Cost and price in higher education, again

These administrators are like cookie monsters… They seek out all the resources that they can get their hands on and then devour them

Ronald Ehrenberg in Tuition Rising

As economic conditions around the country (and world) impose increasing limitations on funding for higher education, it is worthwhile to review some of the major reasons that higher education costs are so high and rise so rapidly. An understanding of these reasons is critical to making rational responses that preserve (and perhaps even strengthen) important components of institutional mission. This is, of course, a subject that has been extensively written about over the past several decades by many authors, but since responses to the current economic situation seem to generally ignore what is known about the problem, perhaps another brief review is justified. Interested readers will find my many earlier takes on this issue collected here. 

The quote above is basically a brief restatement of what is known as Bowen's Rule, which appeared in one of the earlier (1980) extended studies of cost in higher education. Bowen pointed out that budgeting in higher education is basically the inverse of that which occurs in most industries: first you see how much income you can raise, then you spend it all in pursuit of an elusive goal of "excellence" and brand. I put excellence in quotes because it is a concept that primarily is internally defined by academe itself rather than by its customers.

Interestingly, however, a recent work by Christensen, Horn, Caldera and Soares (CHCS) called Disrupting College showed that many of the cost issues in higher education actually correspond extremely closely to well - studied cost issues in other industries. Turns out there are cookie monsters everywhere!