The-Ave.US

The American Enterprise Institute has published a facile analysis of the costs of higher education. What is missing in their report are the answer sto two questions:

1. Why have costs escalated faster than inflation?

2, How will the efforts to cut costs affect America’s tradition of equal opportunity?

Thomas Jefferson saw the University of Virginia, the world’s first publiuc university, as his single most important achievement.  Jefferson’s concept of  universal opportunity for an education may well have been more revolutionary that the republican ideals of government.  For the following two hundred years, the opportunity for an education distinguished the US from almost every other nation in the world.  The list of great Americans who have been “self” educated or who have used public education is awesome and still makes us very different from most of the rest of the world.

My keyword for Jefferson’s philosophy is “opportunity.”  The University of Virginia was so central to his philosophy that American universities now outrank all but Oxford and Cambridge in ranking for academic quality.  If the public university is such a great part of America, why is it now being challenged?  It seems to me that the answer is simple …. “opportunity “may be trumped by “efficiency.”

The workers in a university are its faculty.  ALL of the activities of faculty … teaching and research … are labor intensive .  Most of these activities are NOT subject to the sort of efficiencies that come from robots, software or outsourcing.

Faculty are not alone in this challenge to be efficient.  The cost of any service that involves intensive intellectual or other personal talent as an input .. lawyers, musicians, professional athletes, neurosurgeons, musicians, writers, accountants, social workers … all of these have gone up relative to the wages earned by our more productive comrades in professions where the amount of labor required to produce “products” has decreased.In some cases, the need for efficiency seems to prohibit talented people form developing tyheir skills.  How many kids today aspiure to be writers, jazz musicians, violinists, or ..english professors?

Medical care is the more immediate and obvious example of the problem of a profession that is limited in its ability to decrease costs.  Several years ago, our pediatrician told my wife that the “system” had trimmed his contact time with  patients down to seven minutes.  This “trimming ” was AFTER “the system” found better ways of using  nurses and physician assistants.  From that point on,   care by pediatricians would become prohibitively expensive.  Our pediatrician was right … personal medical by MDs is becoming prohibitively expensive.

As with the example of the pediatrician, the professor probably can cut some costs.  A lot more of the burden oif learning can be transferred from the teacher to thge student if we  make better use of new tools of technology.  When all that is done, however, we will be where medicine is now. We will reach an irreducible minimum of faculty effort that can not be reduced.

What happens then?  The AEI report implicitly leads to a very frightening choice … elitism.  Just as the wealthy pay their private pediatrician for concierge medicine, the wealthy will be able to pay for Stanford, MIT, and Harvard.  If those wonderful places are unable to fill their classes with ordinary Americans, wealthy Saudis ,Chinese party members, and heirs of the Koch fortunes will take up the slack.  The result will be a class system similar to the British “public schools” system prior to WWI.

The ability to get a high quality education will be determined by class and wealth, not by ambition and talent.

Opportunities for Efficiency and Innovation: A Primer on How to Cut College Costs

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Over the past two decades, the cost of a college education has risen dramatically. Tuition and fees have increased at twice the rate of inflation, rising more quickly than market goods or services and outstripping the growth in family incomes. In his new study, Opportunities for Efficiency and Innovation: A Primer on How to Cut College Costs (published by AEI’s Future of American Education Project), Oklahoma State University professor Vance Fried finds that this dramatic rise in college tuition costs is due to the ways in which traditional colleges and universities organize and allocate resources, and not due to lavish university facilities and extra student services.

“Higher education insiders sometimes point to the increasing cost of auxiliary services like student housing and big-time athletics as a major cause of large tuition increases. This is a red herring,” notes Fried. “Football, good food, and hot tubs are not the reason for runaway college spending. Rather, the root cause is the high cost of performing the instructional, research, and public-service missions of the undergraduate university.”

To identify areas ripe for cost savings, Fried creates a provocative experiment: what would it cost to educate undergraduates at a hypothetical college built from scratch? Fried concludes that undergraduate colleges should consider five major cost-cutting strategies:

1. Eliminate or separately fund research and public service

2. Optimize class size

3. Eliminate or consolidate low-enrollment programs

4. Eliminate administrator bloat

5. Downsize extracurricular student activity programs

“Rather than focusing only on the big-ticket items that tend to dominate debates about college costs, Fried argues that the real levers for increasing efficiency include rethinking student-faculty ratios, eliminating under-enrolled programs, and trimming unnecessary administrative positions,” explains Andrew P. Kelly, AEI research fellow and editor of the Future of American Education Project. “His recommendations are a must-read as states look to rein in college costs.”

Vance H. Fried is the Riata Professor of Entrepreneurship at Oklahoma State University and author of Better/Cheaper College: An Entrepreneur’s Guide to Rescuing Undergraduate Education (Center for College Affordability and Productivity, 2010). His research focuses on entrepreneurship in the higher education industry, entrepreneurship and public policy, and venture capital. Before joining the faculty at Oklahoma State, Fried worked as an attorney in private practice, executive of an independent oil company, and investment banker working with small- and mid-cap companies. He is also a certified public accountant.

Vance Fried can be reached at [email protected]. For more information on AEI’s Future of American Education Project, please visit www.aei.org/futureofeducation or contact Jenna Schuette at [email protected]. For additional media inquires, contact Jesse Blumenthal at [email protected].