Link to the article on the Michigan Daily website

Every year, tuition increases are in the news. What people don’t realize is that for elite public universities like the University of Michigan, there is an easy way to raise quality while lowering tuition. And it is a strategy that can make a particular university more elite while striking a blow against elitism. The strategy is to increase the size of the student body, with a careful plan that scales up everything from dorms to professors to academic advisors to socializing venues necessary to take care of the extra students. 

Increasing Quality: In talking of increasing quality, I mean in the first instance increasing the quality of the faculty, which over time has a big effect on the reputation of a university generally. A larger student body means more total tuition revenue that can pay for more professors. Even if the average quality of the professors in a department stayed the same, a larger department is likely to be perceived as stronger. (Whatever bit of research one thinks is important, it is more likely to have been done by someone in Department X if there are more total professors in Department X.) And it isn’t long before having a larger department makes it easier to recruit more impressive professors because there will be plenty of colleagues in a given field to work with in that department. 

Reducing Tuition Rates: Increasing the number of students by 50% should be accompanied by increasing the number of professors by 50% in departments that have strong enrollments, the number of professors doesn’t need to be increased that much in departments that have many low-enrollment classes to begin with. And having more students should make it possible to offer a wider range of summer classes which can have extra-low tuition because underused classrooms in the summer come at very low cost to the university. In addition, if the number of slots for out-of-state students is increased by a somewhat bigger percentage than the number of slots for in-state students, the same tuition rate for both in-state and out-of-state students will raise more money per student because of the higher fraction of out-of-state students. Note that this shift policy makes it easier, not harder, for in-state students to get admitted, because there are more slots for in-state students. 

Striking a Blow Against Elitism: The beauty of this policy is that while it makes the university more impressive academically, it strikes a blow against elitism since more total people can receive an excellent education. The imprimatur of that prestigious university is given to more total students. 

The biggest problem with the strategy is the mechanical aspect of rankings that gives credit to universities simply for turning away a lot of applicants. So an important aspect of this strategy is introducing measures of how much students know by the end of their college education. But that is something a university that cares about student learning should be doing anyway. 

To press the point, this strategy involves a genuine belief that the university actually teaches students a lot so that someone can arrive at the university not knowing much and leave it knowing a great deal as a result of what the university has done. If actually adding value is a central goal of a university rather than just choosing students who were already smart, then it needs to be measuring how much students have learned and especially how much knowledge and wisdom students have embodied in long-term memory. 

Measuring how much students have learned requires something like adding to the usual practice of student surveys at the end of a class some kind of test that students take two years or so after they have taken core classes to see if they still remember what they learned. To make it a good measure of long-term memory, students should be discouraged from cramming for that test two years later. An easy way to help avoid a temptation for the students to cram is to make their individual grades on that test two years later confidential. Of course, it is important that students try hard on that test. Some very low minimum score needed for passing should ensure that most students try reasonably hard.

Note that the student satisfaction surveys at the end of each class about their experience in the class should also be continued. Student learning may be the most important objective of university classes, but it is not the only one: it also matters how pleasant it was for students to be in the class and learn the amount that they learned. The point is to augment that measure of satisfaction with a measure of learning retained two years later. Having a measure of the success of a class based, say, 2/3 on the amount students learned and 1/3 on how much they enjoyed the experience would have a dramatic effect on how well that objective was achieved.  

Lydia Murray Interviews Me: Understanding where I am coming from, you might be interested in what Lydia Murray wrote based on her interviews with me and others in the article “Increasing tuition: a look at why costs continue to rise” for the University of Michigan’s student newspaper the Michigan Daily:

The University of California system saw a 15 percent cut in state funding between 2006 and 2013 and experienced a 52.8 percent increase in tuition revenue during that time frame. The UC system also maintained a three-year freeze in tuition between 2011 and 2014, when its Board of Regents voted for a five percent tuition increase per year for the next five years.

While it is clear that the University has increased its general fund at a much faster rate than other comparable institutions, according Miles Kimball — a University economics professor — increasing the budget is essential to maintaining a high quality of education. Kimball cited the increasing wage premium for highly skilled labor as a source for the expanding budget, as higher salaries are becoming necessary to maintain a high-quality faculty.  

Kimball said the UC system is now facing fiscal challenges because it has not adjusted its budget to rising costs.

“You can always ruin your University, and basically the UC system has been going in that direction,” Kimball said. “It is actually very troubled by the kind of budget straightjacket that it has been put into.”

Courant echoed these sentiments, citing the so-called “cost disease phenomenon” in which the cost of highly skilled labor has increased rapidly while the productivity of this group has not changed. According to Courant, the University needs to pay higher salaries to faculty members to retain them and the quality of education they provide for students.

“The relative price of University activity, of University faculty in particular, as well as other skilled labor at the University, tends to rise relative to the economy as a whole,” he said.

Alternatives to Raising Tuition

According to Kimball, the University does not need to raise tuition to increase its revenue and budget size. Instead, Kimball said the University could systematically increase enrollment so that there is a both a larger student population and a higher proportion of out-of-state students. The larger student body and the increase in the number of out-of-state students could then circumvent any need for tuition increases.

“There’s a missed opportunity where we could easily keep the tuition from going up simply by increasing the number of students,” he said. “I think that is a big missed opportunity, and, to the extent that, you miss that opportunity, you’re not doing an appropriate thing, because the appropriate thing would be to seize that opportunity.” …

“You’re going to have to increase the budget,” Kimball said. “But increasing the budget doesn’t mean that you have to increase tuition.”

One thing that didn’t make it into the article was my speculation that the University of California schools will show the damage from overly severe budget pressure more slowly than the University of Michigan would because they have better weather. I am very interested to know just how big a problem the budget pressure in the University of California system is and what strains that has caused. Perhaps it isn’t as bad as the picture I painted in my interview. If so, I hope you will correct me.