Overinvesting in Higher Education

Higher education is the only big business I know where success is gauged not by the number of customers served, but the number who are turned away.

Richard Vedder directs the Center for College Affordability and Productivity and teaches economics at Ohio University.

letter to NY Times

The sharp rise in admissions applications at the nation’s elite private universities may seem surprising given the uncertain economic times and the lack of growth in the pool of 18-year-olds. But I think it is a manifestation of the overinvestment in American higher education.

It used to be that a college degree was a ticket to a prosperous upper-middle-class life. As the number of college graduates has grown faster than the number of relatively high paying jobs, more college graduates are not achieving the goal of getting relatively high paid jobs. Now merely having a degree is not enough — a student needs a quality degree.

Hence, the number of applicants applying to highly regarded schools is soaring. But adding to the demand is the fact that the price of attending Harvard and the very best schools is usually little different from the cost of attending merely very good schools. In fact, because of their vast amounts of endowment aid, the rich elite schools often are effectively cheaper.

A final factor in the falling acceptance rate of the elite schools is their deliberate policy of refusing to engage in enrollment expansion. Most Ivy League schools have roughly the same number of undergraduates as they did 30 or more years ago, despite a vast growth in the number of qualified students seeking admission.

Higher education is the only major business I know where success is gauged not on the number of customers who are served, but more on the basis of the number who are turned away.

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  1. barbi #

    The NYT today has an interesting article regarding the overwhelming number of school “reformers” who went to PRIVATE schools, not public ones. One assumes this is probably true of their children as well. What about putting your money where your mouth is??

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