I tend to stay away from current events in writing about unintended consequences, but I’m weighing in on the recent college admissions scandal. After all, I’m a professor at the school with the most involvement. And the story isn’t really all that new. But it might play out differently than you expect.
tl;dr Is college too expensive? Short answer: yes. Longer answer: it depends. Point of the post: it will get more expensive.
If you haven’t heard about it, the “college admissions scandal” is the name for the revelation of a “side door” to college admission at universities including USC, UCLA, Stanford, Yale, Georgetown, and others. At this time it’s a small issue — only around 50 people have been named in the case. We have heard so much about it because the parents include some recognizable Hollywood actors, not because the revealed scandal is so big. (There is however no reason not to believe that the “side door” exists more broadly.)
This particular side door worked by getting bribed athletic coaches to admit students as athletes and also by providing an applicant’s own proctor for their SAT exams. The students weren’t really athletes and the proctors corrected their tests. Those actions dramatically increased or guaranteed admittance for the students.
Some of the bribes cost $500,000 to over $1 million. That’s just for entrance. Tuition of a further $250,000 then still needs to be paid. Interestingly, the scandal has reopened a broader discussion of fairness and value in college degrees.
First the yes
To the question is college over-priced, let’s first decide what we mean. If we think 100% of tuition is for education and then judge how much it would cost to deliver only the educational piece of college, then yes college is grossly overpriced. Today there are resources available for learning that are free and widely distributed. Extensive online information, some of it already structured into classes. There is also of course free access to public libraries. If the question is purely about acquiring knowledge then there are many opportunities to acquire knowledge for nothing or next to nothing except study and experience.
“You wasted $150,000 on an education you coulda got for $1.50 in late fees at the public library.” — Matt Damon in Good Will Hunting
Another way to look at it. My rough calculation of what the needed four-year college credits would cost if students just directly paid adjunct professors: around $10,000. Make that $20,000 to $30,000 for only full time professors. Bear in mind that a four-year degree often costs around $250,000 today.
The other general calculation you’ll often see is that only around 20% of tuition goes toward the teaching and education — a higher figure which I believe includes not only paying professors, but also related administrators, building and facilities and other expenses. On the high side are the degrees that require access to sophisticated lab equipment, for example. But most degrees require no such thing. Equipment is nothing more than the laptop students bring themselves and the books that they purchase. But even at $50,000, just the education piece looks like a sudden bargain compared to the typical total tuition of a four-year degree.
Taking inflation into account (but not increases in interest payments) tuition at the private schools involved in the scandal is today around 70% more expensive than it was 20 years ago. Much of that increase supports adding luxury facilities, fancy buildings, holding large events, and adding many more staff and administration positions. Much of the rest of it is there for another reason.
So just judging by cost of alternatives, college is expensive. But that’s not exactly the question most ask.
Now it depends
If instead you’re talking about value then the answer is different. I find that the most complete response to this question comes from Brian Caplan’s book The Case Against Education. Caplan argues that most of college — 80% — is signaling. The other 20% is about education (an interesting match to the numbers above). Caplan’s point is that college provides a costly signal that is of great value to future employers. For future employees, the college degree proves that you will be a good worker. You’ve incurred the high-cost of spending four years of your life sitting in classes without giving up. You also have loans to pay off. Either way you are probably more serious than most, will work hard, and won’t quit on a whim.
Beyond that, Caplan argues that selection of college major and individual studiousness are also very important. He writes that college is not worth it if you are going to be a bad student and also choose poorly compensated fields. However if you are a good student and also choose fields that have potential to pay off (engineering, business, math, etc), then even at its high cost of tuition today, because of future benefits, college is therefore not expensive.
The disagreement is on whether so much of a premium should be put on signaling. Or, couldn’t we demonstrate signalling at half the price?
Why is college so expensive? This is a question that I don’t think it is being answered well today. As college tuition rates increased at rates well beyond inflation every year over the last 35 years, those increases were not matched it all by increases in pay to professors. And at the same time, colleges have ended up relying more on adjunct professors as a way of cutting costs. (Adjuncts are an interesting American peculiarity, which causes confusion for my friends from elsewhere in the world. An adjunct is someone who teaches, but also does something else. They typically do not have PhDs and also involved because they enjoy teaching rather than doing academic research.)
With this scandal we might see some new short-term activities for the appearance of keeping price increases to a maximum or even producing a handful of additional scholarships for low-income students, but I don’t believe these will have lasting effect. The elite colleges are doing just what they should do strategically. That is, keep their prices high, increasing every year, and acceptance rates low. The fact that parents paid bribes to get their kids into school shows that they believe there is value. That value should be there for others. The fact that many more just pay the tuition with no drop-off when tuition increases shows that they have no other options.
“The failure of MOOCs [Massive Open Online Courses] to disrupt higher education has nothing to do with the quality of the courses themselves, many of which are quite good and getting better. Colleges are holding technology at bay because the only thing MOOCs provide is access to world-class professors at an unbeatable prices. What they don’t offer are official college degrees, the kind that can get you a job.” — Kevin Carey of the New America Foundation
Universities are machines for building bigger, more enjoyable universities. They are like a kind of paperclip maximizer in that regard. Why would a college charge less?
Colleges are presented as being “the victim” of the admissions scandal. That’s a strange way to see it. My concern is with the students, both current and future, and even the professors who teach them. Identifying a university as a victim seems a bit odd. Even odder considering that the victimhood view comes from the university being excluded from the payments. If those parents had gone through official channels and made donations of 10x to 20x what they paid in bribes, and by doing so increased the acceptance rate of their children, we never would have heard about this scandal at all.
Considerations
- The admissions scandal will lead to increased interest in applying to elite colleges. USC will improve in the rankings (at least the unofficial ones as measured by applications and admittance rates). Rather than a more serious discussion about how to reduce tuition rates, it will lead to their maintenance.
- Many people are looking at the size of the bribes and thinking… “that’s not so expensive after all.”
- There are currently no good options preventing college tuition from continuing to rise.
- Hedge against the future student loan crisis.