours from Washington, D.C.—and then just a little farther, a few blocks from where the campus ends. To the mall.

It’s not much to look at, just another outdated commercial husk that had its heyday back in the 1980s selling cassette tapes and Spencer’s gifts before getting squeezed by Wal-Mart on one end and the newer, bigger, better mall out by the interstate on the other.

Walk down to the poorly lit atrium, take a left, and you’ll find …

Continue reading.

Written by LeisureGuy

25 November 2008 at 11:29 am

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