Swarthmore professor's essay: "Could college cost less?"

<p>And the "platinum parachute" severance deal issued to American University's president (after he was forced to resign for financial expense account irregularities) this week is another example of how more spending on education doesn't always indicate a higher quality of education!</p>

<p>
[quote]
Angered by the $3.7 million severance package that American University's trustees awarded to Benjamin Ladner, the departing president, campus leaders called on Thursday for fellow students to lobby Congress to replace the board.</p>

<p>"Please take immediate action and use the power of Congress to deal with these matters," Kyle Taylor, the president of the student government, said in a message to Congress that he encouraged other students to send to lawmakers.

[/quote]
</p>

<p><a href="http://www.nytimes.com/2005/10/28/education/28college.html%5B/url%5D"&gt;http://www.nytimes.com/2005/10/28/education/28college.html&lt;/a&gt;&lt;/p>

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without affecting the ability of full-fare customers to do so one iota.

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</p>

<p>That's easy for you to say!</p>

<p>If one of the 40% of Smith students who are full-fare customers wants to spend a year abroad in Smith's approved program in Tokyo, they have to pay Smith $40,790 for a program that charges the average joe in off the street $28,800. In addition to paying $12,000 over sticker price, and Smith doesn't even kick in the airfare?</p>

<p>I'd say that equation effects the ability of many full-fare customers to do that program by more than one iota! $12,000 is a hefty transcript fee. Maybe your are right. That is a pretty inefficient factor of production!</p>

<p>And does Berea have this:</p>

<p><a href="http://phoenix.swarthmore.edu/2005/2005-10-20/living/15496%5B/url%5D"&gt;http://phoenix.swarthmore.edu/2005/2005-10-20/living/15496&lt;/a&gt;&lt;/p>

<p>"If one of the 40% of Smith students who are full-fare customers wants to spend a year abroad in Smith's approved program in Tokyo, they have to pay Smith $40,790 for a program that charges the average joe in off the street $28,800. In addition to paying $12,000 over sticker price, and Smith doesn't even kick in the airfare?"</p>

<p>Nope. (Unless it is part of the program fee - which in some programs it is.) But I think you are making MY point, not yours. Neither spending per student nor enrollment per student (especially in the upper echelons) has a relationship to quality. Hey, it gets even better. Princeton charges for not only their full tuition for the lower cost programs, and not only do you pay the airfare, but they have an addition $1,000 study abroad fee that they tack on, regardless of where you go.</p>

<p>As I've argued elsewhere, inflation of prestige private college costs will continue until either 1) there are fewer full-freight would-be customers trying to purchase, or 2) the price paid approaches costs of doing business. Whether that is a good thing or not is purely a matter of opinion - that they are doing so really isn't in question.</p>

<p>The other part of the point you missed is this: this particular choice of spending (not subsidizing airfare for full fare customers, and providing even more subsidies for low-income students) increased quality for some, while offering the same quality (at higher cost) to others (which you could say is a decrease in quality, except that the product is exactly the same). This is kind of decision is a common one, whether it be more books in the library vs. another gardener in the arboretum vs. a new Monet in the art museum vs. a new piece of lab equipment, and it happens independent of endowment size or average spending per student.</p>

<p>
[quote]
Hey, it gets even better. Princeton charges for not only their full tuition for the lower cost programs, and not only do you pay the airfare, but they have an addition $1,000 study abroad fee that they tack on, regardless of where you go.

[/quote]
</p>

<p>According to Princeton's website, a Princeton student does NOT pay Princeton's "full tuition for the lower cost programs."</p>

<p>Instead, the student pays "the program cost plus a study abroad fee." I assume the $1,000 mini mentions above is Princeton's "study abroad fee." In exchange for the $1,000 study abroad fee, a Princeton student "remains a fully matriculated student at Princeton and has access to academic advising and other services provided by the various offices at Princeton students." Presumably that fee covers Princeton's costs of dealing with things like figuring out which overseas courses are sufficiently equivalent to their degree requirements, distribution requirements, and major requirements. But, even with the $1,000 study abroad fee and airfare, the cost for a study abroad program could be quite a lot less than Princeton tuition.</p>

<p>And, of course, if a Princeton student wants to take a year off to study abroad but doesn't care to have it count towards his degree or include it on his Princeton transcript, he could always just take a leave of absence from Princeton, and study abroad without paying the $1,000 study abroad fee. Princeton's advanced standing credits are exceptionally generous (compared to other similar colleges---they count 4's on AP exams in many subjects plus they allow credit for SAT II's in foreign language, so it's a safe bet that the overwhelming majority of Princeton students have the advanced standing option, though few exercise it. Using advanced standing credits to make up for the year abroad may be a lot easier and more straightforward than trying to making a case that the particular study-abroad courses are equivalent to Princeton degree requirements, The advanced-standing table is cut-and-dried.</p>

