U.S. News the cause of high college tuition

Kevin Carey explains how U.S. News and World Reports is [] responsible for out of control college tuition. His logic is impeccable:

10 percent of the rankings are a function of spending per student ... If a university were able to figure out how to reduce its costs by, say, 10 percent, while holding quality constant, and it chose to pass those savings along to its customers in the form of a tuition decrease, its U.S. News rankings would go down. If, on the other hand, it became 10 percent less efficient and passed the cost onto customers in the form a tuition increase (not a hard thing to do if you're a selective college), its ranking would go up. All of this stems from a deficit of reliable, comparable, institution-level measures of quality. Thus we have this crazy higher education market with no value proposition, one where cost and quality are assumed to be the same thing -- and in the sense that high-end higher education is a luxury good that primarily serves to signal your exclusive ability to acquire and pay for it, they are the same thing.

Go look at the U.S. News methodology yourself. The SAT scores of the students are a mere 7.5% of the ranking. But direct spending is indeed 10% of the ranking, and "Faculty Resources" is 20% of the ranking, and 80% of that 20% is directly or indirectly determined entirely by the faculty payroll. So 26% of the ranking is based on how much money the college spends. Obviously the incentive for prestigious colleges is to spend as much as possible (mostly on faculty) to boost its ranking.

It's funny how there's so much whining about how it's unfair that college rankings are based on SAT scores, but in fact, how much money the college spends is more than three times as important to the rankings.

Using this rating system, a school like Cooper Union that "admits undergraduates solely on merit and awards full scholarships to all enrolled students" but provides a no-frills education will never rise to the top of the prestige rankings. Once upon a time, Cooper Union was a prestigious school, but its prestige has been killed by U.S. News. Nowadays, no one had even heard of it. Merely providing quality education to the brightest students doesn't cut it.

Comments

[Peter]

I cannot comprehend why so many people even care about some fussy old* magazine's college rankings. It's not as if the difference between attending a top-rated college and a run-of-the-mill college determines whether one becomes a Nobel laureate or a skell. I'm increasingly coming to the conclusion that the only real difference between humans and sheep is that sheep have nicer hair.

* = does anyone under age 60 still read USN&WR except for the college rankings?

[michael vassar]

Another great post. Thanks again. Why don't you forward this to Tyler Cowen, as he has been writing about educational price lately.

[Half Sigma]

I found the link in a comment left on Tyler Cowen's blog, so he has already been alerted.

[Poor Postdoc]

I just can't understand why USN&WR doesn't measure outcome instead of input parameters such as how much a school is spending. I have never, ever heard a student brag about his/her college based on "well, my prof actually makes over $200k". Rational students should be interested in outcome - what are the placement rates and starting salaries after graduation and possibly what former graduates think about their choice of school a few years after graduation. Interestingly enough, relevant factors are measured for their grad school rankings - but only for the "vain" fields like law and business, where people care about what happens after graduation. The weird thing is that I have actually met quite a few engineering grad students who are interested in a. scoring a high-prestige professorship or b. make boatloads of cash after graduation.

That all being said, party rankings probably still carries a lot more weight with many students...

[assetmgmt]

>>It's not as if the difference between attending a top-rated college and a run-of-the-mill college determines whether one becomes a Nobel laureate or a skell.

But it is the difference between getting a really high-paying job (top 5% of US earners) or not. All the best jobs in finance (investment banking, private equity, venture capital, hedge funds, etc.) are virtually closed to anyone who doesn't have an educational pedigree. I imagine it's the same at the high end of other professions.

[superdestroyer]

For 90% of the college students, the rankings just do not matter. For every 5,000 undergraduates at a ranked school like William and Mary who get excited about the rankings there are tens of thousands undergraduates at George Mason University, Virginia Common Wealth, Old Dominion University, etc who wished that they were somewhere else.

One of the effects of the arms race for college admission/college rankings/college prestige is that now, most college students are resentful of where they are going to college but they know how the rest of the world views their school.

I wonder how many of the one million college graduates there are in the U.S. every year really liked their college experience. I would guess that easily less than half believe that they had a real college experience.

[superdestroyer]

assestmanagement,

If you breakdown careers between normally distributed wages and log-normal distributed wages, the top tier school is more important in the log-normal distributed wage fields.

In some fields such as nursing, going to Penn, Georgetown, Villanova, etc can work against you because you paid a premium price for a college degree that pays the same as what every other nurse gets.

"I would guess that easily less than half believe that they had a real college experience."

Like they didn't party and get drunk enough?

