In a Wall Street Journal op-ed this morning, Senator Lamar Alexander argues that college is not too expensive for students to afford, what with Pell Grants, student loans, college tuition assistance of various kinds, etc. That’s true to some extent, but the fact remains that college is a whole lot more expensive than it used to be.
When I graduated from Vanderbilt in 1966, tuition was $1,100 a semester, or $2,200 a year. Using the CPI to convert to 2015 dollars, which would be a little over $16,000 in today’s money. But Senator Alexander reports that tuition at Vanderbilt today is $43,000, more than two-and-one-half times as much (and much that used to be included in tuition is now charged as separate fees, much like now having to pay to check luggage on airlines). That is true pretty much across the country.
It is economics 101 that when a commodity — in this case, a college education — increases in price over and above inflation for decades when there is no constriction on supply, then a cartel is in operation. With colleges, the accreditation organizations serve as the cartel enforcement mechanism.
To be sure, there is more than a combination in restraint of trade going on here. The federal government, using the power that giving federal funds to colleges (which is almost all of them) gives it, has inundated colleges with rules, directions, and “guidance.” I submit the following from Senator Alexander’s op-d as the horrifying statistic of the week:
The Boston Consulting Group found that in one year Vanderbilt University spent a startling $150 million complying with federal rules and regulations governing higher education, adding more than $11,000 to the cost of each Vanderbilt student’s $43,000 in tuition. America’s more than 6,000 colleges receive on average one new rule, regulation or guidance letter each workday from the Education Department.
Alexander has several sensible suggestions to cut college costs, but the bureaucratic compulsion to micromanage what is none of their business is inherent. The only solution to that problem is to get rid of the bureaucrats.
