College can be expensive, but not useless

College can be expensive, but not useless

Among the apparently constant news of rising university costs was a new heading. The colleges that profiled did not increase their education at all during the current academic year.

A report from the National Association of Independent Colleges and Universities profiled 24 private colleges that decided to increase teaching in 2012-2013. Eight schools actually lowered tuition costs. Overall, online education - the amount actually paid by the students, which can be drastically different from the sticker prices - is expected to continue during the school year. The projected median increase, 2.6 percent, is however lower than the increase in previous years.

Part of the change is probably due to a demographic change. Echo boom, during which birth rates temporarily rose as baby boomers had their own children started fizzle out about 18 years ago. As a result, in the coming years there will be fewer potential college freshmen for schools to recruit. Almost half of all universities already predict reductions in the notification, according to a survey by Moodys Investor Services. Lower demand should lead to lower prices.

Until recently, however, the traditional supply and demand laws seemed to have nothing to do with college pricing. It also seems to change.

Young people and their parents have long behaved like spending too much on college. But if we treat the university as a purely financial investment, its quite easy to exceed. A 2008 analysis of the expected outcome for college students found that animals, elite colleges rarely paid in comparison to their cheaper comrades. While the private school did more, it was generally not enough to justify the extra costs of teaching.

It does not mean extra money for smaller classes, state-of-the-art labs or access to outstanding faculty is not worth it; but that means students and their parents should look carefully at what they get. When the parents cling between the aging family members and pay for next-generation education, and because the colleges senior seniors are considering the thought of collecting the debt against insecure job prospects, both groups are increasingly focusing on the bottom. Families pay more attention to the relationship between cost, price, and value than they did before.

Colleges must, in their turn, get used to delivering a product and that if they want to keep their customers, they must ensure that they offer a fair value. Teaching cabinets is a sign that at least some of them learn this lesson - but they may not be happy with it.

In addition to the question of costs per academic year, there are legitimate questions about how much academic education is actually needed for some professions. Pilot programs at New York University and other medical schools begin challenging the received wisdom that future physicians need four years in the classroom. By consolidating the curriculum, the programs have shaved an entire year from some students training without obvious negative results. Some law schools have also acknowledged that their students could do equally well without so much study. But since the American Bar Association rules that statutory schools offer three years of classes, the law schools reform efforts have focused on letting students get more out of their time, rather than letting them remove the same amount and leaving school earlier.

In the next decade or so, I expect that the pressure on colleges to increase the value will only increase. This will be especially true if we begin to see the necessary reforms in accreditation standards that allow for profit, online and foreign schools to compete in an even field with the established actors.

Of course, colleges can not simply lower prices without doing the corresponding changes in the business to reduce costs. For some schools, consolidation of campus, or even merging of current separate institutions, can provide an answer. For other schools, the solution in closing programs is that university presses cost money without adding any student education in any direct way. At most schools, the costs of cutting significantly will require changes that the faculty and administrators will both find.

To the extent that colleges are already beginning to react, at least in a small way, to market forces, it is not a moment too early for college-bound students and their parents. The experiences of discovery that accompany college education can be invaluable, but colleges themselves are not.


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