Thesis, Antithesis, Synthesis and the Cost of College

Over the last two weeks, I talked about two competing theories regarding why the cost of college has risen faster than any other product or service.

One theory, summed up in William Bennett’s Is College Worth It?, lays blame for this hyper-inflation on schools themselves which have taken advantage of huge pots of available money (savings of parents and students, government grants and loans) to spend wildly on supposed necessities (such as departments in every field) and unquestionable luxuries (such as fancy dorms and rock walls), spending that has needlessly pushed the price for a college education into the stratosphere.

But a competing theory, described in the book Why Does College Cost So Much?, says tuition inflation is the result of general economic forces that tend to jack up prices for services (as opposed to goods) that employ highly educated and skilled labor. If you buy into this theory, school spending on celebrity professors or fancy student centers has little impact on a price curve subject to a “cost disease” which affects economically similar industries such as education, medicine and law in a similar way.

When presented with two competing theories, you can just pick one (most people, regardless of their political disposition, seem to line up with some form of the Bennett Hypothesis) or find some middle ground between them.

But given the philosophical training I underwent during my One Year BA, I’m more inclined to set up these two proposed explanations as a thesis and an antithesis ready to be included in the kind of synthesis that makes up the “dialectic” form of analysis popularized by the German philosopher Hegel.

Wait! Come back!!!

And don’t panic. For in this case I’m simply using a tried and true method that provides options beyond a potentially false choice between one side (Archibald and Feldman’s “It’s economics, and thus no one’s fault” – which I’ll use as my thesis) and the other (Bennett’s “It’s the fault of greedy schools” – which will be my antithesis) to see if some options exist beyond having to choose one hand over the other.

The arguments in Why Does College Cost So Much? include two major explanations for price rises in higher education: cost disease and tuition discounting.

Of those two arguments, I think it’s fair to say that their analysis of how discounting must increase list prices (while ensuring most students don’t pay list) is on solid ground. So while parents who have to pay an undiscounted full tab (not to mention critics of higher ed) might be aghast at the $50-$60,000 a year some schools ostensibly charge, discounting means that we need to focus on average prices – which are still quite high, but not as absurd as the undiscounted prices which generates so much media attention and public outrage.

This leaves the “cost disease” argument as a better target for critique as part of this attempt to find an informative synthesis.

If you recall, “cost disease” describes how service industries don’t always benefit from factors like technology and process improvements (factors that tend drive down the cost of products by streamlining or reducing the cost of manufacturing, for example). In fact, technology can drive costs up in service industries, especially for fields that employ highly skilled labor (such as dentistry and legal services which have strikingly similar cost curves to higher education).

Now clearly a college or university that employs large numbers of PhDs fits the description of an institution requiring highly trained employees. But, as noted in the discussion of this book which takes on the institution of tenure, colleges have found ways to reduce this major budget item by using both highly paid tenured professors and low-wage adjuncts and graduate students to teach students. And, putting aside the political and human issues surrounding such a two-tiered system, the system actually provides a brake on runaway labor costs among those who teach.

Bloating administrations is another source of high expense, although the necessity of such highly paid non-teaching professionals is part of the indictment of the “Schools at Fault” antithesis, rather than a necessary outcome of the “General Economic Principles” thesis. And beyond these two categories of (professors and administrators), other school employees (such as maintenance staff, food preparers and servers and other non-professionals) clearly don’t fall into the highly skilled/educated category that supposedly leads to hyper-inflationary cost disease. And, even here, many of these jobs are filled with contractors or student labor, which should reduce overall labor costs in these non-professional areas.

With regard to technology driving up the cost of service industries, it’s not entirely clear that higher education is comparable to fields like high-tech medicine where every new cure tends to be the result of a newly developed expensive treatment, drug or piece of equipment. Within the classroom, for example, blackboards have been replaced by whiteboards, projectors, and “Smartboards.” And while some of this gear isn’t cheap, we’re not talking about equipment as costly to purchase or maintain as an MRI.

Archibald and Feldman use as an example the fact that that schools had to wire their campuses for Internet in the 90s, then rip that all out and replace it with wireless in the 2000s, while adding new layers of IT staff to support adding this important layer of technology to a campus. And while all that is true, ubiquitous Internet (both wired and wireless) was something that every institution (businesses, governments, even families) had to contend with over the last two decades, changes which did not create college-level hyper-inflation in every field and industry.

Now many schools have spent huge sums on high-tech facilities such as expensive research labs with cutting-edge equipment (and associated professional support staff). And such expansion is certainly an example of how technology can contribute to the kind of runaway cost disease that serves as the thesis in this analysis. But is this sort of ambitious and expensive expansion a necessary choice for a college or university? Or might schools be making choices they wouldn’t do otherwise absent some of the dynamics described in our antithesis: the so-called Bennett Hypothesis?

And we shall get to our antithesis and, I hope, a proper synthesis when this Cost of College series continues next Monday.