December 11, 2012

"Why Is Higher Education So Expensive?"

Interesting video (featured at Instapundit), which seems smart in spite of the error-filled English subtitles throughout the presentation, which is in perfectly clear English.

ADDED: The errors may not show up in your browser. I was seeing a lot of symbols like ø inserted here and there.

36 comments:

Peter said...

Why is college so expensive? Because increases in student aid are captured by the schools, leading to demands for further increases in student aid.

http://centerforcollegeaffordability.org/uploads/Introducing_Bennett_Hypothesis_2.pdf

chickelit said...

Lessons for healthcare here?

Matthew Sablan said...

The same reason most things are expensive: People are willing to pay for it.

sane_voter said...

I didnt see any subtitles when I viewed it at Instapundit. I was using Chrome.

Bryan C said...

"The same reason most things are expensive: People are willing to pay for it."

Especially when people actually expect someone else to pay for it.

I think the subtitles on that video are automated. They're off by default from the link I followed, but that's probably somewhere in your YouTube settings.

pduggie said...

That's a lot of leg at 2:40. Kinda took me by surprise.

SteveR said...

Why is my house so expensive? Wait, its not? (anymore)

Tank said...

Gov't subsidies. Um, I think I've made that exact point here (at Althouse) several times.

I did not get subtitles.

Bruce Hayden said...

Must have done something wrong. Perfectly understandable when viewed from Instapundit.

And, I think that the guy is right, and, in particular, in the end, when he points out that governments massively subsidize higher education, through primarily loans, but also grants and scholarships, and when an activity is subsidized, you will get more of it.

Back to his first point though, which is supply/demand - that dynamic is getting ready to burst. There has been a very aggressive move in the last year or two towards on-line college education. And, that will likely completely demolish most of the supply limitations. And, for awhile, it was looking like the bigger name schools were trying to stay out of the on-line market in order to maintain their brand value, leaving it to the for-profits like University of Phoenix, etc., but this last year or so have seen a number of major state universities introduce on-line programs. So, sure, a Harvard education may still be worth $50k a year for the name, but is Podunk college worth $30k, when you can get an on-line degree from State U., and most everyone has heard of State U., and many fewer have heard of Podunk college?

Ann Althouse said...

"Must have done something wrong. Perfectly understandable when viewed from Instapundit."

I clicked on a video at YouTube where Instapundit linked and watched what played. It's irritating to hear that I must have done something wrong. There's a glitch in this video that made me hesitate to link to it and need to apologize for a problem.

Ann Althouse said...

Of course it was understandable. As I said, the presenter speaks clear English.

I guess the subtitles were for the hearing impaired. They messed up the presentation, though. Often, they covered other words on screen.

It was a fairly slickly made video, so screwing it up like that is unfortunate.

Lew Lipshitz said...

Literally everyone has heard of "Podunk", like everyone has heard of "widget".

I'm not sure, in light of the new, soon to be implemented repayment rules (20 years, 10% of discretionary income, then remaining principal balance forgiven - i.e., picked up by the taxpayers) that this spectre of an increasing burden on the student is the problem. It's the increasing burden on the taxpayer that should be the point. The benefits of the education are personal and move with the student in subsequent life and career choices. The burden shouldn't be offloaded onto the general revenue taxpayer, a significant portion of whom never attend college.

Bruce Hayden said...

The speaker mentioned that the physical plant, along with the administration, of colleges and universities, have exploded, and the cost of the physical plant may just bankrupt some schools, as the demand for bricks-and-mortar college degrees deflates.

But, one thing that he didn't mention, was that most academics in colleges and universities are overpaid. Some a bit overpaid, and some grossly overpaid. What else can a PhD in, say, History, or Romance Languages, do, besides teach? So, why pay them six digit incomes, when the only place many of them can go, besides universities and colleges, is into K-12 education? Not STEM, of course, because they mostly have other real job alternatives in the private sector. This dynamic is, of course, compounded by tenure. Can't get rid of the low performers with tenure w/o buying them out (which is apparently happening to a lot of baby boomer profs right now).

And, you know that this dynamic is insidious, when the Ward Churchills and Elizabeth Warrens of this world can cheat themselves into tenured positions with seeming impunity (Churchill was fired for gross academic misconduct, and not for cheating to get his job - which was apparently protected by tenure, as probably was Warren's).

EDH said...

Prof. Lin implicitly applies profit maximizing behavior to the university as the firm in his supply and demand analysis.

That leads him to say that "since most colleges can't keep up by increasing enrollment, tuitions must rise" in response to higher demand.

In a competitive market, the imperative moving a market to clear and reach equilibrium with higher prices in the face of inelastic supply and higher demand is the assumption of profit maximizing motive on the part of firms.

If colleges weren't acting as profit maximizing firms, there's no imperative that higher tuition be used to choke-off demand.

Instead, the college simply sends out more rejection letters without increasing tuition.

bpm4532 said...

