Section 1: Use Lower Cost Alternatives

Chapter 1: Encourage More Students to Attend Community College

Abstract: The average cost of educating a person at a community college is markedly lower than that of four year institutions. Tuition levels for students are seldom much more than one-half of what they are at four-year schools, and governmental subsidies per student tend to be lower as well. A very significant savings in overall college costs could occur simply by increasing the proportion of Americans attending lower cost schools, including for-profit proprietary institutions.

A large portion of students attending both two and four-year schools drop out, often because of academic difficulties.  Too many students whose high school grades and test scores indicate they would have difficulty with four-year schools enroll anyhow. These students not only accrue large personal debts but also impose a burden on society in the form of federal financial assistance and unwarranted subsidies to state schools. Four-year schools should be discouraged—perhaps even actively prohibited–from accepting many of these students. Students instead should be encouraged to enroll in two-year colleges; those who succeed academically can then move on to four-year schools.

One difficulty with the scenario above is that it is often difficult for students to transfer to four-year schools without a significant loss of credit—meaning the total college experience extends beyond four years and therefore becomes more costly. State higher education coordinating boards, state boards of education, state governments and, above all, school officials should work to make credit transfer relatively seamless and cost efficient. This means there should be more communication and coordination between the two types of higher educational institutions. Perhaps financial incentives need to be offered to the four-year schools who demonstrate that they are accepting more and more community college transfers—students who are actually ready for their third year of college.

How much can be saved by increasing the proportion of students in two-year community colleges? A lot. Let us compare two otherwise identical states who both educate two- and four- year students, respectively, at a cost to society of $10,000 and $25,000 each annually. Suppose the first state has 75 percent of its undergraduates in four-year schools and 25 percent in two-year ones, while the second state has equal numbers in each type of institution. Total per student costs for the first state would be $21,250, while for the second state they would be $17,500, or 17.6 percent less.
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Chapter 2: Promote Dual Enrollment Programs

Abstract: Many educators would agree that for many students, the senior year in high school is a waste. Certainly there are numerous bright and ambitious high school students capable of doing college level work while in high school—sometimes in the junior or even sophomore year.  Students who earn a good deal of college credit in high school can sometimes reduce their college baccalaureate years to three—saving nearly 25 percent in direct costs and, just as importantly, giving an additional year of productive full-time labor.

Examples of dual enrollment programs include:

  • Advanced Placement(AP)—High school courses and examinations that provide colleges with good information on prior student knowledge; already growing substantially, its further growth should be encourage.
  • College Level Examination Program (CLEP)—A college board program that offers credit in over 30 subjects; 2,900 colleges now accept at least some CLEP credit, but the program needs more publicity and support.
  • On-line Education—A variety of on-line providers offer credit to high school students and even cater to that clientele, but this credit also needs to be made available to college students.
  • Dual Enrollment Programs—Some states offer high school students the opportunity to get dual high school/college credit for courses taken at colleges while in high school; the establishment and expansion of such programs should be encouraged.
  • International Baccalaureate (IB)—The International Baccalaureate is viewed as offering a superior and challenging version of the traditional curriculum; many colleges give partial credit for students from IB schools.

The key is to incentivize students, and schools must encourage alternative ways of obtaining college credit. Since colleges are reluctant to reduce the tuition revenues they receive per student, legislative mandates may be required in some cases to force the acceptance credit for programs like AP, although this would obviously raise serious issues about political interference and institutional autonomy.
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Chapter 3: Reform Academic Employment Policies

Abstract: A major cost item for universities is the cost of instructors. Costs for adjunct faculty are relatively low, but senior tenure-track faculty are very expensive; at a few universities, salaries for full professors (including fringe benefits) rise to as high as an average of $200,000 annually. A large portion of faculty receive tenure, the equivalent of a lifetime employment contract. A decision to award tenure often means making a financial commitment with a discounted present value of two million dollars or more. Hardly any other occupation offers such an extraordinary employment arrangement.

Tenure was originally designed to protect academic freedom and to prevent the dismissal of professors who take unpopular positions on issues. No doubt one strength of American universities is the diversity of ideas that are generated and disseminated as a result, at least in part, of the tenure system. Tenure can also be viewed as a valuable fringe benefit, making academic positions more attractive than they otherwise would be. As such, it might in some cases improve the quality of the professoriate.

