Cost of Higher Ed...

I follow the discussion on Higher Ed costs partly because I am an academic and partly because the costs of sharing need to be factored into any knowlede sharing model. Since Higher Ed is a primary knowledge sharing entitity, its cost structure should be interesting to knowledge folks.

Michael Feldstein, an Oracle employee and education blogger has a blog article about the cost of education and its relation to earning. He raises some great points and concludes the cost of an college degree might be in a bubble that could burst. I disagree.

I think the cost of college has risen dramatically compared to median income (check out Feldsteins graphs for some sobering illustrations). But I do not think many of the people that argue Higher Ed is at a tipping point are factoring in some significant variables. Some breif thoughts on the costs of Higher Ed:

• Feldstein argues that an Associates Degree would take until age 29 to pay off. This is bad math. I think he's taking the average cost of a Bachelor's and halving it to get an A.S. degree. Most people get their A.S. degrees at technical and community colleges. The non-profit versions of these schools are some of the most cost-effective options available in the whole world.

• Few pay MSRP. Very few students pay the stated tuition price for their education. A lot of analysts for college costs simply look at the stated price for tuition at at college and use this number. Each school has a discount rate. Many private schools have average discount rates in the 30-40% range. Knock off 35% from tuition rates and the equation changes.

• Some of college cost is self-induced. Students want better/bigger dorm rooms, lounges, pools, organized activities, athletic programs for all levels (e.g. clubs), coffe bars, and fast Internet. These ammenities cost schools a lot of money. If you do not provide these features, students respond by not choosing your school.

• Administration costs have skyrocketed. In Derek Bok's book Underachieving Colleges... he notes how the numbers of faculty has stayed consistent per capita over the decades but administrative positions have exploded. Dirty secret that no one in academia will address. Businesses add people when they can demonstrate the people add value (e.g. revenue) to the system. Not so with Higher Ed.

I do not think we can lay blame on one area. But we do need to examine the costs of Higher Education. We need models that reflect the complexity of the Higher Ed ecosystem. Maybe providing a range of cost options would work. It sure works for consumer products. Feldstein's off to a good start. But we need to factor all the variables before we can make simplistic assumptions about whether college still pays off...not to mention the fact that a better educated public is something that no one seems to be factoring.