Why is the Cost of College What it Is?

Over the last few months, Monday postings have been dedicated to the cost of college, one of the driving forces behind the initial enthusiasm for Massive Open Online Courses (MOOCs) as a potential replacement for a residential college experience that continues to be the choice for most students, despite a price tag spiraling beyond the reach of many.

Now initial enthusiasm over this role for MOOCs dampened over the course of last year as critics started toting up the shortcomings of online learning in a massive environment and, more importantly, students demonstrated indifference when given the chance to participate in MOOCs for credit.

But the fact that MOOCs in their present form do not seem to provide an effective (or attractive) substitute for four years enrolled in a traditional college program doesn’t mean that what they might evolve into (or whatever technology-driven options emerge next) won’t give residential colleges a run for their money or – more accurately – won’t give students and parents a better option for their money.

With regard to money, we first looked at what college should cost if its cost curve matched that of another hyper-inflationary market: housing. For had the price of college “only” risen as fast as had housing over the last several decades, then the most post-secondary schooling should cost would be about $15,000 per year – a number between one-third and one-fourth of what college actually costs today.

After looking at some examples of higher education experiences that actually are in line with this $15K-per-year price tag, it seemed as though students who only care about the courses they take can get an undergraduate education for this sum or less.

But since students (and their parents) are actually paying 3-4 times this amount, there must be something else they’re getting (or think they’re getting) for their money. And a subsequent breakdown of the cost of education tried to attach a price to other components of the college experience, such as the chance to participate in a liminal right-of-passage at the appropriate time in life and the discrimination a diploma buys you in the employment marketplace.

This type of list will be useful as we delve into whether technology-based options can provide an adequate and realistic substitute for one or more of these priced components. But before getting into that discussion, it’s worth diverting for a moment from the theoretical to the actual.

After all, my breakdown of the high sticker price for a college education takes as a given that all-in costs to attend a prestigious college is $50-60,000 per year range with other alternatives proportionally cheaper, but still rising at the same hyper-inflationary rate. But college cost rising at such a fantastic clip is not the result of some natural force beyond the control of human beings. Rather, it reflects a set of choices and priorities made over the last several decades by institutions, politicians and the public.

Fortunately, a whole non-fiction sub-genre exists that tries to affix blame for the high cost of college somewhere. Pampered faculty and students, high-priced administrators, investors speculating on education as a profit center, state and federal governments ready to subsidize schools and underwrite loans, and parents and students ready to go into hock to snag a diploma are all fingered as culprits in at least one of the “Why the heck are college prices so nuts” books sitting on my bedside table.

Over the next several Mondays, I’d like to review the theories presented by several of those books as we work our way towards a better understanding of how our present higher education economy emerged which will hopefully provide a better handle on how it can be changed.