Linking costs and postsecondary degrees
Key Issues for Policymakers

Wikimedia Commons

Austin Hall, Harvard Law School, Harvard University.

Article Highlights

  • Nate Johnson's 5 rules of the road to make college budget decisions

    Tweet This

  • Are nominally lower-cost approaches saving both taxpayers and students money, or are they just shifting the cost burden?

    Tweet This

  • There is not a magic formula to arrive at a cost of #education that will serve every possible need

    Tweet This

Read this paper as an Adobe Acrobat PDF

View the Press Release

With the costs of college rising, policymakers and institutional leaders have struggled to cut spending while improving student-success rates. In "Linking Costs and Postsecondary Degrees: Key Issues for Policymakers" (published by AEI's Future of American Education Project), Nate Johnson offers practical advice for decision-makers struggling to rein in college costs while improving productivity. Johnson, who previously served as executive director for planning and analysis for the State University System of Florida, currently works as a higher education policy consultant with a particular expertise in effective cost management.

"There is not a magic formula to arrive at a cost of education that will serve every possible need." -- Nate Johnson

Johnson provides a step-by-step guide to different approaches for calculating costs. He highlights the tremendous variability in cost across programs within institutions, and documents some of the "hidden costs" of higher education. Rather than cut budgets across the board, as many cash-strapped schools have done, officials should make budget decisions based on clear and reliable data that prioritize performance and productivity, Johnson argues.

Johnson offers five simple "rules of the road":

  1. Acknowledge that different degrees do not all cost the same. Decision-makers should keep the variability in program and degree cost in mind as they seek to reduce spending and balance budgets.
  2. Private-sector colleges and universities show where growth in enrollments is possible even without massive state subsidies. Policymakers would be wise to examine what private colleges are doing and how much it costs them to do it.
  3. Larger institutions are less costly because they benefit from economies of scale. Smaller institutions may be able to share facilities or merge entirely.
  4. Policymakers must distinguish between enrollments and degrees. Low-cost, high-enrollment programs with low rates of student success can be a false bargain.
  5. Past program performance may not be the best indicator of future success. Institutions with high costs per degree may have the most room for productivity gains.

"There is not a magic formula to arrive at a cost of education that will serve every possible need," Johnson cautions. "Yet with a few key concepts in mind, and access to accurate and timely information, it is possible for policymakers to make good use of cost data in setting goals, allocating resources, and asking tough questions of higher education leaders."

Nate Johnson is an independent higher education consultant based in Tallahassee, Florida and an affiliated consultant with HCM Strategists, LLC.

Also Visit
AEIdeas Blog The American Magazine

What's new on AEI

AEI Election Watch 2014: What will happen and why it matters
image A nation divided by marriage
image Teaching reform
image Socialist party pushing $20 minimum wage defends $13-an-hour job listing
AEI on Facebook
Events Calendar
  • 27
    MON
  • 28
    TUE
  • 29
    WED
  • 30
    THU
  • 31
    FRI
Monday, October 27, 2014 | 10:00 a.m. – 11:30 a.m.
State income taxes and the Supreme Court: Maryland Comptroller v. Wynne

Please join AEI for a panel discussion exploring these and other questions about this crucial case.

Tuesday, October 28, 2014 | 9:30 a.m. – 12:15 p.m.
For richer, for poorer: How family structures economic success in America

Join Lerman, Wilcox, and a group of distinguished scholars and commentators for the release of Lerman and Wilcox’s report, which examines the relationships among and policy implications of marriage, family structure, and economic success in America.

Tuesday, October 28, 2014 | 5:30 p.m. – 7:00 p.m.
The 7 deadly virtues: 18 conservative writers on why the virtuous life is funny as hell

Please join AEI for a book forum moderated by Last and featuring five of these leading conservative voices. By the time the forum is over, attendees may be on their way to discovering an entirely different — and better — moral universe.

Thursday, October 30, 2014 | 2:00 p.m. – 3:00 p.m.
A nuclear deal with Iran? Weighing the possibilities

Join us, as experts discuss their predictions for whether the United States will strike a nuclear deal with Iran ahead of the November 24 deadline, and the repercussions of the possible outcomes.

Thursday, October 30, 2014 | 5:00 p.m. – 6:15 p.m.
The forgotten depression — 1921: The crash that cured itself

Please join Author James Grant and AEI senior economists for a discussion about Grant's book, "The Forgotten Depression: 1921: The Crash That Cured Itself" (Simon & Schuster, 2014).

No events scheduled today.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.