Tuesday, November 27, 2007

Forbes and the cost of higher ed

I came across this article in Forbes at the Dr's office the other day. It's about the lack of controls on costs in higher education. Being inside the system at a private college, I can say that it seems totally accurate. There really isn't much pressure around to develop efficiencies. Enhance quality and provide new services, yes, but develop efficiencies, no. Overall, I think the problem of rising costs is partially due to rising expectations for enhanced support services (computing, athletics programs/facilities, counseling centers, libraries, etc.) and partially due to a lack of cost-cutting culture in academia.

One figure it points out is the number of nonteaching professionals per student, which has doubled since the 1970s.

What are colleges doing about their overhead? Not much. In 1929 universities spent 8 cents of each operating budget dollar on administration; today they spend 14 cents, says Richard Vedder, an economics professor at Ohio University in Athens. In 1976, he says, colleges had three nonteaching professionals for every 100 students; 25 years later they had six.
Being one of those nonteaching professionals, this seems a little disturbing. I sometimes wonder if there will be a huge backlash against the increasing costs of private Colleges (and ballooning student loans), or perhaps some other event that produces a rethinking of staffing at Colleges. It's important for us on the higher ed payroll to realize that a good portion of our paycheck is being paid out of a student loan some 18 year old took out.

One way to look at elite private Colleges is that they are a boutique product, like micro brewed beer or good wine. There's demand for high quality education done the expensive way like there is for other "artisan" products. Hence, it makes sense to focus on quality rather than the bottom line.

The top income earners in this country who fund much of private higher ed by picking up the tab on tuition and giving money to colleges like the idea of high quality education. And those top income earners have done rather well in the last 5-10 years or so, helping out many private colleges quite a bit. They probably also read Forbes.

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