Interesting, they didn't touch on the quality of higher education. In a sellers market, and college is a classic sellers market where capacity/supply is constrained in the near to medium term, not only do prices rise, but there is less need to compete on features and quality. In spite of the message of great dorms, food, and facilities (and believe me, I'm experiencing this as my own kids are applying to and passing through college), that is there only to distract the marks and keep them happy until they graduate and realize the lessening value of that education.

Very little of what people learn in college class is applicable to what they'll do in their career. What they learn in college outside of class may be much more valuable, and the developing sense of buying a brand and into a community of alumni. This reinforces the concept that Harvard doesn't produce better students, it merely selects them.

Only a simple accounting class and basic math skills are required perform low-level accounting tasks in a corporation, even using fairly sophisticated computer software, yet you would not be able to get such a job without a bachelor degree in most publicly held corporations. Likely the same is true for many tasks in the legal world that require a BA, JD, and successfully passing the bar exam.

Of course, one does need a college degree and a network because employers are fairly forbidden from requiring applicants to take an employment test. Hence the art of interviewing to validate knowledge and the importance of knowing someone to get past the computer that screens resumes for specific words.

PatHMV said...

People keep saying that online education is going to increase supply and fundamentally change the dynamics of higher education. It's not. The retention/graduation rates of on-line programs, on the whole, are significantly lower than those of real-world colleges and universities. There's a reason bricks-and-mortar colleges have built housing and substantial student support services -- they tend to help students succeed... and success means more money to those schools (nice housing and other amenities are also necessary to help recruit students, but that's another issue).

On-line only programs can't really provide the support and the sense of community that is needed by many or most average students to succeed. Sure, for self-starters, young people who developed a strong sense of self-discipline in their k-12 educations, they can do quite well with on-line offerings with little support.

But the average kid needs some help. He'll slack off unless there is pressure from students and teachers, people with whom he feels a sense of community, to keep up the work.

On-line offerings will certainly be an important adjunct tot traditional education, but it's not going to replace traditional higher education institutions for a very, very long time, if ever.

EDH said...

Of course, many colleges would say they are not profit maximizers precisely because they do not enroll all qualified applicants willing to pay even more and because of student aid.

Bruce Hayden said...
This comment has been removed by the author.
Bruce Hayden said...

"Must have done something wrong. Perfectly understandable when viewed from Instapundit."

Sorry Ann. Threw that out, and didn't think of how it sounded. It wasn't meant as a criticism, esp. since I love your blog and appreciate all the work you do here for our benefit. Rather, it was merely intended to be an observation, and maybe helpful to some who were having problems with the video. My SO routinely points out how undiplomatic I can be. Again, apologies.

Paddy O said...

tddw; (too dry, didn't watch)

Seeing Red said...

Because Uncle Sam assumed the risk in the early 60s and college costs have risen.

Put the risk back on the banks & families.

Not everyone should go to Harvard, look at the idiots coming out of there, they're running the country.

Paddy O said...

I didn't see subtitles at all.

Seeing Red said...

The union should be open & above-board with their records.

If the members don't want to pay for the lobbying, then just charge them for the portion for their bennies.

Seeing Red said...
This comment has been removed by the author.
Bruce Hayden said...

People keep saying that online education is going to increase supply and fundamentally change the dynamics of higher education. It's not.

Maybe. But, it has frankly been amazing over the last year or so seeing how many colleges and universities with decent reputations have moved in this direction, introducing on-line programs.

In Colorado, it seems like many of the biggest and most prominent universities (CU, CSU, DU, etc.) are now advertising their online classes. How long until the difference between their on-line and brick-and-mortar offerings fades a bit? Where the onus on on-line classes starts to disappear?

Which get me to the second step, which is that at the point where this line starts to blur, it will become apparent to a lot of people that, while a 4 year bricks-and-mortar education is nice, it is primarily a luxury. Is is really worth more than $100k more in many cases as compared to an on-line degree from a decently well known university? Esp. when much of that $100+K is in the form of non-dischargeable loans?

Finally, you have the problem that most college professors are mediocre, in terms of their teaching ability, for a number of reasons. Most obvious is the law of large numbers. Also, many would rather be doing research than dealing with pesky undergraduates. Etc.

What I expect that you will ultimately see are some of the best teachers teaching very large on-line classes, and while community may be lost, the difference in their teaching abilities will overcome that problem.

Lest you think that this is wishful thinking, it seems to already be happening in K-12, and, esp. in mathematics. There are apparently mathematics videos out there now that a lot of kids would rather watch than TV or than playing games. The videos make the subject interesting and, most importantly, understandable.

Education, both K-12 and collegiate, is one of the remaining cottage industries. The efficiencies that we saw introduced into the auto industry 100 years ago have mostly not arrived yet in education. But, as on-line education progresses and matures, I fully expect to see 100 $50k a year K-12 teachers, or 50 $100K a year professors being replaced by superstar teachers making much more, maybe into the seven figures.

gsgodfrey said...

