NCPA - National Center for Policy Analysis

Rules for the Road

July 12, 2011

With the costs of college rising, policymakers and institutional leaders have struggled to cut spending while improving student-success rates.  In "Linking Costs and Postsecondary Degrees: Key Issues for Policymakers," Nate Johnson, an independent higher education consultant, offers what he terms "five simple rules of the road" -- practical advice for decision-makers struggling to rein in college costs while improving productivity.

Johnson's five "simple rules of the road" are:

  • Acknowledge that different degrees do not all cost the same. Decision-makers should keep the variability in program and degree cost in mind as they seek to reduce spending and balance budgets.
  • Private-sector colleges and universities show where growth in enrollments is possible even without massive state subsidies. Policymakers would be wise to examine what private colleges are doing and how much it costs them to do it.
  • Larger institutions are less costly because they benefit from economies of scale. Smaller institutions may be able to share facilities or merge entirely.
  • Policymakers must distinguish between enrollments and degrees. Low-cost, high-enrollment programs with low rates of student success can be a false bargain.
  • Past program performance may not be the best indicator of future success. Institutions with high costs per degree may have the most room for productivity gains.

Source: Nate Johnson, "Linking Costs and Postsecondary Degrees Key Issues for Policymakers," American Enterprise Institute, July 8, 2011.

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