The Cost of College: A Full Accounting

John_BelushiSeven years of college down the drain.”

For those of a certain age, this droll line from that classic art film, Animal House, still draws a laugh.  But for students in this generation, Bluto’s lament might draw a puzzled, “Why is that funny?”

A recent New York Times article describes the results of a new study, saying, “At most public universities, only 19 percent of full-time students earn a bachelor’s degree in four years, the report found. Even at state flagship universities — selective, research-intensive institutions — only 36 percent of full-time students complete their bachelor’s degree on time.”   The full study can be found here.

These results are not universally true and this study focused on public 4-year institutions.  As is true with most of the more selective private colleges, at the College of Saint Benedict and Saint John’s University more than 70% of our students complete their degrees in four years. Of course there is some sample selection, as our selective student body typically comes prepared for college and focused on completion, but I think there are at least four important additional factors that explain the sharp difference in four year completion rates for small liberal arts schools compared to bigger institutions.

  1. Structural issues.  Bigger institutions simply do not always focus their undergraduate curriculum on four year  completion.  Some schools accept a large number of students knowing that many will not finish at all and those who persist will often find themselves unable to get in to certain required classes in their majors in a timely fashion, thus delaying graduation by a year or two or more.   At most small schools, the explicitly stated expectation is that students will be done in four years.  Requirements and course offerings are designed to achieve that goal. If a student makes a choice of a major at the usual time, typically during the sophomore year, majors and course offerings are designed to be completed in the subsequent 2 and 1/2 years. If need be, adjunct faculty are hired or overloads are taught to make sure the necessary course offerings are available so the students finish on time.
  2. Advising. A second important reason for the stark difference in completion rates is the quality of advising offered at smaller institutions. Students are typically assigned an adviser for their first year or so, and then they are given an advisor in their major field of study once they declare their major.  These advisors are faculty members with a reasonable number of advisees (typically no more than 20-30) who know all the college’s requirements and, more importantly, are thinking explicitly about how to get all requirements completed within four years. Of course advisers exist at all institutions, but they don’t always have the ability to give the personalized attention that is provided in small residential settings.  Furthermore, as one commentator notes, “large course catalogs overwhelm students who lack guidance from adults who can help them choose a course of study.”
  3. Course support.  Related to the advising situation, smaller classes lead to more contact between students and faculty.  This puts faculty in a better position to notice when a student is struggling or failing to come to class.  While the academic responsibility is ultimately the student’s, faculty can usually intervene more readily in the small liberal arts setting, thus keeping a student on track for four year completion.
  4. Cohort effects. Finally, an often underappreciated benefit of being in a small liberal arts residential setting is the positive cohort effect. When all of your classmates are focused on completing their degree in four years and making plans around that expectation, the typical undergraduate responds similarly. Students take the same full load of courses as their peers.  They complete the required coursework so that they can move from first year to sophomore year, etc. Students choose their majors when peers do.  They study abroad during junior year when their peers do.  They work on senior theses in their final year like their peers. The intimacy of the residential setting generates these cohort effects which are likely to be much weaker at large institutions.

When I greet parents in the fall of their child’s first year, I occasionally say to them, “I certainly hope to see you in the meantime, but I’ll expect to see you no later than Mother’s Day (our graduation day) four years from now. You can put it on your calendar, as long as your child does his part!”  A smile to the son is my small contribution to the positive cohort effect!

I strongly believe there are significant benefits to going through a four-year degree with a group of peers and friends, but there’s another obvious benefit: cost.  The study says a year of additional tuition costs, “$22,826….at a public four-year college,” and, more importantly, is the opportunity cost of a lost year of earnings. For the typical college graduate, salaries range from $30-$40,000. Therefore a fifth year costs tuition plus $35,000. The impact of the sixth year is obvious.

Sadly, as the Times notes, “The lengthy time to graduate has become so much the status quo that education policy experts now routinely use benchmarks of six years to earn a bachelor’s degree and three years for an associate degree.”

