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The pervasive third-party payment in higher education results in many distortions in incentives. Consultants to colleges advise setting high list prices, and of

The pervasive third-party payment in higher education results in many distortions in incentives. Consultants to colleges advise setting high list prices, and offering "merit scholarships" that simply roll back the apparent price of the college to near its actual value as a revenue-maximizing strategy.[1] Very few parents shop for colleges with the free online resource from Education Trust, the College Results website,[2] which allows comparison of what various colleges actually spend per student on instruction. On the whole, most people assume colleges are more similar than they actually are, and that list price is a reliable guide to which colleges are somewhat better (as a value proposition for the student). Neither assumption is correct. [1] http://www.maguireassoc.com/services-challenges/optimize-net-revenue/ http://www.maguireassoc.com/services-challenges/optimize-net... [2] http://collegeresults.org/search1b.aspx?institutionid=166027 http://collegeresults.org/search1b.aspx?institutionid=166027 (See the "Finance and Faculty" tab on the page comparing similar colleges for any college you are curious about.)

acjohnson55 13y ago
I'm going to push a little further. Maybe, just maybe, the root problem is our financial scheme for higher ed, in particular, the idea of foisting the cost on the student prior to enrollment (let alone graduation, or gainful employment). Say what you want about our K-12 system, but its costs haven't spiraled completely out of control. Nor have the costs of highly state-subsidized public universities in many other parts of the world. I don't think enough people are seriously considering the idea that we have shot ourselves in the feet by demanding that the government and private industry make a return on investment on a basic service that provided all sorts of positive externalities when people have access to it. We've encouraged colleges to compete with one another for market share. Maybe the incentives that aren't working for us are a result of our cultural infatuation with winner-take-all competition.

acjohnson55 13y ago

I'm going to push a little further. Maybe, just maybe, the root problem is our financial scheme for higher ed, in particular, the idea of foisting the cost on the student prior to enrollment (let alone graduation, or gainful employment). Say what you want about our K-12 system, but its costs haven't spiraled completely out of control. Nor have the costs of highly state-subsidized public universities in many other parts of the world. I don't think enough people are seriously considering the idea that we have shot ourselves in the feet by demanding that the government and private industry make a return on investment on a basic service that provided all sorts of positive externalities when people have access to it. We've encouraged colleges to compete with one another for market share. Maybe the incentives that aren't working for us are a result of our cultural infatuation with winner-take-all competition.