@snarlatron: The same Federal grant and loan programs existed 20 years ago (and the limits may not even have kept up with inflation), so you’d need another way to explain cost inflation over the past 20 years.
That just begs the question of why there has been no productivity increase in education, other than opposition from entrenched interests(faculty) and no incentive to improve productivity(being a non-profit).
“Online education will revolutionize higher education.”
I think to some degree it has already. It supplements traditional delivery and enables universities to reach those students who otherwise cannot be served. But it does not seem to be able to replace or even take away a meaningful fraction of the traditional market, at least at the undergraduate level.
There is a recent working paper looking into the student profile of an online master program. The authors find evidence suggesting that these students are mostly non-traditional students; that is, they would not pursue a master degree if no online degree program was available. It appears that online education is good at creating new demand, but not good at “stealing” demand from traditional delivery. https://research.hks.harvard.edu/publications/workingpapers/citation.aspx?PubId=11348&type=WPN
“That just begs the question of why there has been no productivity increase in education”
Stable productivity means the growth in productivity is slow (including zero). I think the increase of productivity in education is slow, but not zero.
I think the best way to understand stable productivity is to use string quartet as an example. It will take exactly 4 people for a live performance. Regardless of whatever innovation you can think of, it will still require 4 people to put on a show in the future. Note that it is the fundamental nature of string quartet dictates the outcome of no productivity improvement. It has nothing to do whether musicians work hard enough or whether the music industry is competitive enough or corrupted.
For education, to increase productivity is to increase the number of student credits per instructor. As long as each instructor teach 4 courses (or any number you wish) a year and the number of students in each course remains pretty much the same, the productivity will remain pretty much the same over time. In other words, it takes either teaching more courses or having more students in each course to “fundamentally” improve productivity. (note that productivity improvement may reduce delivery quality)
For various reason (competition, physical class room size constraint, reputation, student satisfaction, etc.), these possible changes are hard to accomplish. So the easy way out for the universities in the past decade is to substitute expensive human inputs (tenure-track faculty) with inexpensive human inputs (adjusts) to meet the popular target of either 3.9% or 3.4% tuition increase.
@prof2dad: Note, however, that it’s much tougher to make it as a live musician these days because there are so many recordings online and stuff can be reused. Nobody is paying orchestras to record another Beethoven’s 9th, for instance.
If online educational delivery becomes better, lectures would not be constrained by physical space. Stuff like labs and hands-on teaching as well as seminars/tutorials/cold-calling case studies (which are constrained by size, though they won’t be constrained by distance either) won’t see much increase in productivity, but other aspects may.
But in any case, your reason is also why, when a society becomes wealthier, stuff like a haircut and plumbing fixes become relatively more expensive, because we’re not very close to automating those activities.
This assumes all performances have to be live. If the string quartet puts their video on YouTube, the marginal cost of having additional viewers can literally be zero.
Where have colleges’ expenses grown in excess of inflation over the years? It seems like this information would be available for public schools.
“Note, however, that it’s much tougher to make it as a live musician these days because there are so many recordings online and stuff can be reused.”
It is true that many musicians have a tougher life today. But I think the main reason is that they have a harder time to monetize it through their recordings and online videos. I believe that more and more of them derive their main incomes from live performance and their recordings and videos are used as some sorts of promotion to get their fans to their concerts. I can be wrong about this because I do not follow the business model of music that closely. But I bet the average ticket cost of attending a concert has been increasing at a speed higher than inflation rate because automation is difficult to achieve in this area. Also, the utility/happiness from attending a concert is quite different from listening a recoding or watching a video, and thus they are not that substitutable.
“But in any case, your reason is also why, when a society becomes wealthier, stuff like a haircut and plumbing fixes become relatively more expensive, because we’re not very close to automating those activities.”
That is very true.
“This assumes all performances have to be live. If the string quartet puts their video on YouTube, the marginal cost of having additional viewers can literally be zero.”
I did not assume all performance have to be live. I simply said that a live performance of quartet will require the same amount of human input in terms of the number of performers and the time commitment regardless whether it is 1900, 2017, or 2200. Also, no technology or innovation can improve it.
It is true that if the string quartet puts its video on YouTube, the marginal cost of having an additional online viewer is literally zero, but this is not so for having an additional live performance viewer. I do not know about you, but at least for me, viewing a recorded performance is quite different from watching a live performance by the same quartet. They are not really the same product or having the same level of enjoyment/utility. As a result, the cost of watching a recorded performance (whether it is a CD or a YouTube video) and the cost of listening in a live performance are very different in real life.
@prof2dad: It’s cut in to live performances as well. Back in the day, all music required real humans doing physical things. With electronica and, heck, even tracklists, etc., that’s no longer true.
I hope Emerson Quartet would not do these kinds of things in Carnegie Hall. 
The Super Bowl might be the best analogy for where I see the very distant end state. 100 million+ people saw it on tv for free or the cost of drinks at their local watering hole. A very small group of people paid thousands of dollars for the luxury experience of seeing it live.
Fed Reserve Bank and many other sources link gov’t college programs to corresponding hikes in tuition:
http://college.usatoday.com/2015/08/20/report-federal-aid-rising-tuition/
Just one piece of the puzzle but a legitimate piece nonetheless.
@snarlatron: That study explained the growth in list price. Net price in higher ed actually hasn’t grow much faster than inflation.
Equality costs money. In my lifetime, I’ve seen K-12 education evolve from dependence on a largely captive pool of college-educated women who had few other professions open to them, to one of the last bastions of unionized labor and an even larger mission to, essentially, fight poverty in the United States. At the university level, tuition discounting, precisely in order to make college more affordable for poorer students, is approaching the 50% level which means, someone else (e.g., the college, taxpayers or other parents) is footing the bill for the other 50%. I seriously doubt it was that high even ten years ago.
Actually, for the public schools that most college students attend, state government subsidies have been on a downward trend, while net tuition revenue has been on an upward trend, as a percentage of revenue. Looking at just list price tuition and discounts (FA/scholarships) does not get the complete picture here, since the state government subsidies are used to lower the in-state list price tuition.
https://www.washingtonpost.com/news/get-there/wp/2015/01/05/students-cover-more-of-their-public-university-tuition-now-than-state-governments/?utm_term=.ce4e9aafa6ed
https://www.amacad.org/multimedia/pdfs/publications/researchpapersmonographs/PublicResearchUniv_ChangesInStateFunding.pdf
More students are forced to use them, so while individual limits may not have changed much, a much larger pool of people are taking out loans. Also, more people are failing to repay those loans, so the total amount of student loans balloons.
@ucbalumnus wrote:
Net tuition income has nothing to do with the underlying discount rate. In fact, theoretically, you could raise net income by charging a few select families a million dollars a year in tuition while still maintaining a 90% discount for everyone else quite handily. In the case of pubic schools, that increase in revenue is coming from OOS families and increasingly from internationals who are, in essence, subsidizing state taxpayers.
Well. whatever the reason, it is horrible that it got this way. There are so few options available to kids now from a middle class family. The rich and the poor don’t stress like the middle class families. It is so expensive now that most take out loans just to be in the game.
Don’t you think brand new multi million dorms, student unions, cafeterias, STEM facilities, exercise facilities and stadiums, fancy theatres, etc are adding to the cost? The schools all seem to be competing for who has the swankiest campus and can provide kids the ultimate pampering package, Every single campus I’ve visited in the last few years had at least one expensive upgrade going on.