

The Cost of College is Probably Going to Keep Going Up - mtviewdave
http://motherjones.com/kevin-drum/2012/01/cost-college-probably-going-keep-going

======
TomOfTTB
I think this article misses the point. The problem with our University system
right now is they have a monopoly. A correct market price can only be set if
competition is allowed and that only happens when everyone is allowed to
compete. That's the not the case right now.

The bar to gain accreditation is so high that only large universities and
(relatively) dishonest private corporations can get accredited. This puts an
artificially high barrier to entry for competition.

If we made one simple change and accredited testing facilities instead of
Universities the cost of education would plummet. What I mean by this is we as
a society say...

"This is what a [Insert Major Here] should know. We don't care how you get the
knowledge. At University, Online, Divine Intervention, whatever. Anything is
acceptable as long as you can prove you have the knowledge at an accredited
testing facility."

So the tests would be the same because they would be the tests students take
at University now and testing facilities would have to prove they can
administer those tests properly. But you could get the knowledge wherever you
choose. So if you can pass the tests for a BS in Mathematics by watching Khan
Academy videos that's fine.

I can't even imagine how fast the cost of an education would fall if that
happened.

~~~
Turing_Machine
Testing is the wrong approach, IMO. It's, at best, a proxy for actual
knowledge, and suffers from the inherent problems of all proxy measures (the
same is true for grades -- if a class is worth taking, there's way too much
material to boil it down to a single letter). We've used tests and grades in
the past because we had no better option, but that's no longer the case.

The web lets us assemble large-scale portfolios of our actual work and
transmit them to potential employers with a link. As an employer, would you
rather see:

a) A transcript showing that the person got an A in his CS senior design
project (or got some specified score on a test). b) A link to github which
lets you see the actual code that the person wrote for the project.

I know which one I'd rather see.

There's no real reason why a student couldn't deposit _all_ of his work in an
archive (with perhaps some sort of vetting/certification by the professor or
institution), then grant access to the archive (or selected parts of the
archive) to potential employers.

~~~
tbrownaw
I'd rather see a usable sort key (item a), maybe with a short description.

Given that you have a position to fill, and a deadline for when you need it
filled, and a large number of applicants, and other everyday work you need to
keep doing... how many minutes each are you able to spend on a first-pass
review of the applicants?

~~~
randomdata
As they saying goes, you get what you give.

There's nothing wrong with picking someone that way, but you're essentially
selecting someone based on random chance. You'll probably find someone who is
adequate at the job, and if that is what you want, who am I to judge?

But the recurring theme on HN is that people want to hire the best of the
best. The best people are 10 times more productive, they say. It may be
conjecture, maybe businesses don't want that kind of person at all, but
selecting someone from a sorted list is almost never going to find you that
person. For that, you're going to have to put in some effort.

Anyway, it doesn't matter how you do it. The benefit of the open market is
that the one who does it right will find greater success with their hire.

~~~
tbrownaw
At some point, you need to decide that one candidate is better than the
others.

So, you need some function that provides at least a partial ordering of your
candidates (ie, a sort key).

Computing these sort keys is _expensive_. It can be optimized by (partial)
precomputation. Maybe this is a letter grade from a school, or having/not
having a degree, or a summary prepared by the candidate (a resume), or
whatever.

You probably don't entirely trust whoever did that precomputation. So you'll
want to check their work. You can't do this for every candidate since you
still want time to sleep at night. So, you need to use that pre-computed sort
key as a filter to throw out at least some portion of the applicants. But the
ones that you don't throw out, you'll want to investigate further.

This could be reviewing their past work (github portfolio, etc). Or it could
be in-person interviews, or phone interviews, or whatever.

If looking over a portfolio is less expensive than doing an interview, does it
let you filter out enough candidates to be cost-effective?

 _But the recurring theme on HN is that people want to hire the best of the
best. The best people are 10 times more productive, they say. It may be
conjecture, maybe businesses don't want that kind of person at all, but
selecting someone from a sorted list is almost never going to find you that
person. For that, you're going to have to put in some effort._

The _only_ way to find the best (or the "good enough") is from a (at least
partially) sorted list. What varies is the quality of the sorting, and of the
contents of the list. Given limited resources, how do you maximize the quality
of the sorting (assuming somebody else is handling maximizing the quality of
the list contents)?

------
ctdonath
Supply and demand.

So long as enough people are willing to pay a high price (thru whatever means
conceivable, including compelling taxpayers to foot the bill) the price will
keep rising. When enough people stop agreeing to such high costs, it will
stop.

~~~
CWuestefeld
I'm surprised that Mr. Drum is so economically ... unsophisticated. And the
quotation he opens with is downright stupid; no conspiracy or nefarious intent
is needed to explain the phenomenon. As you say, it boils down to those
basics.

One would expect that as prices rise, fewer people would attend college.
However, as Americans wail that college costs are too high, the government
attempts to "help" by subsidizing the costs through various means. But given
the number of applicants, colleges still need to limit enrollment to their
actual capacity, and the way to keep some people out is by raising prices,
allowing those at the lower margin (in terms of their desire to attend) to
drop out of the running.

But I think that the accounting for the benefits (and opportunity costs) of
attending college is way more complex than just looking at differences in
income. There is also a person's feeling of personal accomplishment or growth;
the student's (or their parents) status; signalling of group membership; and
so on.

And it seems that a college education is a product whose elasticity is very
low. As a society, we've come to view it as such a significant marker for job
ability and for social status that we've grown increasing convinced that it's
a necessity, and thus colleges must raise prices even faster to keep the
enrolled population (i.e., quantity demanded) manageable.

------
rtperson
Valuation doesn't work the way this guy thinks it does. If I buy a hammer and
use it to build a house that I then sell for 300K dollars, it does not stand
to reason ipso facto that my hammer now costs 300K dollars. Yet this is
exactly the level of reasoning that goes into his valuation for a university
education.

The hammer costs what supply and demand say it should cost. And with
universities, you have a case of increasingly plentiful supply for most
materials chasing relatively stable demand. So market reality dictates that
prices will fall, if not now then eventually.

