Reason.tv: Economist Richard Vedder on Why College Costs So Damn Much!

In Going Broke By Degree: Why College Costs So Much, Ohio University economist Richard Vedder lays out in plain language why, well, college costs so much.

Vedder, also a scholar at the American Enterprise Institute, sat down at FreedomFest in mid-July with Reason magazine Editor in Chief to talk about college costs and more.

Approximately nine minutes. Shot by Dan Hayes and edited by Meredith Bragg.

Scroll down Go here for downloadable, hi-res, and iPod-friendly versions. And embed code too.

Related: The Case Against College Entitlements: Why we don't need more funding for higher education.

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  • EscapedWestOfTheBigMuddy||

    He's not wrong, but seems to have missed the issue of constant cost of skilled time which I have discussed before.

  • The Wine Commonsewer (TWC)||

    It would also be helpful if every dam rag in the country didn't count housing cost as a part of the cost of going to college.

  • P. T. Barnum, Dean of Admissio||

    "Why College Costs So Damn Much!"

    Because there's a college student born every minute.

  • Robert||

    But just try to make a living as adjunct faculty, which is what colleges are stuffing their teaching staff with.

  • wingnutx||

    Why do people take out $350,000 loans to get a BA that qualifies them for nothing?

    Why is feministing.com running ads for catchhimandkeephim.com ?

  • ||

    Radical feminists need love, too.

  • Paul||

    Why is feministing.com running ads for catchhimandkeephim.com ?

    'Cause that's where the wimmen are.

  • Not majoring in women\'s studi||

    Because universities and lenders can charge what they like with no risk of not receiving payment, and subsidies.

    I'd recommend leaving the country before some lobbyist has the bright idea to convince congress to deny passports to student debtors.

    ANd a problem of lazy judges became another occasion of there outta be a law.

  • ||

    What drives me batty about these discussions is that no one ever explains WHERE the tuition money IS SPENT.

    God knows I could suggest a few expenses worth deleting from a college balance sheet, but I've yet to get any data that would allow me to do so.

    Unlike most people, I eagerly await the bi-weekly fundraising phone call from my overpriced alma mater, so I can demand a copy of the college's annual budget in exchange for a possible check. Strangely enough, it never arrives (but at least I'm off the hook for a donation.)

  • EscapedWestOfTheBigMuddy||

    Mari,

    Various places. My link above discusses one place (i.e. the cost of faculty as a fraction of median income increases as time passes), there are bigger, better equipped and more comfortable buildings, in many schools the athletic department is a drain, and then there is http://mjperry.blogspot.com/2009/08/bloated-university-administrative-ranks.html.

  • ||

    Good interview and interesting theses. I've been in the higher ed system since 2000 and have been amazed at the pace costs have risen. On another note, I haven't read any Rothbard yet -- is there a seminal work I should start with?

  • ||

    Thanks for the link; I'll read it with red pen in hand. :)

    But my overall gripe (as opposed to my sub-gripe) is that college reps never feel any obligation to defend their spending via the major media. (i.e. an editorial in the NY Times along the lines of "Here's why we can't cut back on our spending on comfortable chairs...")

  • qwerty||

    Richard Vedder has a very good point about college costs. Government grants and other financial aid is part of the reason that too many people are going to college today. Another reason is that employers are forbidden from giving IQ tests for hiring decisions (since we all know IQ tests are RACIST!). As a result, companies use the BA as a proxy for an IQ test.

    The proximal causes of increased college costs are:

    1. Bloated administrations: student success centers, diversity centers, ect.

    2. Highly paid tenured professors who spend most of their time doing research and teach 2 classes a year.

    3. Demand by students for better food, nicer dorms, bigger stadiums, ect.

  • ||

    OK, yes, I admit I'm an idiot....

    Scroll down for downloadable, hi-res, and iPod-friendly versions. And embed code too.

    Where?

  • Sean W. Malone||

    Script does not work in blogger :( Wahhh.... YouTube link, please?


    Qwerty - Everything you mentioned is more of a feedback loop rather than even a proximal cause.

  • ||

    As I watched the video, I couldn't help but think of the ubiquitous ad on TV for "Education Connection".

    A waitress freely admits that she "didn't go great" in high school. BUT!..she's going to college so she can "make a better sal-a-ry".

    Now, I suppose there are people who don't thrive in the K-12 system, but are easily intelligent enough (esp. now) to gain a degree in college.

    But, my gut feeling is that most people who "didn't do great" in HS are going to abolutely clueless in a post-secondary setting.

    Am I crazy?

