Category Archives: Finance

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A response to Pearlstein on college costs

In the latest uninformed higher education column in a major national newspaper, Steven Pearlstein writes about the four tough things universities should do to control costs. Pearlstein’s critiques are as tired as they are naive. He argues that all higher education needs to do is to 1) cap administrative costs; 2) Operate year-round, five days a week; 3) More teaching, less (mediocre) research; and 4) Cheaper, better general education.  Geez, why haven’t we thought of that before? Of course, the reality is that these issues are far more complicated than Pearlstein suggests.

Photo credit: Brad Warsh

The first fundamental mistake Pearlstein makes is confusing cost and price.  As I’ve written about before, the price of higher education has increased. He does mention some of the frequently touted causes by higher education faculty, administrators  including administrative bloat, unproductive faculty, and a decline of state funding. Yet, these ideas as simply dismissed as a pox on all their houses.

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What is tuition discounting and why do colleges do it?

Tuition discounting is growing in higher education. Yet, by the very nature of the practice, the concept is confusing to prospective students as well as people who have spent their careers working in colleges and universities.  A recent report by the National Association of College and University Business Officers (NACUBO) suggests that tuition discount rates are at an all-time high. The report further argues that the strategy is unsustainable and many institutions will have to reconsider their approach to discounting. But all of this raises the question: what is tuition discounting and why do colleges do it?

Photo credit: Daniel Oines

No one— or very few students— actually pays the listed tuition price for a university. The way to think about a university’s tuition is like the sticker price on a car. No one pays sticker. The question is how much of a discount you can negotiate.

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Are we sacrificing effectiveness for efficiency in higher ed?

Higher education finds itself facing many challenges. In particular, questions about college costs, student debt, and public funding remain at the top of the higher education public policy agenda. I’ve been thinking a great deal about the issue of effectiveness versus efficiency. I’m increasingly concerned that in the push to lower costs, reduce public subsidies and improve internal operations that we are approaching a dangerous line: Are we sacrificing effectiveness for efficiency in higher education?

Photo credit: Ben Sutherland
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Recipe to Destroy a Great Public Higher Education System

At first glance, Wisconsin and North Carolina do not seem to have much in common. Brats vs. Barbecue. Football vs. Basketball. Cheeseheads vs. Tar Heels. North Carolina has 4 million more people than Wisconsin. North Carolina gets an average of 5 inches of snow per year. Wisconsin gets that much in November alone. Despite the differences between the states, they both have had one thing in common that has led substantially to the success of both both states:  a great university system. Sadly, they also have something else in common these days: political leaders seemingly hellbent on destroying their great university systems. When reviewing the higher education policies in these states, you can easily see that both serve as a recipe to destroy a great public higher education system.

As much as (if not more than) nearly any public university system in the country, the University of North Carolina and the University of Wisconsin lifted their states socially and economically. Both are known for world class research and offering high quality education to their state’s population.

Moreover, both university systems have a long history of service to the state eschewing the Ivory Tower trend.

Simply put, UNC and UW have been models for a great public higher education system for generations.

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Obama’s #FreeCommunityCollege Plan: The Good, The Bad, The Ugly

Last week in Tennessee, President Obama proposed a plan to make the first two years of community college free. If every state were to participate, according to White House figures, the plan would benefit 9 million students per year saving them an average of $3,800 in tuition. Based on the Tennessee Promise supported by Republican Governor Bill Haslam, the purpose of the plan is to provide two years of community college education for free for students that maintain a 2.5 grade point average, attend at least half-time, and make progress toward completing their program.