16.11.04

TRAINING THE FOURTH ESTATE. A student in an investigative journalism class emailed me some questions about tuition and retention. Regular readers of this site will know what my answers are, but even the brightest among you will benefit from a modicum of repetition. Herewith the questions, and my responses.
1. Why have so many college - particularly NIU - seen such an increase in college tuition?
Northern Illinois University's administration has been reluctant -- compared to public university administrators in other states and particularly compared to private university administrators -- to raise tuitions. Even so, university tuitions are a bargain. On average, a high school graduate can expect to earn $25,900 per year, and a college graduate, $45,400 per year. Starting salaries are admittedly lower, not everybody earns the average income, and those higher incomes might not kick in for several years. All the same, the discounted present value of the average higher income in the first ten years out of college at 5% interest is $158,102. And graduates will work for another thirty to forty-five years. A student who studies full time forgoes $109,600 (again, that figure is overstated as high school graduates start at less than the average and work up) and pays tuition. We have been far less aggressive in harvesting additional gains from trade -- the increase in your earning power your degree provides us -- than we might be. Furthermore, because children from wealthier families are more likely to attend college, and graduates are likely to make more money, to the extent that taxpayers are subsidizing Northern Illinois University, that is a transfer of resources from the general population to richer people.
2. Do you think the high cost of college contributes to some students dropping out?
Yes. Years ago, I could work my way through the University of Wisconsin with some help from my parents, a summer job in a factory, and a commissary job with the dorms during the school year. I'm not sure that is doable any more. Furthermore, there is something called decision making at the margin. A student who is having trouble with college courses will be more likely to withdraw from a more expensive program rather than a less expensive program.
3. Is there anything else you think I should know?
Plenty. You're focusing on graduation rates. Monetary incentives matter, but there is an economics of decision making under uncertainty that comes into play. I'm going to quote at length from an old post that introduces much of that uncertainty.
Cal Pundit misses the college point completely. Just about anybody who wants to go to college can probably find someplace that will accept them. Only a minority of the population might be able to get a slot in one of the highly ranked schools, but that's irrelevant if your only criterion is making money. (It might make a difference if you aspire to be a court intellectual to the Democratic Party or get into Polite Blue State Society or the right law firm or an influential public policy magazine, but I digress.) The more troubling problem facing the students, the universities, and the employers is the loss of signal stemming from the consumerist mentality of some students and parents, catered to by administrators and some professors, the use of the university to do over what the high schools fail to do in the first place (and some corporations then hire people to provide the information the universities don't deliver), and the fear of low grades that might steer students away from the subjects that yield higher returns on their investments.
I have for a long time groused on my web journal and observed in committee meetings that admitting unprepared students and calling it "access" is a mistake. The decision many college administrations choose to make, in the face of uncertainty about the quality of students who apply, is to admit many, offer remediation to a large proportion of them, and then wring their hands about their low retention rates. They compound that error by thinking of students as "customers" rather than as participants in acts of learning. It doesn't help matters that many students succumb to the temptations of Hillcrest Drive (fraternity row, for those not familiar with DeKalb) or buy into the MTV Spring Break view of collegiate life.

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