Public policies, prices, and productivity in American higher education

Graduation by Shutterstock.com

Article Highlights

  • Tuition, fees, and other college charges have increased at more than twice the rate of inflation.

    Tweet This

  • US spends more than $25,000 per student on higher ed.

    Tweet This

  • Must examine effect of public policies on higher ed spending.

    Tweet This

Subscribe to AEI's education emails
Articles and events on education policy. Published approximately weekly.

First Name:
Last Name:
Email:
Zip Code:

This paper is one of three in a series on higher education costs. The series also includes "Initiatives for containing the cost of higher education" and "Addressing the declining productivity of higher education using cost-effectiveness analysis."

Rapid increases in what colleges charge and what they spend per student have been and remain one of the most controversial aspects of American higher education. Tuition, fees, and other college charges have increased in both the public and private sectors at more than twice the rate of inflation for over a quarter century. Trends over time in what colleges and universities spend per student are harder to discern because recent changes in accounting conventions have made it difficult to compare spending patterns. We do know from various sources, though, that spending per student in the United States is high by international standards. For example, the Organisation for Economic Co-operation and Development (OECD) reports that in the United States more than $25,000 is spent per student in higher education, by far the highest among OECD countries and more than twice the OECD average.[1]

This report seeks to examine the extent to which public policies at both the federal and state levels have shaped these trends in price and cost productivity (measured as spending per student). To accomplish this, the report is divided into the following four sections:

1.    A theoretical consideration of how public and private providers meet the demand for higher education.
2.    An examination of trends over the past 40 years in what colleges charge, how much they spend per student, and tuition as a percentage of educational costs.
3.    A discussion of the various theories that have been put forth for why prices and spending per student have increased so rapidly in the past three decades.
4.    An analysis of the effects public policies may have had on pricing and productivity (measured as spending per student) and a series of suggestions for a series of federal and state policy reforms that could slow the future growth of what colleges charge and spend per student.

Note

1. See Organisation for Economic Co-operation and Development (OECD), Education at a Glance 2012, tables B1.1 and B2.1.

Read the full report.

Also Visit
AEIdeas Blog The American Magazine

What's new on AEI

Making Ryan's tax plan smarter
image The teacher evaluation confronts the future
image How to reform the US immigration system
image Inversion hysteria
AEI on Facebook
Events Calendar
  • 01
    MON
  • 02
    TUE
  • 03
    WED
  • 04
    THU
  • 05
    FRI
Wednesday, September 03, 2014 | 9:00 a.m. – 10:30 a.m.
From anarchy to Augustus: Lessons on dealing with disorder, from Rome’s first emperor

We invite you to join us for two panel discussions on how Augustus created order from chaos 2,000 years ago, and what makes for durable domestic and international political systems in the 21st century.

Wednesday, September 03, 2014 | 12:00 p.m. – 1:30 p.m.
Multiple choice: Expanding opportunity through innovation in K–12 education

Please join us for a book launch event and panel discussion about how a marketplace of education options can help today's students succeed in tomorrow's economy. Attendees will receive a complimentary copy of the featured book.

Thursday, September 04, 2014 | 12:00 p.m. – 1:30 p.m.
How conservatives can save the safety net

Please join us for a luncheon event in which our panel will discuss what conservatives can learn from how liberals talk and think about the safety net and where free-market economics, federalism, and social responsibility intersect to lift people out of poverty.

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