Ann, it's a closed captioning problem. While the video is playing, hover the mouse over the YouTube video and playback icons will pop up at the bottom. Click on the CC icon to the right of center, and select "Turn Captions off".

For a more permanent solution, you need to log into your YouTube account and disable Captioning in the playback settings.

MadisonMan said...

The retention/graduation rates of on-line programs, on the whole, are significantly lower than those of real-world colleges and universities. There's a reason bricks-and-mortar colleges have built housing and substantial student support services -- they tend to help students succeed... and success means more money to those schools (nice housing and other amenities are also necessary to help recruit students, but that's another issue).

This is exactly right. At the Community College level in Madison, there is a significant push to add online courses because they "only" require IT support. That is -- they bring money into the College. "Student Success" is mentioned, but it is a very special kind of student who succeeds in an online-only course (or worse, the compressed online course, sometimes called 'accelerated'). So many other students enter an online class and it's like meat into a grinder.

If Colleges really wanted students to succeed unreservedly in an online environment, they would require students to take a Preparing to Learn Online course. Instructors have to take a Preparing to Teach Online, yet students are assumed to just know what to do?

MadisonMan said...

That differential between High School Graduate Salary and College Graduate Salary really should differentiated by College Major.

PatHMV said...

Bruce,

I agree with many of your points. The superior quality of some faculty members to make lectures interesting, the ability to make much more "fun" educational videos like the math examples you site, these things are real advantages of on-line learning.

But the reality is that not everybody (and, I think, not most people) will sit there and dutifully attend 30+ semester-hours of on-line lectures for 4 years. For non-traditional students, yes, people with kids who must work and are trying to go back to school, those folks will likely benefit from on-line learning a lot.

But for the traditional college student, straight from high school, most of them are just not old enough and mature enough yet to exercise that kind of self-discipline. Part of the reason, in my view, that college has become so pervasive is that it lets kids age, mature, a bit more before entering the workforce.

Moreover, a great deal of learning (and maturing) happens informally at college... after class discussions with teachers, arguments with friends (and enemies) over current issues of the day or lessons from the latest class. Cooperative projects between classmates. Not ever conversation in the dining hall is about deep philosophical issues, but they're hardly all high school gossip-fests, either.

As for why so many traditional universities are moving into it, there are 2 reasons. One, they are a useful adjunct to existing programs, as I said. My university has a program with several other schools to make online classes available in certain areas where one school has an expert and the other schools do not. These are often low-volume, but important, areas where it's not feasible for each school to have an expert. Two, universities are as much subject to the band-wagon effect as others. If there's a trend, they'll jump on it. They have trustees who read about the latest big thing and push administrators to try it. It doesn't always mean they've though through it a great deal.

Peter said...

'PatHMV' said, "On-line offerings will certainly be an important adjunct tot traditional education, but it's not going to replace traditional higher education institutions for a very, very long time, if ever."

Online offerings will become the mainstream, leaving bricks-and-mortar schools as the adjuncts.

The key is credentialling- specifically, replacing seat-time (credit hours) with comprehensive exams.

The increased motivation and self-discipline required to succeed online will be a feature as it will separate slackers from self-movers and thus make degrees earned via online study more valuable.

Bricks-and-mortar schools will become the backwaters of higher ed., occupying the market space now taken by those costly liberal-arts-only colleges where unmotivated, don't-know-what-I-want-to-do rich kids go.

Hagar said...

If you consider the AAUP as a very vocal, effective, and influential labor union, that might provide an insight to a large part of the problem.

wildswan said...

Thing that strikes me is how everyone suddenly knows about rising college costs - even liberal relatives who never read blogs and are unaware of the country's debt are quite well aware of the student debt problem.

And here's an idea about rising costs one of these liberals threw out - tenured professors only teach two or three classes a year. If they, the most expensive teachers, taught more classes, costs would drop sharply.

Jane said...

Would someone please fill in the details on the income-based repayment? Is this for any sort of student loan, with no maximum, so that a student going to Harvard and one going to a state college, once they hit that 10%, are going to pay the same amount in loan payments, and Uncle Sam (that is, US!) will pay the difference? If there is no cap, then there will be no restraint in the growth in tuition. Sky's the limit!

As it is, there was an article in the Chicago Tribune on the explosion in foreign students at the flagship university. As long as the university gets suckers to pay its tuition, there will be no reason for them to restrain themselves.

Crunchy Frog said...

I was seeing a lot of symbols like ø inserted here and there.

A møøse once bit my sister.

MadisonMan said...

A møøse once bit my sister.

øøuch!

ken in sc said...

Military personnel get a housing allowance unless they live in the barracks or in on-base married housing. Whenever the housing allowance was raised by congress, during my 24 year tour, off-base landlords raised the rent exactly the same amount—every time. This is what colleges do as regards to student loans. They know they will get the money.