Suddenly the cost differential between a private institution and a public institution, not even including financial aid, looks very different.  This reality is too little understood by parents and students who, not being fully informed, focus on the sticker price and an assumption of a four year degree.


By |January 26th, 2015|Categories: Economics, Higher Education||0 Comments

#FreeCommunityCollege: Equity and Efficiency

Untitled-1President Obama recently unveiled a plan to make community college tuition-free.  As many as 9 million students could benefit, according to the White House.  The price tag is a bit uncertain, but most estimates have put it at $60B from the federal government, with the states being responsible for 25% of the costs, another $20B.

The program will need the approval of Congress and participation by the states. The goal is to increase educational attainment and better prepare students for the job market.  The proponents argue that for most future students a community college degree could become what a high school diploma is today.

“Two years of college will become as free and universal as high school is today,” Obama said.

The president’s education secretary, Arne Duncan, said on Twitter: “Just as free K-12 education is an educational and civil right, #FreeCommunityCollege should be as well.”

The announcement has met with mixed reviews.

The first concern focuses on costs.  In tight budget times it is not clear that Congress will be interested in a program that costs $60B, and the additional $20B required of states may be a burden some states might choose not to bear.

A second concern is equity.  The program is not, of course, “free.”  Federal and state taxpayers would pay for tuition costs and here the analogy with high school breaks down.  The equity implications of funding the two educational models are different in important ways.  Most public high schools are funded with property taxes in the district where the schools are located.  The recipients of the education are, by and large, the children of the taxpayers.  Revenues are collected in a means-tested fashion where better off home owners pay more, and therefore, the costs of education are generally means tested too as children from wealthier families are paying more for their education than those from less well-off families.  (There are, of course, further equity concerns as richer districts can choose to offer a different quality education than poorer ones.)   Under the free community college tuition plan, the link between the taxpayer and consumers of education is much less clear, potentially raising equity concerns.  Many taxpayers will never have children that pursue a community college education. Weakening the link between those paying for a program and its beneficiaries likely weakens the political support for the program.

In addition, the means testing of students is much weaker.  Students (and their parents) who pay more in federal and state taxes are indirectly paying more for community college, but with tuition set at zero, the Obama plan is basically a transfer from taxpayers to students, regardless of the individual student’s economic circumstances.  This may well be a defensible transfer, but most economists would argue that if transferring income for education to students is the goal, then it should be done directly.  For example, by offering a grant directly to students that can be used only for education.  Such a grant could be means-tested if it was felt that low income students should be the primary beneficiaries.

Finally, and less commented on, are the efficiency concerns. By making community colleges free, the program significantly changes the relative price of 2-year schools compared to 4-year institutions.  (A price differential that already exists between most state and private 4-year universities.)  This change could have a significant impact on enrollments at 4-year schools and be detrimental to some students.

Most high school students have the option of choosing between 2-year and 4-year schools.  For those students who ultimately want a bachelor’s degree or more, entering a traditional baccalaureate school is often the best option.  If this new program alters that choice because of the change in relative tuition costs, the student who previously would have chosen a 4-year school could be worse off.  They may pay less in tuition but not be able to study exactly what they had hoped to, or find that their community college credits do not all transfer and they end up spending more time in school.  The outcome obviously varies by student, but the new program may lead to significant inefficient sorting of students, with some students “undermatching” their talents and interests by choosing to start in a community college based on price and having a worse undergraduate experience as a result.

The 4000+ options for post-secondary education in the United States serve students well by letting them select the best fit for their talents, interests and previous educational experience.  Any public policy that narrows the range of choices, in this case by distorting prices signals, potentially leaves the intended beneficiaries worse off.

These policy debates may well be moot given the political situation in Washington.  As one advocate said, “Obama probably won’t get this done in the next couple years, but,” she argued, “he’s laying the groundwork with his message.”

