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Why does college cost so much? Sat Dec 03, 2011 5:16 pm
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Editor's note: Richard Vedder is distinguished professor of economics at Ohio University, director of the Center for College Affordability and Productivity and an adjunct scholar at the American Enterprise Institute. He is the author of "Going Broke by Degree: Why College Costs Too Much." Matthew Denhart is administrative director of the Center for College Affordability and Productivity.

(CNN) -- College costs too much, both for students and for society as a whole.

This year, according to the College Board, average published in-state tuition and fee plus room/board charges exceed $17,000 at four-year public institutions, a 6% increase from only one year earlier.

In 2009, spending by Americans for post-secondary education totaled $461 billion, an amount 42% greater than in 2000, after accounting for inflation. This $461 billion is the equivalent of 3.3% of total U.S. gross domestic product (GDP) and an amount greater than the total GDP of countries such as Sweden, Norway and Portugal.

Richard VedderThe public is taking notice. The Occupy Wall Street protesters have featured student debt forgiveness as one of their demands, and students in California have demonstrated several times in the past year after their tuition was raised twice.

Earlier this week, U.S. Secretary of Education Arne Duncan addressed some of these concerns in a speech where he urged colleges to get serious about their cost problem. But there's only so much the federal government can (and should) do. The underlying structure of American higher education needs dramatic reform before there will be any relief in sight.

Whereas private businesses cut prices for consumers and costs to themselves through efficiencies that increase profits and incomes, universities lack those incentives.

Indeed, the typical successful university president views his or her key constituencies not to be the customer (students and their parents who pay tuition charges or the granters of research funds), but rather others -- the faculty, important alumni, key administrators, trustees and occasionally politicians. They please these constituencies by raising, and then spending, lots of money.

http://rss.cnn.com/~r/rss/cnn_mostpopular/~3/H1Hvyo1yJU0/index.html
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Why does college cost so much? Sat Dec 03, 2011 5:16 pm
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