Preface to the Paperback edition

Since the preface to the paperback edition of Why Does College Cost so Much? is freely available on Google Books, I see no reason not to put it up here. This preface is a good introduction to why we are writing a new book on the challenges facing the American higher education system. The catastrophe-disruption narrative now widely entrenched to the point of being the common wisdom. Yet we think this narrative is based on fundamental misunderstandings of the higher education data and of the trends shaping the economic environment.

With that as introduction:

Preface for the Paperback Edition

The hardback version of this book appeared in late 2010. The U.S. economy was just beginning to recover from the financial meltdown, and median family income was substantially lower than it had been earlier in the decade. Rising list price tuition was beginning to bite into the pockets of people in the upper portion of the income spectrum who pay full price while putting a college education seemingly out of reach for many lower and middle-income families.

In the final chapter we called for a calmer and less politicized public debate about the complex U.S. higher education system. As time has passed, however, we haven’t seen much evidence that this call has penetrated the public discourse very deeply. If anything the rhetorical temperature has heated up.  The word “crisis” is increasingly appended to the term “higher education.” Google found 436,000 such citations when last we checked. Tuition and fees have reached seemingly “stratospheric” and “unsustainable” levels.  We hear of a higher education bubble that will presumably burst, causing colleges and universities to fail in large numbers. The burden of college debt is said to be crushing the next generation of American graduates.  And new technologies will soon disrupt higher education, completely changing what goes on at a university.

We stand by our earlier call.  The public conversation about higher education would improve if we could ratchet down the rhetoric.  We wrote this book to help people see how the century-long evolution of the entire economy helps explain the current circumstances of our higher education system.  Many of the cost, access, and quality problems we face are long in the making, and most of them have little to do with rising inefficiency or growing mismanagement in higher education. The real problems we face will not be cured overnight by simple policy changes or with magic technological bullets. Labeling them as crises is not helpful.

Our first task in this book is backward looking. We seek to explain why higher education costs and prices – and these are different things – have generally risen more rapidly than the inflation rate over the last sixty plus years.  This is inherently a comparative question. Are there other industries that have experienced something quite similar (yes), and do these industries share certain predictable traits (also yes)? Our work is also forward looking and policy-oriented, and the first step on the path to practical solutions is to know how we arrived at our current situation. Policies built on a misunderstanding of how we got here are not likely to produce good outcomes.

Context is very important for our analysis, and it is often lacking in discussions of higher education.  For example, “administrative bloat” is often tagged as an important driver of higher education costs.  The supposed “bloat” is the rising administrative fraction of the university workforce. This percentage has indeed grown, but so has the administrative fraction of the whole US workforce. Putting facts in context is essential if we are to separate between things that are problems and things that are not. The relevant question we should ask is whether or not added administrators – everything from IT professionals to psychological counselors – are worth the cost.

If context is a crucial framework for telling the story of rising college cost, data provides the real structure. Yet much of the public debate about higher education and its ills is built on unrepresentative examples and cherry-picked statistics. Given the wide variety of higher education options provided by thousands of institutions of all shapes and sizes, there is fertile ground for anecdotes that can highlight almost anything one wants to show. We make no apology for using a lot of data covering much of the past century. Some of the current crisis rhetoric should melt away when one takes a close look at the data for all of higher education.

The higher education bubble idea is a good example. It is based on the recent list price tuition increases combined with current labor market problems for some graduates. But the processes that lead to rising college costs (and price) have been at work for as long as we have good records.  And the economic return to higher education is growing, not shrinking. In recent years, much of that growth has come from falling wages for high school graduates, but the payoff to acquiring a degree is always relative to the alternative of entering the labor force without one.

Tuition and fees have indeed risen substantially over the past thirty-five years. Are they spiraling out of control? The College Board’s annual Trends in College Pricing is something that all commentators should be forced to read and use.  Recent issues show that there has been scant growth in what the average student actually pays (as opposed to the list price). Many students do face very high list-price tuition, but again the data in Trends in College Pricing show that a relatively small fraction of students attend institutions with the kind of tuition and fee bills that make headlines.  At present almost fifty percent of students at public four-year institutions face a list price of less than $9,000.  The large numbers of students who attend two-year schools pay even less.

Rising student debt is also an important national issue, but the crisis label serves tabloid journalism more than the public interest. Anecdotes and unrepresentative samples dominate the national conversation.  Debt grows when family incomes fail to increase sufficiently to cover the increases in college expenses, or if we succeed in getting students from poorer families into college in greater numbers. For all but the very top of the American earnings distribution family income has moved in reverse over the past decade, and as we demonstrate in this volume similar economy-wide forces have driven up the costs of providing a higher education.  Neither problem has a simple solution, and fixing the national income distribution goes well beyond higher education policy. In fact, the very practices that help colleges keep their programs affordable to lower income students (price discounting) have helped to push up list price tuition.

The growing debt problem, however, has been hyped by stories focused on unfortunate students who have debts that are often wildly unrepresentative. These students’ problems are real, but they are not typical. And in most cases, they were avoidable. Once again, the College Board’s Trends in Student Aid 2013 provides real data.  At public institutions the average debt per borrower (in 2012 dollars) increased from $20,800 in 1999-2000 to $25,000 in 2011-2012.  This is a problem, especially for students who do not finish a degree, but words like “skyrocketing” or “unsustainable” add nothing to the public debate about reforming how we aid families who want to finance long term educational investment.

Lastly, we remain agnostic about the potential for new technologies to revolutionize higher education. The fanfare that accompanied the advent of Massively Open Online Courses (MOOCs) suggested that big changes were in the offing. Instructional quality would rise while cost would plummet. This is the ideal reform. The effect thus far has been modest.  We have seen steady growth in the number of online courses and online degrees, but we are far from the demise of face-to-face learning. Courses that blend online features with traditional classes are also becoming popular. Evolution is a much better term than revolution to describe this process, and much of the impetus for reform is coming from within traditional higher education institutions as they try to preserve their mission while wrestling with the hard problem of rising cost.

We try to steer away from the politicization that characterizes much of the higher education debate. Our goal is to give the reader a measured analysis infused with data and grounded in a broad understanding of historical trends that have shaped both higher education and the economy as a whole. Use it to help sort through the hyperventilated rhetoric that no doubt will continue despite our calls for calm.

Robert Archibald

David Feldman

Williamsburg, VA