  • Trybuntu||

    Seems to me this is issue is a direct parallel with health care. You artificially increase demand (via medicare, pell grants, etc.) for a service without significantly increasing the supply and prices have to go up. Not to mention the fact that you can really inflate the price of certain things since the government is the one providing some of the cash. Remember those $800 hammers and toilet seats that the military buys.

  • zoltan||

    It would also be helpful if every dam rag in the country didn't count housing cost as a part of the cost of going to college.

    Some colleges require students to spend their freshman year in the college-owned dormitories if they live more than a certain distance away. The college I attended required any students with scholarships to stay in on-campus housing for their entire education or they would lose the scholarship.

    Another reason is that employers are forbidden from giving IQ tests for hiring decisions (since we all know IQ tests are RACIST!). As a result, companies use the BA as a proxy for an IQ test.

    That would be nice. Where I work, the non-college grads are far more qualified and willing to work hard (not to mention they have this je ne sais quoi--a common sense-type of thinking). Does anyone else encounter that in their professional, or even personal, life?

  • MaxLiberty||

    Higher education is a huge fraud, as explained here: http://maxliberty.wordpress.com/2007/12/30/higher-education/

  • Spartacus||

    Mari,

    I work at a state university (hangs head in shame). All our budget documents are public records. They are not online, but if you want to see anything related to the operating budget, you just have to go to the library and ask. The same is true for most public schools. You must have gone to a private college. You should have read the clause in your contract about access to budget documents before voluntarily giving that up (that was a joke).

    More generally...I agree with the comments about administrative positions going way up. I think, though, that a closer analysis will show that most of these new positions are in student services, auxiliaries, and various "compliance" areas. The student services are there because students want them, and a university that doesn't have an active student life program will be at a competitive disadvantage in recruiting students. Auxiliary operations have grown because colleges are looking for new sources of revenue in an effort to replace state funding cuts. Compliance positions have grown because colleges need professional staff to keep up with all the mandates and reporting requirements that keep getting added every year. We have a small army of staff who do nothing but ensure that our grant money is being spent according to all the different sets of rules of the various funding agencies.

  • KingShamus||

    As long as Reason never gives EDDIE Vedder a forum to discuss his hare-brained economic theories, we're good.

  • robc||

    But, my gut feeling is that most people who "didn't do great" in HS are going to abolutely clueless in a post-secondary setting.

    Am I crazy?


    You are minorly crazy.

    I am a moderate example. I did poorly, relatively, in high school. I was in all the highest level classes and I had an okay HS GPA, but stylistically, the learning style of HS didnt fit me. Mainly because it involved doing homework. Which I didnt.

    My college, on the other hand, was much harder - we have had, at best, only moderate grade inflation, the professors and admin expected students to get Cs, Ds, and Fs. However, with rare exceptions, homework was for learning, not for grading. Your grades were based on tests. I graduated with highest honor. MY GPA was significantly better than my HS GPA. I did homework in college, as it fit my schedule and as much as was needed to learn the material. The fact that in 95% of my classes assigned homework was discussed but ungraded was a huge benefit to me.

    Speaking of stylistic differences, my alma mater gets hurt in the USN&WR rankings for stylistic reasons. Most top tier schools have extremely high acceptance standards and then graduate nearly everyone. Both of these are positives to USN&WR. My school chose to have lower (but still tough) admittance standards but then to flunk out a significant number of students. More of a Navy Seal approach. I consider this a legit style, but USN dings us in 2 categories. Idiotic fuckers.

  • ||

    Well, robc, I qualified my statement to take people like you into account. I had a lot of the same issues in HS. I despised the grunt make-work, and often flat-out refused to do it.

    However, since exams, essays, and quizzes constituted about 80% of the grade, and I always aced those, I still graduated with a 3.6 GPA.

    OTOH, that was back in the day when corporeal punishment was still in vogue, so I often literally got my ass handed to me for not doing the homework.

    I still got the impression that we would be the exception to the rule, and the target audience for the commercial was not.

  • EscapedWestOfTheBigMuddy||

    2. Highly paid tenured professors who spend most of their time doing research and teach 2 classes a year.



    Many (most?) of these folks bring in considerable outside grant money from which the University skims a non-trivial amount of "overhead". It is often a financial wash (or even a win) from the department's point of view.

    And while I know a number of research professors who have had their teaching load reduced, I haven't many any with it cut back so far. Perhaps I'm not looking at the right(?) institutions.

  • EscapedWestOfTheBigMuddy||

    The student services are there because students want them, and a university that doesn't have an active student life program will be at a competitive disadvantage in recruiting students.



    This is certainly true, but I think it plays right into Mr. Vedder's point. When you can approach college without cost pressure you will weigh the balance between a good education and an opulent, exciting, fun-filled lifestyle differently.

    To say nothing of the cohort who attend only because it is the done thing and are not actually interesting in learning anything.

