Good news and bad news about the cost of the college
While students and parents are preparing to settle in the new academic year, there are undoubtedly many who are still suffering from the shock of posters when they see the cost of joining the college. There is good news and bad news on this front.
The good news is that the college prices have erupted and even decreased a little in recent years. The annual report of the College Council on the college’s pricing changes in the net cost of the college attendance – the total cost, including tuition fees, fees, room and council, minus any grant assistance such as PLL grant that should not be paid.
The latest report reveals that after the inflation controlled, the net costs decreased modestly for several years. For example, the net cost of a public college of four years has decreased from about 24,000 dollars in mid -2010 to about 21,000 dollars in the past few years. The costs of the presence of the community college similarly decreased from about $ 18,000 to about $ 16,000. Until the cost of non -profit colleges, it decreased from about 39,000 dollars to about 36,000 dollars. Low costs are definitely welcome news.
Bad news is that the costs have increased unabated for decades before the recent declines, which means that the college still costs a lot, it can be said that they are too much. Worse, there is a little agreement on the reason for the high costs for a long time, which makes it difficult to agree on potential treatments.
Some argue that students and parents should pay more because the state’s lack of investment – state governments that flounder university financing, leaving colleges a little asylum but raising students ’prices. Although the evidence looks logical, the evidence clearly governs this story. First of all, financing increased over time, unlike the theory of complete lack of investment.
From 1980 to 2024, the states increased funding by $ 56 per student per year. Therefore, it is not possible to explain the state’s lack of investment of the student’s high costs if there is no government occurrence. It is true that there are years in which countries cut financing, especially during the economic recession. But the typical style was to drop the financing for a few years, then recovery. The problem of the theory of the state’s lack of investment is that the costs of students have risen when the financing was reduced (in accordance with the theory) and when it recovered (inconsistent with the theory).
Another common explanation for high costs is known as Pomul, which argues that intensive industries in employment, such as university teaching, will witness a continuous increase in costs with a high wage for the professor. The basic idea is that scientific and technological improvements in other places of the economy raises productivity, which in turn raises wages in those industries. To prevent professors from leaving these higher wage industries, universities must match higher wages, although university teaching has not benefited from increased productivity. The rise in wages along with stagnant productivity and thus means that the costs of the kidney will increase over time.
There is some fact for the cost of Pomul’s cost, but not much. Analysis is constantly finding that increases in the salaries of faculty members represent only a small share of the costs of the higher college. For example, cost disease in Pomul cannot be explained by more than 10 percent of the spending increase for each student from 1999 to 2015.
So what explains the reason for the college cost a lot? The best explanation I found is the laws of Howard R. Bayen Five Educational Finance:
- “The dominant goals of institutions are educational excellence, prestige and influence.
- “In search of excellence, prestige and influence, there is no extent to the amount of money that the Foundation can spend to meet the apparently fruitful educational needs.
- “Every institution collects all the money that can be.
- “Each institution spends everything it provokes.
- “The cumulative influence of the previous four laws is towards increasing spending ever.”
It is sometimes referred to collectively in the name of the revenue theory of cost, which reflects the traditional view of how the student’s costs such as tuition fees. Under the traditional view, there is some cost of providing education. Federal governments and state governments usually cover some of this cost, and if the college is fortunate, the calculated or other groups will also cover each other. All other groups are not covered by tuition fees.
Bowen’s revenue theory says this story is back. Colleges of allocating their spending to meet their revenues. If they raise a lot, they spend a lot (see the ivy bond). If they do not raise much, they will not spend much (see the colleges of society).
The cost revenue theory has some important effects on student costs, such as tuition fees. For one of them, this explains why colleges raise tuition fees even when increasing state financing – because they have a set of “fruitful educational needs” that will be assisted by more tuition fees revenues. But he also tells us that colleges will tend to charge any lessons they can stay away from. This in turn means that we cannot “buy” low tuition fees only by increasing other revenue sources.
Andrew Gillin is a research colleague at the Cato Institute of Educational Freedom Center. His research focuses on higher education economics, with a focus on federal and state policies related to financial assistance, organization, accreditation, financing, transparency and accountability.
