Tuition Rising: Why College Costs So Much

Academe, Sep/Oct 2003 by St John, Edward P

Tuition Rising: Why College Costs So Much Ronald G. Ehrenberg. Cambridge: Harvard University Press, 2000.

In Tuition Rising: Why College Costs So Much, Ronald Ehrenberg provides a concise and compelling explanation of the influence of academic governance processes on rising university expenditures and tuition charges. While his explanation of the causes of rising prices does not add new substance to policy debates about college costs, his book is a rare and insightful primer on the intersection of governance and finance.

Part one of the book, "Setting the Stage," reviews research on college costs and discusses the intersection between governance and budgeting. While Ehrenberg's discussion of college costs contains little new information, it is well written, and the discussion of governance sets the stage for the book and introduces the complexity of budgeting in universities.

Part two, "Wealth and the Quest for Prestige," describes how faculty preferences influence development policies, the quest for program rankings, and prestige pricing. While the detailed comparisons between Cornell University, Ehrenberg's institution, and other elite institutions are not always compelling reading, Ehrenberg's analysis is important. A new emphasis on prestige pricing-the process of using grant aid to attract students with high test scores-has invaded most private colleges and has become integral to policy decisions in public universities. Economists have long argued that colleges and universities should bestow grants on the basis of students' needs, rather than their grades or test scores, but Ehrenberg describes how even an elite campus can be forced to abandon this principle in the face of competitive pressures, and how the quest for prestige subverts sensible financial aid policy.

Part three, "The Primacy of Science over Economics," reveals why the science disciplines have primacy in the budget process. Cornell's physical science and engineering programs are highly ranked, and maintaining these rankings has a high price tag. The economic rationales of cost-benefit analysis and efficiency have little sway in budgeting processes; while widely espoused in the policy literature, these economic notions have little influence on budget decisions. The situation is much like defense budgeting under the administrations of Ronald Reagan, George Bush, and George W. Bush. Just as defense has been given primacy over health, social welfare, and education programs in these presidential administrations, science has been given primacy over the humanities and social sciences in elite universities. It is important for faculty in other disciplines to begin pondering the monetary implications of this financial trend.

Part four, "The Faculty," gets at a core issue-the links between governance and budgets that cause tuitions to rise-and distinguishes Ehrenberg's book from other books on the economics of higher education or academic governance. Ehrenberg's discussions of salaries, tenure, and retirement not only reveal how faculty preferences directly influence budgets and rising costs, but also raise issues that should be of interest to most faculty. He describes how the quest for prestige intersects with the new faculty star system to contribute to a growth in endowed professorships, and he analyzes the internal and external forces that drive up faculty salaries. His discussions of the end of mandatory retirement and of budgeting strategies that encourage transitions at the end of the career are thoughtful and analytic. These chapters confirm that Ehrenberg has used the knowledge accrued in his discipline, economics, as a senior leader in his university. While these chapters focus on Cornell and are anecdotal, they will ring true \vith the lived experiences of faculty in most institutions. His reflections can inform faculty who want to make thoughtful contributions to the governance debates about salaries and retirement systems in their own universities.

Sections five through eight of Tuition Rising address the roles of governance in budgeting for space, administration, and student life, issues primarily of interest to those involved in graduate courses on higher education finance. In the concluding chapter, Ehrenberg appeals to the public interest by arguing for adequate funding of student financial aid. Since Cornell comprises both private and public components, Ehrenberg is able to share his experience about the adjustments universities make to the decline in public funding as well.

Ehrenberg is one of a number of noted economists, including William Bowen, Michael McPherson, and Michael Schapiro, who have continued to make substantial contributions to the study of the economics of education after having joined the ranks of administrators; with Tuition Rising, he also makes a substantial contribution to the literature on governance.

In his acknowledgments, Ehrenberg thanks Henry Rosovsky, "whose own wonderful and humorous book The University: An Owners Manual every reader of this book should read." But even before reading this acknowledgment, I was reminded of Rosovky's book. In contrast to that book, which does a very fine job dealing with underlying moral issues in academic governance, Tuition Rising, like much economics literature, is silent about the implications of its reflections. Nevertheless, it provides an excellent treatment of the impact of academic governance on college finance.