Yet there are many objections to tenure.  First, tenure is a costly way to achieve job security. Many superstar professors are not the slightest bit worried about job security (seeing as they get job offers all the time), and the abolition of tenure would not have much impact on their willingness to work. Tenure is most often prized by the least productive faculty—the ones who would not receive an offer from another employer if they lost their current jobs. Tenure protects people who become incompetent or ineffective because of changing circumstances. It makes it difficult to reallocate resources over time as academic needs change.  The natural inertia of faculty is fortified by tenure since they have little to lose in opposing cost-saving or service enhancing measures.

The cost of tenure, ironically, is reducing its importance over time.  The inefficiencies and inflexibilities tenure creates has gradually led universities to replace tenure-track positions with part-time or non-tenured positions. In addition to the use of contingent faculty, some schools may initiate post-tenure review procedures that make it easier to dismiss marginal faculty members. Another alternative is to replace tenure with a system of renewable long-term employment contracts (of say, five years) that increase flexibility while still providing an element of job security.  Tenure could also be made more explicitly a fringe benefit with an explicit monetary value. Employees could then select the fringe benefit package that best meets their needs, subject to a maximum amount.  Insisting on tenure would come at a price to the employee, such as a reduced quality health care plan, reduced pension benefits, etc.
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Chapter 4: Offer three year Bachelor’s Degrees

Abstract: The bachelor’s degree in European universities is designated as a three-year program under the Bologna Process. Shorter time to completion of a degree dramatically reduces college costs—perhaps as much as 25 percent. The question is whether the benefits of a fourth year of college training exceed the costs. Do “diminishing returns” set in so that the fourth year of instruction involves only modest extensions of the basic knowledge imparted earlier? The answer to this question no doubt varies between program, schools, and even students. Still, there is little scientific basis for the conventional opinion that four years is the optimal period of collegiate study.

A three-year program can simply be a condensed version of the current four-year program achieved in part through the elimination of vacation periods, particularly in the summer. Alternatively, the bachelor’s degree could be redefined by eliminating up to a year of the coursework currently required. One consequence of the move to the three-year degree in Europe is that a large portion of students now want to go on for two additional years and get a master’s degree—the old four year bachelor’s degree program has, in effect, become a five year bachelor’s/masters program. It is therefore not entirely clear that shortening the time to earn a bachelor’s degree will in fact lead to lower costs and higher education participation in terms of years.

If colleges serve largely to screen the more able and talented students from those who are less so, then the shortening of the time required to earn a degree would seem to make sense.  It may, for example, make a good deal of sense for those majoring in English or anthropology. If, however, the fourth year of study confers valuable post-graduate vocational skills, as in, say, most forms of engineering or in accounting, then it makes less sense. At the minimum, research needs to be done on the costs and benefits of three-year degrees, and more experimentation with shorter degree programs is probably in order.
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Chapter 5: Outsource More Services

Abstract: Colleges and universities are ostensibly in the business of producing and distributing knowledge. Yet huge portions of universities are given over to doing other things: running food and lodging operations, hospitals, recreational centers, building repair and maintenance, high school education (remedial education), entertainment operations (especially intercollegiate sports), information technology services, etc.  Many of these operations could be more efficiently provided by specialists in those activities. Many colleges have made some progress in this area, especially in food services, but vastly more can be done.

Colleges should explore contracting out or selling their food and lodging businesses, but also much more, such as IT operations, building maintenance, student health centers, remedial education, and even campus recreational centers. Universities with large hospitals should consider separating the hospital operations from the core university businesses. In some cases, the sale or long-term lease of capital assets is appropriate, particularly dormitories and dining halls. Resources from assets sales can finance capital projects in core academic areas. Done adroitly, colleges can rid themselves of some money-losing auxiliary operations and actually earn revenues from the leasing of campus facilities to private entrepreneurs to operate businesses (e.g., fast food restaurants in student union buildings).  Some schools are even outsourcing some instructional services to for-profit companies, partnering with such companies in, for example, offering on-line or remedial education.

Although more controversial radical, the complete separation of highly commercial intercollegiate athletic activities from the university would seem to be appropriate. This is particularly true of schools with big time sports programs that often have budgets approaching and even exceeding $100 million annually.
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