Legislators nationwide are asking questions about the costs of higher education, which is a bit like asking which blade of scissors cuts paper. What really matters isn’t how much something costs, but how those costs are balanced by benefits—the value. This is a harder question, but one that needs to be asked.
The discussion is more than a hangover from the recession, but the data is unclear about how real the problem is. While college tuition has risen over the last two decades, state funding for universities has declined. Some schools’ per-student spending has dropped and some has risen. But nationally only about 10 percent of tuition increases in the last decade are due to higher spending on each student. The biggest factor is the declining state support, shifting costs from taxpayers to college students.
The share of college expenses allocated to teaching, administration and student services in the United States has been largely unchanged for two decades. Even so, some funds diverted from the classroom might actually improve educational efficiency.
Computer purchases are one example. Another is Ivy Tech Community College’s recent effort to hire more student counselors to improve graduation rates. That is a non-instructional cost—one that I’d wager increases value for students but is likely punished by Indiana’s erratic funding formula.
In the end, even with higher tuition, college students are still flocking to campus. The real problem isn’t increasing costs, but uncertain benefits.
For the typical student, the college experience is an investment windfall. The return on a college degree continues to outperform any other investment. However, for a growing number of students, education doesn’t pay.
Today, about one in five graduates hold jobs that didn’t require a degree a generation ago. This phenomenon predates the recession. Certainly, some of these changes are due to changing technology requiring more skills in particular occupations, but much is simply due to more students choosing majors with little or no demand. A visit to any Occupy encampment will provide examples aplenty (an underemployed puppetry major is my personal favorite—no kidding).
It is these students—and probably their disappointed parents—who cry loudest about the cost of education and heavy college debt. Colleges should be a bit clearer about career opportunities, but really, this information is less difficult and costly to obtain than an iTunes account.
The United States now graduates more visual and performing artists each year than we do engineers or scientists. I don’t mean to disparage the arts or even discourage these choices, but this trend factors into the value proposition of college.
What should we do? Ironically, cutting the costs of college will simply magnify this problem. Imagine how many puppetry majors we’d have if college were free!
The problem isn’t cost alone, but the value of a college education. That is the real policy issue we aren’t yet talking about.•
Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at email@example.com.