  • Spartacus||

    Speaking of stylistic differences, my alma mater gets hurt in the USN&WR rankings for stylistic reasons. Most top tier schools have extremely high acceptance standards and then graduate nearly everyone. Both of these are positives to USN&WR. My school chose to have lower (but still tough) admittance standards but then to flunk out a significant number of students. More of a Navy Seal approach. I consider this a legit style, but USN dings us in 2 categories. Idiotic fuckers.



    The Fundamental Rule of College Strategic Planning:

    Access, retention, or rigor. Choose any two.

  • Spartacus||

    Escaped--

    I agree with you. My point was that the increase in the cost of college is as much a response to "consumer" demand for shiny things as anything else. Many stories paint the increase in costs as being due solely to greedy trustees and administrators trying to vacuum up government funds. No doubt there is some of that going on, but much of it is due to increased demand for "extras" beyond the core academic programs. Without easy funding, the demand for these extras would likely decrease, sure. But it's a feedback cycle, and I'm not sure it's fair to lay all the blame on the colleges for it.

  • ||

    Aaarrrgghhh... it just ate my comment.

    Without retyping the whole thing, though, what I just wrote was that while you are right about the effect of grant funding, the very low teaching loads can be found at the Harvards, Berkeleys and other elite institutions, EscapedWestOfTheBigMuddy. And not all of the fully tenured faculty members at elite schools are bringing in the big grants--though many do attract graduate students, who are another source of revenue for the institutions.

    Nevertheless, the low teaching loads at the most elite research universities have produced similar pressures at other schools. My undergraduate alma mater is among the most selective and prestigious in the country, but it has historically always had a focus on undergraduates and on teaching. Over the past twenty years, though, that has changed some, and teaching loads have been decreased in an attempt to help recruit the best faculty members. As a result, course enrollments have soared and people now have difficulty getting the courses they need. (This was unheard of when I was a student there.) Costs have also soared.

  • EscapedWestOfTheBigMuddy||

    Thanks, Kurt.

    I'm a physicist, which skews my view of the grant situation some. At the research schools I spend my time in, most physics professors are bringing in some grant money, and non-trivial fraction bring in a lot. But I've never worked for a prestige school. Indeed I seem to keep working for well regarded departments at cow colleges, so typical teaching loads are five or six courses a year (possibly plus summer school).

    Do you know how many of those very-low-teaching-load positions are endowed chairs? Such positions factor very lightly into a departments budget, and should be thought of in a different category. I believe that many of the elite school have a lot of them. Come to think of it, I took a course in California form a prof holding an endowed chair. I think it was the only course he taught that year.

    Anyway, I'm sticking with high demand, opulent lifestyle, and a low coefficient of technological productivity gain as the causes for rapid post-secondary education inflation.

  • ||

    It is true that there are lots of endowed chairs at elite schools, but I don't have any statistics on faculty teaching loads by whether the faculty holds an endowed chair or not. Endowed chairs can also be funded different at public institutions than at private ones. Many public institutions have an established faculty line that they turn into an endowed chair, and the endowment pays salary and research costs, assistantships, etc. above and beyond what the standard faculty line would be on its own.

  • ||

    Aaarrggghh... typo alert... I wrote "funded different" but I meant to write "funded differently." Embarrassing.

    It's also the case, as you pointed out, Escaped, that physics and other hard sciences are very heavily funded by grants. It can be a different story in the humanities and social sciences, though.

  • DADIODADDY||

    I went to a state college. They let in anyone with a pulse and then proceded to fail 2/3 of the admitted class over the next 4 years. No grading on the curve, open book tests...know your shit or get the hell out..admittedly this was an engineering college and was back when dinosaurs ruled the earth (slide rules not calculators)

  • Data available||

    Budget data for public universities -- including very fine detail -- is often available online. If not, an "open records" request can be submitted.

    For private universities, annual financial reports are often online. And in light of the recent financial crisis, some privates are communicating more regarding their cost reduction strategies. Here's Harvard's Faculty of Arts and Sciences -- http://planning.fas.harvard.edu/c/index.html

  • ||

    it would be great if instead of videos on reason.com, you guys put it on writing. i'm at here at work and it looks bad if i watch videos but its ok when i'm just reading. :)
    sorry if a bit off topic. now then, college costs high because of those perks to college jocks. so... let them play for nothing :)

  • Daniel Dorestant||

    Great Video. Let's face it College is extremely expensive. Students considering a degree should definetly check this article out.

  • Planning For College||

    Great video! College is so expensive now it's pushing students and families that have been planning for college right into something else. And now, educational funding in the form of Federal Student Loans are becoming more difficult to get.

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