PrintMarch 22, 2011
Are We Getting Our Money's Worth in Higher Education?
President Obama has stressed that a college education is critical to the future of America and our ability to compete in the world marketplace. To achieve that aim, our government is spending 60% more in 2011 than 2008 and providing 123% more in tax breaks for post secondary education (i.e., college). The Government has taken over all federally backed student loans, pushing almost all private lenders out of the 100 billion a year market.
But are we getting our money's worth?
One of the hallmarks of bad government is spending that is out of proportion to what is actually bought. Think 500 dollar hammers and 1200 dollar toilets seats. Ensuring that taxpayers get what they pay for at a fair price is doubly important in this age of a 14 trillion dollar national debt. When the conversation turns to such ephemeral ideas as a good education, measuring value for money is rarely talked about. Perhaps we had better start considering some of the salient statistics;
- The median debt for a student graduating with a 4 year degree is $19,999 and going up.
- 56% of Students that start a 4 year program don't get a degree within 6 years.
- 45% of students show no improvement in critical thinking, writing, or reasoning skills after the first 2 years of college.
- College tuition costs have grown 3 times the rate of general inflation, even outstripping medical costs.
These statistics underscore the unintended consequences of blindly funneling monies into the US college education marketplace. Much like the community re-investment act coupled with loose monetary policy fed the housing bubble, government monies are feeding the forces driving higher education cost up. This produces a vicious cycle where government drives costs up requiring more taxpayer money to help get students through school. Currently dividing the amount of aid available by the estimated total student enrollment results in more than nine thousand dollars of aid per student for 2010!
The increasing cost isn't just too many dollars chasing a product. According to the New York Times, part of the increase in tuition costs can be traced to the increase in back office personnel required to comply with the regulations and reporting requirements colleges. Government has several strings attached for all of the money it lends out, and those strings aren't cheap.
Stephen J. Dubner of Freakonomics fame makes an interesting observation;
When I visited my undergrad alma mater a few years ago, the chancellor pointed out that three buildings had gone up in the past decade or so that were each larger than any existing building on campus. There was a library, a convocation center (a multipurpose arena), and a huge student gym. The gym, he said, was a top priority because parents and prospective students increasingly think of themselves as customers, shopping for the most amenities for the best price, and the colleges that didn't come to grips with this would soon see their customers going elsewhere.
Instead of looking at schools as places of learning, students and parents are looking at schools for their amenities. Some students are just looking for a good place to party. The existence of lists like the "Top ten party schools in the US" takes on a new meaning for taxpayers who are helping foot more and more of the bill. These changes in attitudes toward college may help explain some of the seedier statistics about college life in the US, from binge drinking to sexually transmitted disease infection rates. The changes in attitude among today's enrollees is a marked departure from the GI Bill students with whom they are compared when we talk about government funding secondary education.
As noted above, schools are adapting to keep up with these changing attitudes and this includes their teachers. In one recent example students were treated to a live sex show, an incident NRO described as "The $50,000 Orgasm". This may help explain why such a large portion of graduates show no improvement in critical thinking. The teacher responsible for the live sex show actually said "My decision to say 'yes' reflected my inability to come up with a legitimate reason why students should not be able to watch such a demonstration." Apparently being a "cool" teacher is more important than being an effective educator among a certain subset of college academics, and critical thinking is certainly not involved.
In the eyes of people like President Obama, America has failed college students. The failure isn't because people are graduating with large amounts of debt, or even graduating without being able to think critically. The failure is that enough people aren't going to college in the first place. The immediate reaction to the bad news among the statist crowd is more money, and more regulation. This will just exacerbate the problem. Governments often interfere in markets and then complain when that interference doesn't produce the desired results (For Example: FDR's policies prolonged the Great Depression by seven years).
The solution isn't more money, or more regulation. Indeed, we've already seen the Department of Education engage in unethical behavior while writing new regulations in an attempt to stop private for profit education from competing with traditional educational outlets. It is not the government's job to pick winners or losers in the educational marketplace.
If we want a first rate educational system that works in the US, then the federal government's interference in the college education marketplace needs to end. Allow schools to compete with each other and for student's money and attendance. Give tax breaks to businesses that provide college tuition assistance or loans. Let banks, businesses, colleges, and private charities be the source of student aid. These entities have a vested interest in the outcome of each student, the quality of instruction, and in controlling the cost of the education received.
A market based solution won't be popular among the entitlement crowd, but it will make for a more efficient and effective education system. Shifting the source of student aide will also produce a more serious college student. If the taxpayer funded ride to a top ten party school stops, more college bound students will have to select a school based on more than just the amenities (Welcome students to your first lesson in critical thinking).
Aaron Gee is a U.S.-based IT consultant who started the blog foundingideals.com.