[Russ]

Great post. This is the exact type of higher ed nonsense that people need to be alerted to.

If you can get into Cooper Union, you'd be a fool not to go. All that money saved can be spent on getting tanked.

[Swingline]

Total BS.

The highest weighted catagory is "Peer Assessment" (25%)- which is probably moved by the salary and perks they give to their staff. So thats 25% plus the 7% from Faculty Compensation. You could also throw in 10% from the "Financial Resources" category.

That means that 42% of your institutions rating you can move by raising your tuition and making things cushy for the staff. Hire a massage therapist for the Poly Sci department to roam the hallways and your school will probably crack the top 50.

[Cameron]

Not only are tuition rates going up, but starting pay for students coming out of top schools has been going down due to cheaters -- I put a entry on it in my blog.

[JewishAtheist]

It's crazy to pay for a top school unless you're rich or you're in one of the very few professions in which it really matters (in which case you're probably crazy anyway.) There are plenty of very good state schools that will be more fun, less work, and provide you with plenty of opportunity to have a good career. Oh, and ridiculously cheaper, especially if you're in-state.

[SFG]

Dunno. These log-normal careers are probably most people's only chance at the big time.

[Jack]

I actually never knew this about US&WR rankings - wow, they really exist mainly to perpetuate the current status order. I read an article once about how CalTech won the top spot years ago, and the magazine had to rush to change the criteria so that Harvard, Yale, and Princeton would return to their rightful place at the top. No doubt, you can get an education at a high-level state school like Penn State, North Carolina, Texas, or Michigan just as good. The status of the Ivy degree is worth it for some occupations and not for others. The main difference is at an Ivy you are in a small community of almost all excellent students while at a large state university you are in a large community where you have to make your own way more. In addition, at a state university there will be a lot of fairly dumb kids who don't do any schoolwork. Girls are no doubt hotter at those schools though.

[SFG]

You know, this 'hot girl' thing I never quite got. I mean, I understand wanting to sleep with hot girls, and maybe I'm just cynical because I never had the chance, but you're going to sacrifice your entire future career for a few months with a cutie?

Anyway, yeah, it depends on what you want to do. Banking or law, you need an Ivy. Other things, I'm not so sure. It requires an honest assessment of your own ability, which is kind of hard when you're 18. Especially when you're the smartest kid in your high school class...

Go to trucking school. You won't have any loans to pay off and you'll be earning atleast 40k after one year on the job. Live with your parents for a few years, save your money, and you'll be light years ahead of your peers. Especially the Liberal Art graduates.

And the biggest plus of all, you won't be turned into an ardent liberal that will be programmed to scream "oppression" at the drop of a hat.

[SFG]

Yeah, whatever. I mean, it's like telling people to go to engineering school. If you don't have the math gene, don't bother. Some people are just made to sit behind a desk, and others to drive around in a truck. I do agree that blue-collar jobs may be an undiscovered source of funds. The best thing in my view would be more realistic career counseling.

[David Alexander]

The best thing in my view would be more realistic career counseling.

That presumes that the students will bother following it. I didn't follow career counseling or the fact that my verbal SAT scores were higher than my math SAT scores, and I went right into comp sci and engineering because "I could make money at programming" and "engineering will make my parents happy, let me play with trains, and get me closer to the girl that I love". There's no need for me to rehash the results again.

[shortcut]

I agree with the trucking idea. Although I have a BS with honors, I am not proud of it. I actually consider it somewhat insulting that I had to attend college to open the doors to the occupation I chose. College did not help and only served to distract me from pursuing my career (sales).

[David Alexander]

I want a college degree for personal reasons. Firstly it appeases my parents, secondly it opens up more access to women (and friends), and thirdly it (barely) moves up my wages. Plus, people do treat you differently when you have a college degree. I'd imagine that some, but not all of my personal malaise would disappate once I finish and get a degree.

[the professor]

Laughable. Some of you guys are detached to reality. Let me bring you back: Harvard is not number one because of the high tuition. (in fact BU has always had higher tuition than any Ivy and BU is 2nd tier) The reason Harvard is number one is prestige. Simply put, they have the most prestigious faculty and departments. The best people choose Harvard and that further enhances its prestige.

About the peer thing: professors are driven by EGO mainly and not money. The university prestige makes them happy. Math professors are payed as low as 40k per year (yes!) while finance professors would easily make 200+k.

I find the us news ranking quite accurate, at least at the top, and especially at the specific graduate subjects.

[SFG]

As with many patterns, this one falls apart at the ends of the distribution. Harvard's prestige has nothing to do with tuition and derives from its age as first college in America. All the Ivies are old.

