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Costs and Quality of Higher Education

A common attribute of service sector organizations is that their costs of operation have increased at higher rates than those of other sectors. Sectors of the economy that have used electronic or mechanical processes to assist human labor have shown larger productivity gains (output per labor hour). For example, manufacturing firms, using automation, have increased their production per employee in significant ways. Higher productivity often leads to cost benefits for the resulting products.

In contrast, for example, psychotherapy using clinical therapists, show lower productivity gains. It’s difficult to imagine how a single therapist could greatly increase the number of patients served without a loss of quality. Hence, the cost inflation is larger for such activities than those not solely dependent on human labor.

Using traditional categories, higher education falls into the service sector of an economy – it provides educational services to students. In that sense, universities share many of the attributes of other service sector providers. Having a faculty member teach ten times as many students in a single class will increase productivity, if only measured by number of students taught, but the service provided is generally believed to be of lower quality.

Part of the process of explaining the cost inflation of higher education is, therefore, inevitably intertwined with arguments about what constitutes quality aspects of education. This question has led to discussions of what are the desirable outcomes of education.

As we crawled slowly out of the Great Recession, great attention was paid to income impacts of education. We now have highly replicated results that the value of a bachelor’s degree is over $1 million in increased lifetime earnings, relative to a high school diploma. Further, if you factor out the missed employment for four years of a bachelor’s curriculum and the cost of tuition, the economic gains of higher education remain clear. Higher education pays off in income gains.

If income were the sole outcome of higher education that was relevant, we could easily compare quality adjusted productivity across different curricula. But we believe, especially at Georgetown, that empathy, civic engagement, commitment to social justice, creative thinking, leadership, resilience, self-teaching ability, etc., are also outcomes to be valued. Not all of these are correlated with income of first job.

However, the measurement of these attributes is not easy. Behavioral, observable indicators are available only for a few. Most are internalized attributes that are usually (but imperfectly) measured only by self-report.

For those of us who work in highly selective universities, there is another concern. Entering our universities are highly accomplished young people, with superior cognitive abilities, many who sought out rigorous educational curricula and excelled. That they then achieve great success after graduation begs a question. What evidence do we have that what the students experience in our university is a cause of their later success? How do we know our institutions are significantly increasing the chances of their success? Would they have achieved the same wonderful outcomes without us?

To explain costs of higher education, we must understand and provide evidence for the value of education. To explain the value of education, we need more serious attention to measuring the outcomes of education that we value.

11 thoughts on “Costs and Quality of Higher Education

  1. Education is really an important part of any economy. It has a lot of potentials. But education isn’t really supposed to be very expensive at this age where everything is taking a modern dimension. Great article as always.

  2. Not all that counts can be counted. And not all that can be counted counts. A difficult dilemma. This was a recent topic of discussion among Professors of Chikd and Adolescent Psychiatry about RVU ie. Relative Value Units some universities use to determine pay scales for physicians and the many problems using those especially with very labor intense subspecialties as working with children and families in mental health as you point out in trying to determine “ production” in psychotherapy. Difficult issue we try to address. But again not all that can be counted counts and not all that counts can be counted .

  3. As a current student at Georgetown, I find numerous issues with this blog post. First, it is quite clear that the Provost is simply looking for research to justify the tuition increases that his office forces upon us students every year. He clearly has not wrapped his mind around the concept that, every time tuition goes up, another middle class family is shut out of higher education. If anything, this article proves that an undergraduate degree is a gateway to the American Dream. Every time the Provost raises the cost of attending Georgetown, he closes the gate to more and more families. Finally, this blog presents tuition increases as inevitable, which could not be farther from the truth. Yes, wages and such do increase as our economy grows. However, there are MOUNDS of waste committed at Georgetown University – just the other day, McCourt School of Public Policy employees were treated to a “wine and paint” night. Is this integral to higher education?! Clearly, our Provost does not have his head screwed on straight – otherwise our school would not face frequent budget deficits. Whatever the “lifelong benefits of higher education may be,” Georgetown still feels like a scam to me.