By |January 19th, 2015|Categories: Economics, Higher Education||0 Comments

The Gagliardi Effect?

gagliardiThe recent blog post about the Flutie Effect (exploring the impact of athletic success at the Division I level on the academic parts of the university) prompted thoughts (and even several comments from readers) about something similar happening at the Division III level.  What impact does a successful athletic program–at the national or conference level–have on a Division III school?  Saint John’s enviable record of football success is an obvious case in point.

I think it is probably safe to say that the publicity and dollars are orders of magnitude smaller rather than similar success for a DI program, but certainly within a state or region that publicity could have an impact.

Academic Reputation.  As was noted in the earlier post, the impact of athletic success on academic reputation for any institution is very hard to measure and, to me at least, seems likely to be pretty minor, either in the positive or negative direction.  The academic reputation is something built over many years based on the success of graduates as they move through their professional and personal lives.  As I look at higher education, I see no correlation between athletic success and academic reputation.  This is certainly not to say that an individual student’s athletic experiences cannot affect their post-graduate lives, just that at the institution level there is no obvious correlation.

Admissions.  The Flutie Effect was first touted in admissions, with athletic success allegedly leading to more student applications.  A closer look at this hypothesis, as noted in the previous post, suggests that the evidence for this link is not as strong as initially thought.  Admissions is affected by many variables and a winning (or losing) football team appears not to have a significant impact.  This is likely to be even more true at the D3 level as the fan support and game day experience are quite different than at a D1 school.  Students may well want to go to a place where there is a football program, but desiring such a social occasion is often more important to such students than the actual outcome of the game.

Interestingly, at Saint John’s we have some natural experiments to examine.  According to Fr. Donald LeMay, Director of Admissions in the 1960s, enrollment did see a significant spike following the two national championships in 1963 and 1965.  Conversely, an analysis of enrollment in the couple years following the 2003 national championship, done by our Director of Institutional Research Jon McGee, suggested no impact from that successful season.  Fr. Donald and Jon would both admit that the quality of the statistical work and our confidence in its conclusions is highly problematic when we are looking at one or two or three data points.  In fact the evidence is properly called anecdotal, not statistical.

Student-Athletes.  There is a hypothesis that might reconcile the two anecdotal observations at Saint John’s, and likely identifies the true impact of successful athletics at the Division 3 level.  I think the true impact on the institution of excellent athletics comes in the form of student-athletes.  Many of the young men and women who are drawn to residential liberal arts institutions are interested in continuing their high school athletic endeavors, even as they pursue an excellent academic experience.  To participate in a program that has been successful at the conference or national level is likely to be an attraction.  Furthermore, to play for a particular coach might also serve as a draw.  I suspect what Fr. Donald saw in the early 1960s was an increase in student athletes who wanted to play for John Gagliardi, and when SJU had a small student body, those 20 or 30 additional guys had a noticeable impact on enrollment.  (There were, of course, other significant factors like the GI Bill and the general growth in college enrollments across the country.)  By 2003, the student body had grown to the point where 20 or 30 extra football players, attracted by the football program’s success, might well not have not been as noticeable in the usual fluctuations of an entering class of about 500 students.

Admittedly, this is speculation on my part, but the D3 equivalent of the Flutie Effect (which may not be real) might be called the Gagliardi Effect, where an excellent athletic program draws student-athletes in large enough numbers to have a real impact on enrollment over time.  I know that we pay careful attention to the one-third of students who come to SJU to participate, at least in their first year, in varsity athletics.  It would be interesting to explore this question at other institutions to see if there was a Westering Effect at Pacific Lutheran or a Kehres Effect at Mount Union.

Selfishly, I hope we can turn the Gagliardi Effect into the Fasching Effect at Saint John’s.  I’d love our 2014 conference championship and Gary’s MIAC Coach of the Year honors to translate into 20 or 30 more students in the class of 2019.  We shall see.


By |January 16th, 2015|Categories: Higher Education||0 Comments