According to the WSJ article “Why Is Tuition So High?”, college tuition has risen three times as fast as the CPI, and twice as fast as medical care. In the article, the WSJ interviews three different economists to discuss the issue.
Rudy Fichtenbaum, a professor at Wright State University, attributes the high costs to the decline in state support for higher education, as well as the bloated salaries of university administrators. Richard Vedder, the director of the Center for College Affordability and Productivity in DC, adds that tenured professors can be costly. He claims that as some professors reach tenure, they also acquire low teaching loads, thus universities must pay adjunct professors to pick up the slack. Dr. Vedder also notes that rising federal financial aid programs are driving up costs, a theory known as the “Bennett hypothesis”. Lastly, Katharine Lyall, former president of the University of Wisconsin System claims that the IT boom in universities is largely to blame for the cost issue.
In terms of how to reduce costs, Dr. Vedder argues for a reduction of federal presence in financial aid. In doing so, he claims that enrollment would fall slightly, therefore lowering the ability of colleges to raise prices, and forcing them to economize. Additionally, he claims that states should subsidize students instead of universities, in order to bolster competition. Dr. Lyall proposes that we must shift our view of higher education as a subsidized public good to a competitive market good. Essentially, Lyall wants to remove all regulations and requirements that universities face from the government, and allow them to manage their resources and capital. Finally, Dr. Fichtenbaum claims to “partially agree with Lyall”, but does not want to give up education being a subsidized public good, as he finds this will heighten the already growing inequality issues in our society.