NCPA - National Center for Policy Analysis

Cost Containment Should Be a Priority for Higher Education

April 19, 2013

The cost of college education has risen exponentially over the last few decades, so much so that now the value of college is in question as students graduate with enormous debt loads. Indeed, student loan debt now totals more than $1 trillion. To restore college affordability, cost containment strategies will be executed best by entitles external to a college or university, says William Massy of the American Enterprise Institute.

  • Competition in the higher education market is intense as colleges all seek to attract new students through their offerings, facilities, researching and funding.
  • At the same time, public outcries about the never-ending rise in tuition prices are occurring at the same time many states are cutting their appropriations for higher education.
  • As a result, many schools are cutting back their course offerings, allowing larger class sizes and letting more adjuncts and part-time teachers instruct undergraduates.

To avoid paying higher tuition, many students are turning to online offerings and for-profit institutions that offer competitive tuition rates, innovative course offerings and increased flexibility. In the face of a changing environment and a market that is demanding lower prices, traditional universities must reinvent themselves if they are to remain competitive, retain their human and physical capital, and continue to provide quality face-to-face teaching and mentoring.

  • At the campus level, colleges should encourage faculty to update and redesign courses, improve content management systems and online courses, and apply cognitive, learning and behavioral psychology in designing class activities and interactions.
  • In addition, price can be moderated and productivity improved by improving metrics that assess education quality, increasing utilization of workload and facilities, and disclosing price-setting policies and practices.
  • Protocols and procedures must be developed to monitor the effectiveness of these price moderation and productivity initiatives.

At the state and federal level, the government should urge universities to use the governance and management tools at their disposal to contain costs and could potentially withhold funds from institutions that cannot readily demonstrate that they are making efforts to contain costs.

  • The government should continue to publish statistics and information about the cost effectiveness of each school and degree.
  • To better help schools cut costs, the government should look at any federal policies that affect a university's cost of operation.

Source: William Massy, "Initiatives for Containing the Cost of Higher Education," American Enterprise Institute, April 11, 2013.


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