Thursday, October 20, 2005

 

Tuition and Batting Averages

It’s time for the annual wringing of the hands over tuition increases. The popular press will carry stories lumping elite liberal arts colleges, nationally-known research universities, local teachers’ colleges, and community colleges together, trying to generate maximum public confusion and outrage.

The causes for tuition increases are many, and most are poorly understood. (For examples of the blind men describing the elephant, see the current issue of the New York Review of Books.) Any labor-intensive industry will improve productivity more slowly than a capital-intensive one, so education will naturally have slower productivity increases (read: faster-rising costs) than the economy as a whole. Add to that the fact that education and health care are pretty much the only industries in which technology is a net financial drain. (Private industry adds technology when it thinks the technology will improve productivity. We add technology when private industry does, so the students will be able to use it. For us, it’s pure cost; it doesn’t speed up the teaching any, but it does require additional support staff to maintain it, upgrade it, etc.) Add to that the various unfunded mandates placed on education over the last few decades (ADA compliance, health & safety regs, etc.), exponential increases in underlying health insurance costs for (non-adjunct) employees, the unstoppable aging of the faculty (thanks, Justice Rehnquist!), decreased public-sector support, increased marketing costs...

This paragraph could go on for quite some time.

Yet much of it is also beside the point.

Tuition is an easy-to-grasp number, yet it’s a lousy indicator of actual cost. In a sense, it’s similar to batting averages in baseball. Batting averages are percentages (expressed in three digits, so 25% is expressed as .250), calculated by dividing at-bats by hits. In theory, the better the hitter, the higher the average. And, in fact, in the absence of any other numbers, it isn’t a bad place to start when evaluating a hitter. But it misses a lot, and misleads badly. It weighs every hit the same, so a single counts as much as a home run. It omits walks altogether, even though the ability to judge the strike zone well enough to draw a lot of walks isn’t evenly distributed among hitters, and a leadoff walk is as good for a team as a leadoff single.

Savvy baseball fans spend unfathomable amounts of time coming up with (and arguing the merits of) different metrics – slugging percentage (counts total bases, so a double is twice as good as a single), on-base percentage (hits plus walks), OBPS (on-base plus slugging), average with two outs, etc., to compensate for the important information that simple batting average fails to provide.

Tuition works the same way. It’s an easy-to-report number, yet it says much less than it appears to say. The relevant number should be something like cost-to-student, which fluctuates from student to student at the same school based on financial aid packages. If the nominal tuition at my kid’s school is 25k, but he gets a “presidential scholarship” for 10k, then the real tuition is 15k. If tuition goes up 3k and the scholarship goes up the same amount, then the real tuition hasn’t changed.

Proprietaries and some less-impressive private colleges have figured out that the lack of access to something like a ‘total cost’ number can actually work in their favor. They’ll quote tuition prices in the same way that GM quotes MSRP’s – numbers they don’t actually expect people to pay. Then, they’ll offer ‘deals.’ Gee, kid, you could go to the local cc for 3k, but you’d be turning down a 10k scholarship from us to do it! Why would you ever want to do that?

In academia, tuition can actually follow the ‘chivas regal’ rule. High tuition, for the uninformed consumer, can signal quality, and large scholarships to offset that high tuition can look like good deals. (Posting the low tuition upfront, on the other hand, just looks cheap.)

I’d love to see a truth-in-tuition rule, requiring colleges to provide something like a cost-to-student form for every student in some sort of standardized format, so kids and parents could actually compare them. Instead, we get gamesmanship within the system, and ignorant moralizing from outside. The only people with the incentive to really push for this are far too scattered; the only people who could actually do it now have every reason not to. Conservatives scream about undisciplined colleges, then cut public support for them, forcing even higher tuition (and giving conservatives more ammunition to cut even more). Liberals just call for more financial aid, and hope the problem will go away.

I’ll make a proposal for my conservative friends out there: if you’re really serious about controlling costs, let’s start by mandating legible, full, truthful disclosure of actual costs. Empower the consumer, if you want to look at it that way. Tuition is such a flawed indicator that it really isn’t worth taking seriously. Once we know what we’re actually talking about, then we can discuss changes. Until then, we’re all (in both camps) just blowing smoke. Make the statistics on college costs as good as the statistics on shortstops.

Your thoughts?



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