The College Cost Disease

The College Cost Disease

Higher Cost and Lower Quality

Robert E. Martin

College cost per student has been on the rise at a pace that matches – or exceeds – healthcare costs. Unlike healthcare, though, teaching quality has declined, and rapidly rising costs and declining quality are not trends easily forgiven by society. The College Cost Disease addresses these problems, providing a behavioral framework for the chronic cost/quality consequences with which higher education is fraught. Providing many compelling insights into the issues plaguing higher education, Robert Martin expounds upon H.R. Bowen’s revenue theory of cost by detailing experience good theory, the principal/agent problem, and non-profit status.

Chapter 1: Cost, Quality, and Anomalies in Higher Education

Robert E. Martin

Subjects: economics and finance, economics of education, education, economics of education


1.1 INTRODUCTION Polls reveal students and parents are very concerned about college costs, although they tend to give higher education good marks on quality (Bok, 2006; Wadsworth, 2005). Concern about quality seems to increase with proximity to and familiarity with higher education. Polling results from Public Agenda and the Center for Public Policy and Higher Education reveal parents and students are “squeezed” by the importance of higher education and their perception that the opportunity to attend college is declining (Immerwahr and Johnson, 2010). Of those polled, 74 percent think higher education costs are rising as fast as or faster than health care costs1 and 83 percent think students have to borrow too much to go to college (Immerwahr and Johnson, 2010: 11). A plurality, 60 percent in 2009, believes colleges and universities are more concerned about their own financial interest than the quality of the education students receive (Immerwahr and Johnson, 2010: 12). During the current recession, higher education institutions continue to significantly increase tuition and fees (College Board, 2009) and some public institutions plan to restrict enrollment in response to budget cuts. These actions are consistent with the pursuit of self-interest rather than the spirit of public service and shared sacrifice. The public thinks higher education is simply another vested interest group and the academy does little to dispel that perception. The public’s concern is also reflected by numerous studies, commissions, and books dedicated to cost/quality issues in higher education.2 The consequences are also well documented: rising cost reduces...

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