One Step Toward Attacking The College Tuition Bubble

Source: Business Week

As a college professor, I understand that we are part of the problem when it comes to the college tuition bubble.   At far too many universities, particularly large research institutions, a significant number of faculty members don't teach enough or teach well enough.  Moreover, tuition dollars support research agendas that aren't always relevant to practitioners.   However, I think a significant share of the blame for the tuition bubble also must rest at the feet of administrators.  Take a look at this excerpt from a current Business Week column by John Hechinger:

At universities nationwide, employment of administrators jumped 60 percent from 1993 to 2009, 10 times the growth rate for tenured faculty. “Administrative bloat is clearly contributing to the overall cost of higher education,” says Jay Greene, an education professor at the University of Arkansas. In a 2010 study, Greene found that from 1993 to 2007, spending on administration rose almost twice as fast as funding for research and teaching at 198 leading U.S. universities.

How can students and parents tolerate these types of statistics?  How can faculty members tolerate it?   I think that several factors contribute to the administrative bloat.  If we don't address these factors, then we will have a hard time reducing the administrator-faculty ratio. 

• First, accreditation agencies serve a useful function, but they have placed increasing burdens on universities.  Efforts to achieve and/or preserve accreditation soak up enormous amounts of time, and they require a lot of administrative work.   I don't think the return on investment is justified in many cases. Could we streamline accreditation processes?  Absolutely.  Will we?  Well, these accreditation bodies are big businesses. They aren't likely to streamline unless enormous collective pressure is put upon them.  
• Second, we do a terrible of preparing people for senior academic administration jobs.  We name professors to senior administrative posts with virtually no leadership development efforts to enable them to succeed.  We all know that a great teacher or researcher may not have the skills required to lead an organization.  Companies spend significant amounts of time and effort on leadership development; universities throw people into the ocean and expect them to swim.  When they start drowning, we appoint a few more associates or assistants to help them stay afloat!  
• Third, many universities offer a wide variety of additional services to students today as compared to several decades ago.  Those services cost money, and they require administrators to oversee these efforts.  There is no free lunch.  If we want to reduce administrative bloat, we have to take a close look at the services we are demanding from our universities. 
• Fourth, universities have faced an increasing regulatory burden, particularly when it comes to federal regulations that affect large research institutions.  Satisfying the regulatory requirements has taken increasing amounts of administrative work.  
• Fifth, too many universities operate in a very top-down fashion.  Faculty and staff members do not feel empowered to make many decisions.   That centralized organizational structure is a remnant of the past.  Many companies have changed in recent years, adopting leaner and flatter structures.  Universities continue to operate in a much more command-and-control environment in many instances, despite the talk about being faculty-led, consensus-oriented, and the like. 

The Value of a University

Bob Sutton has an amazing post on his blog this week.  He writes about what struck him as he read an article from about a decade ago by the great organizational behavior scholar Karl Weick.  Sutton writes:

Karl started out his 2002 British Journal of Management on "Puzzles in Organizational Learning: An Exercise in Disciplined Imagination" this way: 

It is sometimes possible to explore basic questions in the university that are tough to raise in other settings. John Gardner (1968, p. 90) put it well when he said that the university stands for:

• things that are forgotten in the heat of battle

•values that get pushed aside in the rough and tumble of everyday living

• the goals we ought to be thinking about and never do

• the facts we don’t like to face

• the questions we lack the courage to ask

What an important reminder for us all... The thoughts of John Gardner don't just help a professor like me try to justify the existence (or cost) of universities. These thoughts remind me of what we are obligated to do as faculty members.  Sutton points out one small example, a Stanford study that finds "there is little or no documented health advantage to organic food."  Sutton argues that this study made him uncomfortable.  Frankly, it bums me out too... so much for spending all that money at Whole Foods!  Yet, who will make these types of contributions if not a professor? 

It is our obligation to ask these tough questions.  I would argue that it's also our obligation to train our students to ask these types of tough questions, and to teach them how to explore these questions.   That practice will help them not just in the scholarly arena, but also as leaders in various private enterprises or other organizations.  

Do Colleges Need to Change Their Pricing Model?

CNNMoney writer Blake Ellis wrote today about the substantial tuition reduction enacted by the University of Charleston in West Virginia.   According to the article, "After seeing enrollment decline for the first time in a decade, the University of Charleston, in West Virginia, slashed tuition by 22% for the upcoming school year hoping to entice more students."  Interestingly, applications haven't increased since the move, but deposits have risen substantially.  Obviously, the jury is still out on the move. 

How did the university afford the move?   They cut some costs, but they also chose to reduce financial aid.  Thus, the net price did not actually fall by 22%.  What rationale drove the change in pricing strategy?  Here is an excerpt from Ellis' interview with the university's president, Dr. Edwin Welch:

We realized parents and families were now considering the overall price, not just the discount [financial aid and scholarships] they would be able to get. As universities we tend to market education the same way Joseph A. Banks advertises clothes, thinking the advertised price is not that important but the discounts are the most important part. But that's what is driving middle-class students away. So it seemed we needed to take a fresh look.

Could he be right?  Does the price tag at many universities drive away certain families, because they fixate on the overall list price rather than the net price (after aid and scholarships)?  After all, families don't learn their net price until late in the process?  By then, perhaps the overall list price has framed their view of a school.  I wonder if other schools might try this "Everyday Low Pricing" model of college tuition, in hopes that prospective students will look first at them because they have the lower "everyday price."