Michael Eriksson's Blog

A Swede in Germany

A potential revamping of college tuition

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With regards to college/university there is a subset of problems that could be partially resolved in a simple manner:

  1. In order to ensure a high degree of equality of opportunity and social mobility, it must be possible even for people with low income and little wealth (be it own or when looking at the parents) to gain degrees. (Assuming that they are intelligent and hard-working enough to succeed with the academic side of the equation—few misconceptions are more dangerous than the belief that college creates diamonds out of charcoal.)
  2. Colleges cost money to run, and it is not optimal to finance them through public funds. Not only is the use of “someone else’s” money a bad idea in general, but here those that do not go to college are disadvantaged in an unfair manner.

    Note that this affects the U.S. too, because of the considerable “financial aid” given. Notably, the financial aid is also a driving force behind tuition increases—when the economically weaker buyers of a uniform product are given more money, the sellers have strong incentives to raise prices. The price raise then hits everyone, while only the weaker where given aid, which increases the group that would benefit from aid. To boot, the original aid receivers do not benefit as much as intended, creating a wish for more aid per person. Here there is a risk of a vicious circle.

  3. Academically poor students tend to cost a lot more money than the better students, e.g. in that they require more support outside of lectures and that they are the main reason why the highly inefficient lecture system is still “needed”.
  4. There is a severe over-inflow of students not suitable for college, who force further dumbing down, weaken graduation criteria, etc.
  5. In tuition-heavy countries, colleges have an artificial incentive to let students graduate, pass, get good grades, or even be admitted, irrespective of whether they have actually earned it.
  6. Excessive income, as e.g. with some U.S. colleges, leads to waste, including an every growing administration.

    (As an overlapping special case, it could be argued that the U.S. campus system is an evil per se, and that the students would be better off paying directly for own and independent housing, as they do in e.g. Sweden and Germany, rather than to pay the colleges to provide housing. Certainly, my impression of the living environment, from U.S. fiction and general reputation, points to it being positively harmful to someone who actually wants to study, which would make it a doubly poor use of money.)

  7. If only partially relevant: Popular programs* often have to reject even qualified students.

    *I use “program” to mean something at least somewhat structured, with an at least somewhat separate admission, and similar. Due to the wide variety of systems in use, this word need not be suitable everywhere. Note that the word “major” would implicitly exclude e.g. master programs and med school, which makes it highly unsuitable, even other potential concerns aside.

Consider the following solution sketch*:

*It is highly unlikely that this sketch would be viable without modifications and there are details to clarify. Complications include what exact numbers to use, whether borders should be sharp or fuzzy, what criteria should determine who belongs where, whether percentages or absolute numbers are better, how many categories are reasonable, what conditions are best suited for what category, …

Colleges are by law forced to let the top 10 percent of students study for free, with costs covered by the colleges’ funds.* Students from 10 (exclusive) to 30 (inclusive) percent are charged approximately at cost**. Students from 30 (exclusive) to 60 (inclusive) percent are charged at cost + some reasonable*** markup. The remaining students can be charged whatever the college wants. There is no additional financial aid.

*It is of fundamental importance that the colleges’ money be used. If, e.g., government money was given to the colleges to cover the costs, the system would fail.

**Based on a reasonable estimate of how much each student costs with regard to what directly relates to the education, e.g. salaries to professors for the courses taken, but not e.g. the cost of running the administration or various sports programs.

***Possibly, 500 or 1000 EUR/semester (resp. the purchasing-power adjusted equivalent in local currency), or some percentage of the costs (on top of the costs themselves).

In such a set-up, worthy students will rarely have financial problems; colleges can still earn plenty of money (but with less issues of insane surpluses); a very wide admittance would be possible, but the academically less* fit would tend to disappear when they discover that they fail to score well enough to study cheaply, which increases the quality of the graduates; etc. Note especially that while colleges might still have incentives for over-admission and “over-passing”, the students so favored would still need to pay their fees, and these incentives will then be largely countered by incentives for said students to drop out**. To boot, the colleges only have incentives to keep the students on—not to give them better grades than they deserve or to let them graduate before they have reached a certain standard.

*Note that these need not be unfit when it comes to a competitive program. In such cases, the effect is not so much a removal of the unworthy as it is a filtering based on result, where today a filtering based on expectation of result takes place. For instance, instead of admitting those with a GPA of 4.0 and leaving the 3.9s lying, a program could admit the latter too, and then let the students filter themselves out based on actual performance over the first few semesters. (But there might still be some programs where this type of increase is not plausible.)

