Dimensions: 6'' x 9'' 284 pages AEI Press  (Washington) Publication Date: June 2004 Hardcover ISBN: 0844741973 Price: $ 25.00 Add to Cart   Examination Copies

View the introduction, summary, press release, and key points.

The traditional argument for government subsidies is that a college education provides not only the private benefit of a higher income and a more abundant life but also the social benefit of a more productive and educated citizenry. Maybe, but Mr. Vedder ingeniously shows that the states that have spent the most on higher education in the past 25 years have experienced the least economic growth.”

—The Wall Street Journal

The dramatic rise in university tuition costs is placing a greater financial burden on millions of college-bound Americans and their families. Yet only a fraction of the additional money colleges are collecting—twenty-one cents on the dollar—goes toward instruction. And, by many measures, colleges are doing a worse job of educating Americans. Why are we spending more—and getting less? In Going Broke by Degree, economist Richard Vedder examines the causes of the college tuition crisis. He warns that exorbitant tuition hikes are not sustainable, and explores ways to reverse this alarming trend.

Vedder's research demonstrates that America’s universities have become less productive, less efficient, and more likely to use tuition money and state and federal grants to subsidize noninstructional activities such as athletics. These factors combine to produce dramatic hikes in tuition, making it more difficult for Americans to afford college.

Vedder believes that competition from for-profit universities (the fastest growing sector in higher education), computer-based distance learning, and nonuniversity certification of skills can be a powerful force for needed change. He suggests that possible solutions to the tuition crisis include modifying tenure, increasing teaching loads, paring administrative staffs, increasing distance learning, and cutting costly noneducational programs. He also suggests even more dramatic changes, including transforming state grants to universities into student voucher programs, as well as other steps to increase privatization of state universities. [more...]

Richard Vedder is distinguished professor of economics at Ohio University and an adjunct scholar at the American Enterprise Institute. Trained as an economic historian, much of his work has dealt with the history of American labor markets and issues such as immigration, internal migration, slavery, and unemployment. After serving as an economist with the Joint Economic Committee of Congress, Mr. Vedder focused on public policy issues dealing with labor markets and governmental budgetary policy. In the past decade he has worked on issues relating to education at both the primary/secondary and university levels.

Mr. Vedder’s previous books include The American Economy in Historical Perspective, Unemployment and Government in Twentieth-Century America (with Lowell Gallaway), and Can Teachers Own Their Own Schools? He has authored over two hundred scholarly papers, which have appeared in The Journal of Economic History, Agricultural History, Explorations in Economic History, and numerous other academic journals. His writing has appeared in the Wall Street Journal, USA Today, Investor’s Business Daily, the Christian Science Monitor, and the Washington Post. The winner of numerous teaching awards, Mr. Vedder is a popular public speaker, having lectured on public policy issues across the country and in Europe and Asia. He has advised numerous political leaders on tax and fiscal policy or education issues. Mr. Vedder is a graduate of Northwestern University and the University of Illinois.

Acknowledgments  Introduction Part I  The Problem 1.  The Cost Explosion Rising Tuition and Related Charges Rising Tuition Costs and the Ability to Pay Higher Education Costs vs. Other Consumer Goods and Services Net vs. Gross Tuition Costs Why Has Real Tuition Risen? Simple Supply and Demand Analytics Conclusions 2. Why Are Universities Inefficient and Costly? Introduction Resource Allocation: Universities vs. Private Business Enterprise Four Reasons for Rising Costs The Future: Factors Restricting Spending Growth Conclusions 3.  Productivity Decline and Rent-Seeking Introduction The Rise in Higher Education Spending Where Did the Money Go? The Increase in Personnel Is Productivity Falling in Higher Education? Instructional Productivity Research Productivity Employee Compensation and Rent-Seeking Conclusions 4.  The New Peculiar Institution Introduction Price Discrimination Other Forms of Discrimination in Admissions Tenure Cross-Subsidization Conclusions Part II  Have Our Universities Lost Their Way? 5.  American Higher Education: Past and Present Introduction American Higher Education Today  Interstate Differences in Participation in Higher Education American Universities in International Perspective Characteristics of American University Students Conclusions 6.  Why Do We Need Universities? First Principles of Higher Education Introduction The Dissemination of Knowledge The Production of Knowledge Why Universities? Alternatives to Universities Conclusions 7.  Universities and Society Introduction The Positive Externality Argument and Its Weaknesses Equality of Opportunity Arguments Higher Education as an Investment Additional Testing Government University Support and Economic Growth: Case Studies Higher Education and the Quality of Life Conclusions Part III  Solutions: The Future of American Higher Education 8. New Alternatives to Traditional Higher Education For-Profit Higher Education Distance Learning Alternative Forms of Certification Conclusions 9.  Evolutionary Change on the Campus: One Scenario Reducing Instructional Costs Other Forms of Cost Reduction Improving Productivity: The Output Side Matters as Well Conclusions 10.  An Alternative Scenario: Systemic Reform A Tale of Two Paradigms The First Paradigm: Scholarships (Voucherization) and Privatization The Second Paradigm: Other Regulatory and Financial Options Conclusions 11.  The Future of the American University Rationalizing Public Policy: Piecemeal Approaches Rationalizing Public Policy: More Systemic Reform New Approaches to Funding Research: More Competition A Final Word Notes Index About the Author