Friday, December 5, 2014

Is the Cost of Higher Education Slowing?

According to a report by the College Board shows how college tuition has slowed this year when compared to the past 30 years. This is great news for people concerned about the overall cost of education and how it is increasing faster than inflation every year. In some years tuition increases have reached double digit levels putting additional burden on families. The question of why this is the case has not been fully explored or discussed. Certainly, no solution has been found yet.

The report shows how 2013-2014 tuition and fees increased 10% for private non-profits, 17% for public 4-year and 18% public 2-year. In the past some, of these costs would reach into 20 and 30% increase range begging the question of why. Improvement in the numbers is to the benefit of students, families, and the government itself. The answer to "why" such large increases occur is difficult to answer in a single sitting.

Some have argued that the recession and smaller state budgets are forcing institutions to increase tuition. If this is the case then it is possible that such state monies are not calculated into the cost of education and the entire system has not been evaluated properly. Likewise, this would also assume that a majority of the increases were during the recession which is also not entirely accurate.

Others may argue that it is the availability of state money itself that is forcing colleges to increase tuition. When state money is guaranteed, student loans plentiful, and demand high the traditional educational institutions have no reason to change much like monopolies or government. Why mess with a gravy train?

It is also possible that legacy costs of buildings, mammoth sports programs, be all to everyone approach, and lack of competition are causing these increases. A far majority of society believes that education is the pathway to success thereby creating a captive audience when competition is not fierce enough to force change. In recent years, newer models of education, disruptive technology, and international competition are starting to raise the stakes on antiquated models and opens them to questioning.

The problem of increasing costs will not be resolved anytime soon. Large colleges with endowments and prestige appear to be doing well while a number of smaller colleges are suffering and closing their doors. Institutions based on disruptive technology are starting to make significant headway and traditional institutions are copying parts of their model. Success seems to still be a numbers and economy of scale game.

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