Again, government as part of the problem, not the solution

Because of my job, I read a lot of news items about colleges. The Wall Street Journal reports that Sarah Lawrence College now costs a staggering $58,716 (including tuition, fees and room and board) for 2011-12, which makes it America's most expensive college. The Journal goes on to indict Washington as adding to the problem.


Of course, what the government has done is to rush more financial aid to help with high tuition costs. But many see this as part of the problem, not a solution. "Right now the incentives for our colleges and universities are all wrong," says Ohio University economist Richard Vedder, who runs the Center for College Affordability and Productivity. "It's wrong for colleges, who have no incentive to keep down costs. It's wrong for students, whose needs are ill-served by loans and grants that go directly to the school. And it's wrong for taxpayers, whose dollars are making education more expensive without expanding opportunity for those who most need it."

The Journal had some stats that really opened my eyes. I thought the aid programs were helping the poor, but it’s not working well at all in reaching this goal. People the universities deem rich pay the full sticker price. This might be thought to help subsidize the poor, says Mr. Vedder, but the college population today in fact has a lower percentage of people from the bottom income quintile than it did in 1970 (notwithstanding a massive increase in federal aid). Something’s wrong here with that result.

Meanwhile, those in the middle scrounge for subsidies—like Pell Grants and federal loans—that are not keeping up with the tuition inflation they are causing. The costs soar while the grant and loan money trails behind.

In all other aspects of our society today, great choice prevails. Not so when it comes to paying for college. In higher ed we're stuck with the same one-size-fits all model that worked back in the decades when only the very privileged went to college. President Obama wants to continue things as they have been. According to the Journal, the "reform" he signed last spring—restructuring federal grants and loans—will likely fuel rising costs as schools absorb that money, spend it on their own priorities, and continue to raise tuition at rates that outstrip the Consumer Price Index. That’s not the way to go.

The Journal suggested some other ways to think about making college more affordable. For example Pell Grants need changing. Right now, a college student who graduates in four years with a perfect 4.0 grade point average gets less money than a student who takes six years and squeaks by with a 1.9. A more competitive—and imaginative—Pell Grant might tie it to performance, and maybe even give a cash bonus to a student who graduates in three years.

Another proposed solution is really imaginative. The author of the article asks what would happen if we allowed a private firm like Google to pay for a student's bachelor's degree in exchange for, say, 10% of that student's earnings for a set period after he or she graduated? I wonder if the student would have to wear a Google T-shirt to class.

I really liked another possible reform. Michael Poliakoff of the American Council of Trustees and Alumni suggests having federally approved accrediting agencies stop measuring inputs, such as faculty-student ratio, and start conducting performance audits of outputs such as what a university spends on instruction versus administration, what its graduation rate is, how its graduates fare in employment, and so on. I bet that would be extremely revealing and embarrassing for a lot of colleges and universities.

As a college teacher, I see so many students who need and deserve help to finish their education. Let’s hope a better approach gets implemented in the near future.