For the past 10 years, one of the secrets to the growth of the U.S. economy has been the dramatic improvement in productivity. “Doing more with less” has been the mantra for manufacturing, the service industry and most other sectors. As a result, since 1995 productivity has grown at a rate that’s almost double what it was from 1973 to 1994.
One sector has yet to get on the bandwagon: higher education. Anyone who is paying college bills knows that there’s a great need in the ivory tower to cut spending. The cost of tuition over the past two decades has risen even faster than the cost of medical care. The burden on many families and students has reached the breaking point. And there’s no relief in sight. Fourteen states cut funding for public higher education between 2002 and 2003. In our District, the axe fell hardest in Missouri, which cut such appropriations by 10 percent. Not surprisingly, tuition jumped 20 percent—the second-highest increase then in the nation.
These costs might be easier to swallow if the quality of graduates were going up as fast as the cost of getting that sheepskin. Few think that’s the case. One reason could be that instructional expenditures per student (at public institutions) rose just 17 percent between 1990 and 2001, while administrative expenditures per student jumped 54 percent.
Other sectors of the economy have taken action to boost productivity in order to survive. Colleges and universities might want to follow their example, beginning with these steps:
These ideas just scratch the surface. Certainly, with all the high-powered thinkers on our campuses, more and better ways can be thought of to lessen the financial burden on those who want to get a college degree.
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Fed in Print: An index of the economic research conducted by the Fed.