Higher ed costs

Mark Perry at Carpe Diem posted several days ago a series of posts about rising tuition and disinvestment in faculty.

There has been rapid increases in college tuition, at an average 7.74% annual rate (twice that of inflation) since 1978. Tuition has increased significantly faster than the increase in the cost of health care, which has only increased at an average rate of 6% annually. As I noted earlier, what makes this unsettling is that clearly the quality of health care has improved as costs have gone up, with the advent of many new technologies, drugs and procedures, but its difficult to say whether there has been any improvement in higher education.

What we see from trends of employment and salary levels is that schools are not spending the additional money they're charging for education on providing education.

Between 1997 and 2007 enrollment increased by 25.8%, but tenured/tenure track faculty only increased by 8.6%. I'm generally against the tenure system, and would prefer that colleges shift more towards long-term full-time faculty. But the colleges are instead maintaining class sizes by turning more to cheap disposable faculty, like adjuncts and graduate students. They are forced to do this because colleges have increased the number of non-teaching staff much more rapidly than increases in enrollment: increasing executive/managerial staff by 42.4% over the same period and increasing professional staff by 54%. Also, the faculty aren't getting paid more, since pay has almost been flat in real dollars since 1978.

The overall trend is that students are getting no better education for their money, but only a lot more bureaucracy and administration.

I think the proximate cause of this is that colleges are not for profit, eliminating the incentive for them to maximum profits by cutting cots. Additionally, the increasing costs are permitted since schools don't have many students who immediately pay for their education, meaning there's limited demand from consumers to lower tuition.