Every student who takes Economics 101 learns the concept ofsupply and demand—specifically, how a decrease in the supply of a good or resource drives up its cost. We see—even today—how labor shortages and international conflict are decreasing supply and thereby increasing the price of everything from energy to food.
Can supply-and-demand theory also explain the rising cost of attending college?
The National Center for Education Statistics notes that the cost of a single year of college (at a four-year private institution) is 24 times higher today ($35,830) than it was when early baby boomers graduated in 1969 ($1,487).
Let’s consider whether this was caused by simple supply and demand challenges:
- 教授太少了吗?
- Are universities producing fewer PhD graduates?
- Are too many students trying to squeeze into small-sized classrooms, with no alternative such as distance education?
The answer to each of the questions, of course, isno.
Neither cost-push inflation, nor demand-pull inflation, explains a 24-fold increase in the price of higher education over just two generations.
Neither cost-push inflation, nor demand-pull inflation, explains a 24-fold increase in the price of higher education over just two generations.
What paid for a year of college in 1969 now just buys books
The College Boardestimatesthat the annual cost of college textbooks averages $1,240/year. That amount would have paid for an entire year of tuition in 1969.
If supply-and-demand fails to explain the price increase of higher education, can quality explain it? In other words, if the price of education is 24 times higher, did it get 24 times better?
If wefollow the money，我们找到答案。
“Follow the money,” is the most well-known line in 1976’sAll the President’s Men, which put the Watergate scandal on the silver screen.
“Follow the money” is an exercise worth doing when it comes to pricing higher education. Nationally, only about 30 cents of every dollar of tuition is tied to academic instruction (i.e., faculty compensation, classroom expenses, etc.). If that seems low, it’s because itislow. Most of the tuition dollars don’t actually support classroom instruction.
Keep following the money
Lenders are in the business of making money, and it’s important to remember that the U.S. federal governmentmakes moneythrough itsPlusstudent-loan programs. In a country where change is always difficult to effect, reforming government programs that actually produce positive returns remains—unfortunately—unlikely.
The federal government isn’t the only beneficiary, however.
The widespread availability of student loans is what has enabled universities to increase the sticker price of tuition year after year (after year). Essentially, universities exercised free rein to charge whatever they could and, after distributing merit- and need-based aid, simplydirected students toward government loan programsto cover the difference.
The price of tuition, along with the process of paying for it, are fundamentally broken
The writing is on the wall for higher education: colleges and universities are on the path to losing a generation (or more) of future students due to decades of tuition increases that failed to produce better outcomes.
In aprevious piece, I wrote that “what’s at stake is nothing less than the competitiveness of the American economy and the broader American Dream.” What’s also on the line, however, is the continued relevance of a college education.
One spin on a common saying is that “If there’s no solution, there’s no problem.” A real problem exists in the affordability of American colleges, and there ought to be no neutrality in the matter. At Hope College, we startedHope Forwardwith the goal of changing how students pay for a Hope education. Neither pay-as-you-go nor pay-it-back, Hope Forward aims to fund 100% of a student’s education at Hope College in exchange for giving back to the college after graduation—essentially paying it forward to future students.
我们的第一期有22名学生，Hope Forward的目标是消除进入我们学院的经济障碍，让学生选择他们最感兴趣的专业，而不是他们期望的相对于他们的投资回报最高的专业。我们选择进入这个项目的主要标准既不是需要，也不是优点，而是明确而具体的愿望，以产生积极的影响。反过来，我们相信这种对变革影响的渴望创造了更高质量的学习环境。
However, the opportunity for transformation change is much bigger than Hope Forward or even Hope College itself. My deeply-held view is that Hope Forward ought not to be “competitive” from the standpoint of winning student enrollments from other institutions. Rather, my hope is that other colleges and universities will follow our model.
Learn more about Hope Forward, an entirely new funding model for tuition at Hope College