Robert M. La Follette School of Public Affairs
Wednesday, December 15, 2010

Study examines higher education costs, productivity

American colleges and universities are becoming less productive in getting students through to graduation, but their productivity can be improved, according to a new study by two University of Wisconsin-Madison education experts.

"The (Un)Productivity of American Higher Education: From 'Cost Disease to Cost-Effectiveness" is available as La Follette School working paper 2010-023

Doug Harris

Sara Goldrick-Rab

Conducted by La Follette School professor Douglas N. Harris and La Follette School faculty affiliate Sara Goldrick-Rab, the analysis indicates that several kinds of higher education programs and strategies used nationwide are not cost effective, and rising operating costs are just one factor. "Increasing productivity is more difficult with services like education because the amount of time educators spend with students is essentially fixed by the emphasis on credit hours," says Harris, an associate professor of educational policy and public affairs. "This is a big part of the reason why costs rise faster than inflation in education, as well as in medicine and law."

But the authors also argue that this fact does not wholly excuse spiraling costs and stagnant degree completion. "Another important problem is that oftentimes college leaders have little evidence about either the cost or the effects of their programs, which makes it difficult to make good decisions," Harris says.

Harris's and Goldrick-Rab's analysis helps to provide that information. They started by identifying popular programs that had rigorous evidence of impacts and then compared those with the program costs. "It's troubling that we have little or no evidence about most programs, even ones that have been around for decades," says Goldrick-Rab, assistant professor of educational policy studies and sociology.

Their results suggest that program costs vary widely. For example, a telephone calling center operated by a two-year college in Des Moines, Iowa, showed promising, cost-effective results. For as little as $5 per student, the college has representatives call students who apply but do not register, register but do not show up for class, attend class initially but then stop, and so on. When a student is reached, the college representative learns why the student is not attending and then directs the student to appropriate services. "The college's records suggest the program has potential for improving productivity," says Goldrick-Rab.

In contrast, the study shows that Upward Bound, a federal program that provides tutoring, standardized test preparation, and summer and after-school sessions to improve language arts and math skills, costs as much as $6,000 per student per year, more than 1,000 times the cost of the call center. The program has an impact, but whether the benefit is large enough to justify the costs is not clear, the authors say.

The authors, who have presented the paper at several national conferences, deliberately chose to study and compare a wide variety of programs. "Call centers and Upward Bound represent very different strategies, but they share an important goal: getting students into and through college," says Harris.

The authors are quick to note, however, that problems arise when comparing programs that are targeted to different student populations. "Low-income students are less likely to earn degrees, even when they are academically well-prepared for college," says Goldrick-Rab. "We think it's worth spending more money to give these students a decent chance of success. That said, we should work hard to find the most cost-effective ways to achieve that goal."

The study is important because President Obama has set as a national goal making the United States first in the world in degree completion. University of Wisconsin System President Kevin Reilly has a similar goal as part of his Growth Agenda. The authors note that achieving these goals will be difficult if colleges and universities cannot stem the decline in degree productivity. For example, their study shows that productivity at four-year colleges, in terms of degrees-to-expenditures, has declined by 20 percent in the last 40 years when controlling for increases in labor costs.

"Hopefully, our work will spur a different way of thinking so that even in these challenging financial times colleges can help more students get degrees," says Goldrick-Rab.

Raising Degree Productivity by Spending Wisely, December 15, 2010, New England Board of Higher Education

Cost-Effectiveness, or Cost?, December 13, 2010, Confessions of a Community College Dean

Study examines higher education costs, productivity, December 13, 2010, University of Wisconsin-Madison News

Unconventional Wisdom, December 10, 2010, Inside Higher Ed