<p>
[quote]
As I've argued elsewhere, inflation of prestige private college costs will continue until either 1) there are fewer full-freight would-be customers trying to purchase

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</p>

<p>That's already happened. Otherwise, we would not be seeing the increase in "merit aid" tuition discounting targeted specifically at wealthy customers. Merit-aid discounting is pure price competition, exactly the same as "price rollbacks" at Walmart.</p>

<p>As a percentage of per student operating costs, Swarthmore's sticker price is lower today (55%) than it was 25 years ago (69%). The discounted price has declined to 40% of per student operating costs from 57% of per student operating costs.</p>

<p>What we have really seen an explosion in operating costs. Part of that is that consumers demand more goods and services: colleges now offer power moonroofs, counseling services, leather seats, Asian studies programs, ABS braking systems, freshmen seminars, 24-valve DOHC engines, state-of-the-art science centers, on-board navigation, in-room internet access, dual-zone climate control systems, and women's athletic programs that were simply not part of the product package 25 years ago. In addition, colleges are incredibly labor-intensive enterprises and the labor costs have gone through the roof -- in large part due to health care and benefit costs.</p>

<p>Is there a market for no-frills college products? Sure. And plenty of colleges serving that market.</p>

<p>Wisteria:</p>

<p>Princeton's policy is fair. It's a bit more cumbersome for full financial aid students because they give up direct billing to the university and may have to float some cash depending on how Princeton handles financial aid payments -- although I suspect most progams are equipped to handle that on a direct bill basis.</p>

<p>The policy is advantageous to full-fare customers, particularly when they are looking at some of the lower-priced [sic] programs, where their may be a slight cost savings. There are a few programs that would end up costing more than Princeton's comprehensive charges, but by and large, the university-affiliated programs are priced to match the host-institution's domestic fees.</p>

<p>Just for comparison -can you find breakdowns for public LACs -like New College of Florida, for instance?</p>

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it's debatable to what extent those corporations really should be viewed as schools.

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<p>Well, I'm coming to this late, but I'd be interested in this: what makes their status as schools debatable?</p>

<p>Hoedown:</p>

<p>If you own a corporation with three subsidiaries:</p>

<p>a) a school with $211 million in tuition revenues</p>

<p>b) a chain of hospitals and physicians practices with revenues of $1.4 billion</p>

<p>c) a drug R&D subsidiary with $500 million in patent sales this year</p>

<p>What is your main business? If you were CEO of this corporation, where would you be concentrating your attention?</p>

<p>I'm not making any value judgements. I happen to like this "school" a lot. I'm just saying that many of the top research universities have sound financial reason not to focus on education.</p>

<p>"It would be like arguing that Smith is the number one LAC in the country because it has the largest number of books in its library, which it does. If you are not reading those extra 300,000 books, it is wholly irrelevant, except that spending to maintain the space necessary for those extra 300,000 books might actually detract from "educational quality".)"</p>

<p>That is obviously what Smith posts on its library site at </p>

<p><a href="http://www.smith.edu/libraries/info/about/facts.htm%5B/url%5D"&gt;http://www.smith.edu/libraries/info/about/facts.htm&lt;/a&gt;&lt;/p>

<p>"Largest liberal arts college library - larger than many **unversity <a href="sic">/b</a> libraries. Over 1.4 million items: books, maps, audios, videos, music, manuscripts, & more"</p>

<p>With a less provincial attitude, Smith might become aware that there are LACs that have well over two millions items in their libraries.</p>

<p>It sounds like you are talking about one school, one of which I am not aware. I (perhaps mistakenly?) thought you were making a swipe at research universities in general.</p>

<p>Regardless. Even if the "CEO" as you call him or her has his attention directed to other activities at the university, there is no reason to believe that the university isn't educational. As far as the educational enterprise goes, it would always remain a central part of a university's mission, with key people who care deeply about it (and who quite possibly aren't involved in any way with the other operations). This is one reason why the general fund is maintained separately, so that dollars from hospitals, R & D, and other operations are not comingled.</p>

<p>I appreciate your comment that you're not making a value judgment. However, I believe it sounds different to the ear of someone who is in higher education. Saying a university is not actually a school is denying it a central part of its mission and history, and suggests the people are indifferent to their educational mission (something which I strongly suspect they care about quite deeply). In a business sense, it might be value-free to suggest that a university shift its focus or choose a mission other than education, but within academe that isn't an innocuous suggestion at all!</p>

<p>It aslo is a fact that the research opportunities often drive the placement of the top rising young PhD's each year. The vast majority of top PhD's want major reseach funding and the only place they can have that and all the other amenities is at a research school. Thus research universities generally get the cream of the crop. Also the money generated by research get plowed back into many areas of the university and helps support the entire enterprise.
As to medical revenues and expenses--generally that is a semi-independent or often a fully independent operation run by the medical school with only slight oversight by the university President.As long as they breakeven everybody is happy.</p>