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Universities and the Public Good

August 15, 2010

A Columbia university professor has an op-ed in the New York Times today decrying Columbia and NYU’s planned expansions in New York, calling it “an example of what educational institutions should not be doing.” Instead, he says, they “should be looking for new ways to provide high-quality education to more students at a lower price.”

He’s absolutely right. Three factors are combining to make higher education less and less affordable: rapid increases in private university tuition, decreases in funding for public universities and decreases in scholarship money. Raising taxes and reallocating spending (i.e. from prisons here in California) can in part address the latter two problems.

However, the increases in private tuition are a more difficult nut to crack, as it results from skewed incentives that go deeper than universities’ decisions to expand. Essentially, top universities are engaged in an arms race over the top students. Instead of spending money on providing for more students, universities spend more money on the same amount of students. It’s understandable: graduating more students would dilute their brand. If a whole bunch of kids had bachelor’s degrees from Harvard, what good would the degree be?

So, the increase in tuition is understandable but that doesn’t mean it’s right. We grant private universities tax-exempt status because they provide a public good and, as long as they accept that tax-exempt status, we have a right to ensure that they continue to provide that public good and provide it at the same level. A requirement that increases in spending by universities are accompanied by increases in class size (that is, the number of students in the Class of ’14, not the number of students in ENGL101) would make it so that private universities continue to play their important part in educating young people.

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