~~~
wlesieutre
No, but it does mean that accredited hammers were only available for $100,000
and up, it would still make sense for you to buy one.

The problem isn't that you can't get educated outside of the university
education system. It's that people assume that someone with a college degree
is educated, and someone without one isn't.

I consider that no more accurate as assertions that grade school students
haven't learned anything unless they can pass a standardized test, but I don't
think there's an easy solution. For the near future at least, college degrees
will continue to be the main criteria for guessing if someone's qualified for
a lot of jobs.

~~~
skybrian
Accreditation is a barrier to entry, but it's not insurmountable. The supply
can still go up, particularly if prices are expected to rise.

~~~
doyoulikeworms
Every single hypothetical barrier to entry just short of "insurmountable" can
be described this way.

------
jdeibele
The article didn't mention the fact that student loans are not discharged in a
bankruptcy. There are far too many students who go to school, find out it's
not for them, but are stuck with students loans that must be paid.

There was an article on here a few months ago with a graph showing the growth
of administration versus faculty in the University of California system.
Starting from a low (5-10%) ratio of administrators:faculty it's now reached
at least parity.

Imagine being able to buy a house where you don't have to pay for it until you
move. And offering that only to 18-year-olds. What kind of purchase decisions
do you think they'd make?

------
onemoreact
This ignores the opportunity cost of working while in collage for many
students collage does cost 75+k / year. The average collage student could
probably make ~20+k/year, but some people can earn 40+k/year and still decide
to pay for collage.

~~~
streptomycin
No, it doesn't.

> Now, there's some controversy about whether the college wage premium is
> really that high. For the time being, though, there's certainly a widespread
> belief that a college degree is worth about a million bucks. And as long as
> that belief persists, people are going to act as if the market price of a
> university education averages $75,000 per year.

It's not about actual opportunity costs and actual value, it's about perceived
value.

~~~
onemoreact
The author ends with: _given that universities are most likely still charging
a lot less than their market price even after years of stiff tuition
increases, my guess is that we're in for yet more pain one way or another._

When you include opportunity costs and risks of not finishing in 4 years many
collages's tuition costs are vary close to the value they provide. With some
degrees being a net economic gain and other a net economic loss.

Granted all of these numbers are hard to calculate but there is simply less
headroom than his analysis suggests.

Edit: It looks like there is a bug where I can up vote this post.

~~~
streptomycin
But isn't a market price determined by what people think the value is, not
what the intrinsic value actually is?

~~~
onemoreact
It's a complex question and you can model it in many ways based on different
assumptions etc. However, if want to go with the traditional economic idea:

People have internal utility functions that provide an internal value. They
can also guess how other people value a good and if that's higher than their
internal value they might buy it with the intent to profit. It's the second
line of thinking that can create bubbles, but it's a finite world with finite
resources so over time speculators tend to run out of money at which point
market price tends to go back a market price based on an internal value of
people who actually use the good and the cost of production.

It's odd to think of people being more rational in the long term, but rational
ideas are simply more stable.

~~~
streptomycin
> It's odd to think of people being more rational in the long term, but
> rational ideas are simply more stable.

Interestingly, I read this paper not too long ago:

[http://www.nature.com/nature/journal/v477/n7364/full/nature1...](http://www.nature.com/nature/journal/v477/n7364/full/nature10384.html)

It's just a toy model... but that does underscore how easy it is to come up
with a set of assumptions that lead to irrational ideas being more stable than
rational ones.

~~~
onemoreact
That model uses an incorrect mapping between beliefs and actions to correct
for the 'incorrect' beliefs. As long as the internal model map's correctly to
the external world it's correct. It's logically the equivalent of someone
acting normal for fear the invisible elephants who secretly run things will
eat them.

------
patrickgzill
Is it not the case, that there are many college grads looking for work and not
finding it?

Would this not serve to reduce future demand, since obviously, graduating
doesn't necessarily result in better job prospects.

~~~
matwood
That may be true, but the last time I checked stats college grads unemployment
rate was half or better compared to no college.

------
knowtheory
It's shit like this that reminds me that we're entering a new Dickensian era.

Is the point of educating a populace solely added economic productivity?

~~~
drumdance
That sounds noble, but it's really about what the students are purchasing,
right? The most popular major is business. (Though IMO it's not a very useful
major.) Psychology is #2.

<http://www.princetonreview.com/college/top-ten-majors.aspx>

I think there should be a major in "applied psychology" because so much of
success in the white collar world is understanding and motivating co-workers.

------
iterationx
No discussion of college pricing is complete without this graphic,
<http://www.collegescholarships.org/research/student-loans/>