**From the given program at the given college. It is quite possible that studies are continued with more success in a different program and/or at a different college.

In countries where various forms of public funding pay for significant portions of the cost and tuition is kept very low, this scheme would allow the introduction of higher fees (without negative effects on worthy students) and a corresponding reduction of the cost to the public: Instead of effectively shelling out money to everyone who wants to study, the money is limited to the worthy—or even to no-one, because the worthy are already covered by the fees paid by the unworthy.

Also note that the restriction on costs includable in the two mid-categories give incentives to keep administration and other overhead down. For instance, if a professor is given a raise, ninety percent of students can be charged extra—but for an administrator, it is only the bottom forty. Ditto if the number of professors respectively administrators per student is increased.

Excursion on actual costs:
Keep in mind that the actual cost of a student is much, much lower than what some U.S. fees could make one believe—this especially when we look at a “marginal”* student or a student bright enough to learn from books (instead of lectures) and to solve problems through own thinking (instead of being led by the hand by TAs). As I have observed, it would sometimes be cheaper for a handful of students to pool their money to hire a dedicated, full-time professor than to go to a U.S. college.

*I.e. an additional student added to an existing class, who will typically add far less to the overall cost than could be assumed by calculating the average cost per student.

To exactly quantify costs is hard to impossible, when looking at e.g. differences in class sizes, salaries of professors, the type of equipment needed or not needed in different courses, what type of work* the students have to present, etc. However, for a good student taking non-wasteful courses, the marginal cost might be a few hundred Euro per semester, and a few thousand should be plenty in almost any setting and even on average.

*Compare e.g. a math course with one or two tests to a writing course with a handful of essays, all of which should be given insightful feedback. (Whether they are given such feedback, I leave unstated.)

Excursion on percentages:
When percentages are used, we can have situations like someone dropping out of the top 10 percent because others dropped out entirely.* Originally, I saw this as negative; however, on further thought, in might work out quite well, seeing that the limit will grow tougher in the more advanced years, stimulating competitiveness and keeping the level of those who graduate even higher. However, some type of fail-safe might be beneficial, e.g. that the percentages are converted to absolute numbers at the beginning of each semester. (If there were a hundred students to begin with, the ten best students are guaranteed top-level status, even if the class has shrunk to ninety at the end of the semester.)

*E.g. because he was the tenth best student in a class of one hundred, and is now the tenth best in a class of ninety.

Excursion on choice of college, program, whatnot:
A potentially positive side-effect is that strong students have new incentives to consider less popular colleges and programs. For instance, someone who could be accepted to Harvard, but with a considerable risk of having to pay, might prefer a college where he is almost guaranteed to be a top-10-percenter. Such decisions might in turn have effects like creating a downward pressure on tuition fees of expensive colleges, spreading talent more uniformly, reducing the “networking effect”* of top colleges, etc.

*According to some, the main benefit of going to e.g. Harvard is not the level of the education, but rather the career-boosting contacts made there. Also note that networking is often just a form of corruption—something that damages an employer and/or society for the benefit of the networker. Such damage can e.g. occur when someone is hired because of “whom he knows” rather than “what he knows”.

Excursion on the freedom of the colleges:
One negative effect is that it limits the freedom of colleges regarding pricing, which could have negative market implications and/or be ethically dubious. This complication should be seriously considered before an implementation is attempted.

A reconciliation might be to only put some categories of colleges under the suggested system, including all that are state owned/run, all that have received non-trivial public support within some number of years prior to the “now”, and all that have directly or indirectly benefited from financial aid to their students in the same time frame.

However, if push truly comes to shove, this is one area where even such a strong regulation would be acceptable to me—in light of the catastrophic decline of higher education over the last few decades and the great threat that an even further decline poses.

Excursion on living costs:
In a non-campus system, topics like rent might need additional attention. It might e.g. be necessary to allow some amount of financial aid, preferably in the form of loans, to cover such costs. However, importantly, this would be something between the government and the student—with the college having nothing to gain. Further, it is not a given that such aid would be necessary on a larger scale, especially as societies grow more affluent: For very many, living with the parents, monetary help from the parents, working summers, private loans based on expected future income, or similar, can provide a solution that does not use tax-payer’s money and does not have a major impact on success in college.

Remark concerning “Thoughts around social class”*:
This text is not strictly a part of that text series, but there is some overlap and the implied division of students into more and less worthy categories is highly compatible with an intended future installment.

*See e.g. the last installment published at the time of writing.

Written by michaeleriksson

November 26, 2018 at 7:29 am

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