    • Thanks for your nteresting comments. I do see the points you’re making about tuition but please check your facts. You do realize that Georgetown has had need blind Admissions since the seventies agreeing to meet tuition needs of all students. Second GU. Has been sited as a model for first gen students by none other than The Harvard Magazine. Lastly do you know the average tuition paid by students after grants etc? Check it out you might find it interesting. . Ps one of the main fundraising activities by the University and Alums is for scholarships. A long way to go but I think my alma mater has its priorities right And I also know there are discussions to help ease the tuition burdens of middle class families. Have a happy holiday. Go Hoyas

      • Thank you for your comments. However, need blind admissions ≠ ample scholarships for middle class families. I’m glad to hear that there are discussions in the works to ease the tuition burdens of middle class families, but actions speak louder than words. I personally know individuals whose families have had to mortgage their homes and businesses to send their children to Georgetown. I may not be involved in the upper-level, administrative discussions about these issues. but as a current student, I do know what the “facts on the ground” are – namely, that there is a middle class squeeze at Georgetown University. I would love to see a Provost who took this into account, but we don’t seem to have one, at least in the few times that I have spoken to him. The article above also demonstrates that our administration is more invested in finding research to justify tuition increases than it is in reducing them. At what point will college cost too much? When it’s $80,000 a year? $100,000? Merry Christmas and Hoya Saxa!

  4. Agree there is a middle class problem but more goes on than what you may realize and see on the ground. Are you happy on the hilltop ? I think they do somethings very right ! Go Hoyas and merry Christmas

    • I love it here at Georgetown! That’s why I am so disappointed that so many qualified students can’t have the same opportunities that I have had because of the burden of tuition. It is very frustrating to hear our Provost write articles like the one above. His office is not designed to listen to student input (believe me, I have tried to give a lot of input). Like much of Georgetown’s upper administration, he seems more interested in creating a perception of inclusiveness and fiscal responsibility than in actually changing campus. Part of me wishes we could go back to the days of the Jesuits, and get rid of the ex-financiers who try to run our school as (to use a term from the Wall Street Journal) an investment bank with a library attached.

  5. Ps just fyi when the Jesuits ran the place and i LOVE the Jebbies, well they didn’t believe in fundraising and thus we had NO endowment. Also they weren’t so good at real estate eg. the Vissy property, the Mount Vernon campus , etc.etc and the Georgetown Hospital was like 60 million dollars a year in debt. So i love and respect the Jesuits but be careful what you ask for sir. You might just get it! Go Hoyas beat SMU. Your such a dedicated Hoya you going to the big game tomorrow? just wondering.

  6. I agree with Dubke that Georgetown should endeavor to be more efficient. But reality is that the cost required to deliver a “Top 25” undergraduate education is inherently higher than middle class families can afford to pay. I’m skeptical that Georgetown (or any of its peers) can cost-cut its way to middle class affordability without reducing quality. Assuming we don’t (I hope) want to do that, mitigation of the middle class squeeze will require financial aid expansion, as Licamele suggests.

    Even if it falls short of where we want to be, the financial aid program Georgetown has built to date accomplishes quite a lot. According to, 50% of Georgetown undergraduates applied for financial aid last year. 38% were awarded grants providing 100% of need. The average award was $47,000. The requisite funds come largely from alumni contributions–including an impressive $250 million raised for scholarships during the recently concluded Campaign for Georgetown.

    We simply need to keep building upon that foundation, which I have no doubt we will. Though the Jesuits may have been lousy at fundraising, the university they built has produced an alumni base which is both generous and prosperous.

    Bill Kuncik SCS ’17

  7. Well said Bill. Although the Jesuits were late to fundraising , they did provide a great education for men and women for others. That probably is why a lot of alums have made an impact in life and have tried to pay back to the alma mater they truly love and appreciate. Go Hoyas past present and and future.

  8. Education is a most important part of anybody’s life. I love education system in USA because it give s a person everything that is needed for future life. Higher education can be a bit or in some cases too expensive in my opinion. But on the other hand students who graduated from such universities have a good chance to get fantastic jobs with salaries that will cover all the bank loans…

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