It's not that tuition is the primary determinant of prestige. It's that the effects of tuition at the margins on prestige discourage colleges from competing on price, because it would drop their ranking. It governs velocity, not position, for you physics people. ;) Harvard could drop its tuition to zero and nothing would happen (even leaving out the possibility of USNews manipulating its rankings to put Harvard on top), but if BU tried that they'd drop.

[DML]

Or maybe college costs more money because professors, administrators and anyone else associated with the college would rather have *more* money, not less?

Let that swirl in the old noggin for a bit...

(I'm thinking your college should have required couple of classes in basic human psychology to complement those statistic courses. :) )

[ron purewal]

Harvard could drop its tuition to zero and nothing would happen

It's arguable that such a move would serve to make Harvard even more prestigious, because, all of a sudden, everyone lucky enough to be admitted would go, undoubtedly raising the overall quality of the admitted class. Granted, a plurality (if not a majority) of Harvard admits choose to go there anyway, but it'd be 100% if this change were made.

[superdestroyer]

SFG,

I think one of the hardest things for high school students and those who counsel them to understand if the effect of going from a high school where the kids could be the best student to a top tier college where the kids is not even in the top half any more.

I had friends at Rice University in Houston who went through that. They were used to not working too hard in high school everyone else was less capable. But when they got to college, they found themselves on the left side of the normal distribution. I believe that is why you see so many students who start out pre-med at even the best schools end up in economics, political science, or sociology. Chelsea Clinton is probaby a very good example of this.

[SFG]

Very true. It was sort of amusing in my case. I went to a lower-tier Ivy instead of an upper-tier Ivy for exactly this reason. Of course, the net effect was that I wound up at the top of my class but didn't have the personality for a banking job. Go figure.

[SFG]

I've always wondered why premed is the default option. It's not that great a career track.

[Jack]

Lower tier Ivy with average grades here. And I still don't know what I'm going to do. If I knew about the I-banking type jobs when I was in high school, I would have made sure to study for an extra 50 or 100 SAT points to try to get into Princeton or Wharton and make the big coin.

[Jim Beam]

Firstly it appeases my parents,

Quite possibly the worst reason to plunge deeply into debt so that you can go to college. And no, it's not due to some subconcious hatred of my own parents.

The only way to "appease one's parents" is not receive any financial assistance from them after your 18th birthday and before their untimely death.

secondly it opens up more access to women (and friends)

This is possibly true, but most of the time you'll encounter people that you'd like to strangle with your pants belt. Besides, college educated women tend to be a bossy bunch.

You're best bet is to hook up with a "mute orphan", a woman that you can boss around, or plan for a life filled with Yahoo chess.

Another thing, you're "circle of friends" will be nothing but a "circle" that constantly brags to one another about one's accomplishments.

and thirdly it (barely) moves up my wages.

Depends on what you major in. You may get paid more, but odds are that job you'll get will require one of constant "ass kissing while wearing a tie".

I'm living proof of that.

Plus, people do treat you differently when you have a college degree.

Unless you plan on wearing a t-shirt that says: "I Have a College Degree" 24/7. Even that's not a gurantee, because that would be weird.

If you're walking around town with a shirt and tie, then maybe the Dunkin Donuts server will be nicer to you than a blue-collared schlub...but true independent thinking people will rightfully regard you as a "corporate or government tool".

[G]

If you're walking around town with a shirt and tie, then maybe the Dunkin Donuts server will be nicer to you than a blue-collared schlub...but true independent thinking people will rightfully regard you as a "corporate or government tool".

This is a hilariously stupid comment. Oh, you "independent thinkers", so cool, so free, so above it all! You know you sound like a dumb left-wing hippie, right?

you're "circle of friends" will be nothing but a "circle" that constantly brags to one another about one's accomplishments.

Yes, that's exactly how college educated people interact with each other. Especially tools who wear suits in public.

but odds are that job you'll get will require one of constant "ass kissing while wearing a tie".

Yes, odds are you will, if you don't like, plan ahead, and make sure you get what you need from your time in school.

you're best bet is to hook up with a "mute orphan", a woman that you can boss around

She should also be a flat-headed dwarf, so you can rest your beer on her head. Seriously, though, this is probably a good strategy for some - if you tend to spew nonsense at home, it's best to have a docile companion who won't point out your deficiencies or have concerned parents that keep telling her what an imbecile you are.

[Jim Beam]

Someone can't take a joke.

[Peter]

Especially tools who wear suits in public.

Christ Almighty, don't get me started on suits.