Over the last ten years, American colleges and universities have spent over $400 billion on their physical plants despite the fact that student enrollments have continued to decline. The increase in maintenance and energy costs has caused a financial strain, forcing cutbacks in vital ingredients of education: research, course offerings, student financial aid, faculty and staff support. The author draws a comparison between higher education and the health care industry and suggests that costs can be reduced by avoiding duplication of facilities and developing modes of interinstitutional cooperation. An increase in institutional efficiency will reduce the reliance of the higher education community on public subsidies for operations. This approach is seen to be particularly important during an era when every qualified student is expected to have the opportunity to obtain a university education without undue financial strain.
Hesburgh, the President of Notre Dame, draws on his experience to write a very human account of what makes a good college president. He suggests that the basic cause of most presidential failure is the inability to realize that all constituencies cannot be satisfied all the time. Hesburgh advises that criticism is a far greater part of presidential life than plaudits and gratitude. He acknowledges that decisions should be based on what is right, given the alternatives, not what is least costly or most popular. The author suggests ways to satisfy the various constituencies of the college president (students, faculty and trustees) and says that "effective leadership means getting the best people you can find to share the vision and help in achieving it".
Summarizing a decade of research at the University of California, this paper concludes that admissions criteria that tap student mastery of curriculum content, such as high-school grades and performance on achievement tests, are stronger predictors of success in college and are fairer to poor and minority applicants than tests of general reasoning such as the SAT.
It is increasingly clear that price competition is escalating in the market for higher education. We attempt to understand how price competition would work in higher education and explore the likely long run equilibrium structure of prices in that context. We draw inferences using both microeconomic theory and historical parallels found in the market for graduate education. Our analysis suggests that negative prices are likely to prevail at the wealthiest colleges and universities. Using data from IPEDS we estimate the resulting distribution of prices and school quality. While price competition may increase attendance by low income students at the wealthiest colleges and universities, it is unclear how they will fare at schools with middling wealth and resources. Further, schools with less accumulated wealth will be particularly vulnerable to any ensuing price competition. While our conclusions must be interpreted with caution, they do suggest some cause for alarm.
A sophisticated and widespread intuition is supported by our experience with business firms. And it is confirmed, influenced, and expanded by the formal microeconomic analysis of those firms and their markets. This paper asks if that theory and intuition are helpful for understanding colleges and universities and the higher education “industry.”
Student subsidies are large, ubiquitous, and very unevenly distributed in US higher education - covering, on average, two-thirds of a student's educational costs and ranging from $2,600 in the bottom decile of schools ranked by subsidy size to $24,000 in the top. So data on the distribution of those subsidies among colleges and universities identifies the schools that are most vulnerable to the emergence of an accredited, degree-granting for-profit sector: profits (price minus cost) are simply negative subsidies (cost minus price). Roughly a third of private two-year colleges, and doctoral and comprehensive universities are badly protected by their meager student subsidies that put them in the bottom ten percent. In the top decile, with large entry barriers erected by large student subsidies, schools can worry less about survival but no less about for-profit "cherry picking" within their curricula and programs as firms move to take over those courses that give students the smallest subsidies.
This essay describes methodological approaches and pitfalls common to studies of the economic impact of colleges and universities. Such studies often claim local benefits that imply annualized rates of return on local investment exceeding 100 percent. We address problems in these studies pertaining to the specification of the counterfactual, the definition of the local area, the identification of “new” expenditures, the tendency to double-count economic impacts, the role of local taxes, and the omission of local spillover benefits from enhanced human capital created by higher education, and offer several suggestions for improvement. If these economic impact studies were conducted at the level of accuracy most institutions require of faculty research, their claims of local economic benefits would not be so preposterous, and, as a result, trust in and respect for higher education officials would be enhanced.
In 1979 Emory University became the recipient of the largest single endowment gift (from Coca-Cola's Robert Woodruff) to a college or university. Self-studies have been initiated to recommend improvements that will guide the allocation of the uncommitted funds. (MLW)