The Leaning Tower of Ivory

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The usual trend in a healthy economy is for the quality of products to increase while prices decrease. This sort of progress can be observed all around us, from complicated technologies such as computers and automobiles to simple consumer goods such as clothing and groceries. Yet for some reason higher education in the United States has gone in the opposite direction. In their new book Unprofitable Schooling: America’s Broken Ivory Tower, editors Todd Zywicki and Neal McCluskey consider the causes and consequences of that failure, with contributions from leading scholars of education policy and history.

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The book starts with a simple yet sobering fact: “Inflation‐​adjusted undergraduate tuition and fees at public four‐​year colleges have roughly tripled over the past 30 years. At some of the priciest private institutions they now exceed $50,000 a year.” Despite this skyrocketing price inflation, outcomes are, at best, stagnant if not declining. For students who entered college in 2010, the six‐​year completion rate for four‐ and two‐​year programs was only 54.8 percent. Those who do graduate often find their degrees simply aren’t worth what they’ve paid for them.

For decades, policymakers have shoveled increasing amounts of loans, grants, and other subsidies at higher education on the premise of making college more affordable and accessible. Yet today’s students often find themselves drowning in a mountain of debt while falling behind on both educational and career‐​value metrics.

Unprofitable Schooling traces the history of higher education in America to explain how we arrived at this dismal reality and what can be done to fix it. The central lesson is simple but comes with wide‐​ranging implications. Subsidies have disconnected higher education from the market signals that are necessary to deliver value to students in an affordable, rational manner. Bloated administrative staff, unaccountable professors, and ever‐​increasing tuition are all symptoms of the same underlying dysfunction.

Each chapter of Unprofitable Schooling explores crucial aspects of the provision of higher education, informed by the authors’ deep experiences and analyses of how higher education and many other markets work, with an eye to bringing about innovation, improved quality, and lower costs. The opening section offers a history of for‐​profit education before the Morrill Act — the federal legislation that funded land‐​grant universities. It then reviews the act’s impact and concludes with an exploration of federal student aid and how it prevents new funding options from entering the market. Section two examines higher education as it stands today: factors driving up college prices, the tenure system, administrative growth, and systematic flaws in current university governance. The third and final section shows how robust competition in higher education can be energized and takes an in‐​depth look at for‐​profit versus nonprofit institutions. With a student debt crisis looming large over American politics, Unprofitable Schooling offers an important contribution to the ongoing debate about higher‐​education policy in the United States and how it has gone awry.

Purchase print or ebook copies of Unprofitable Schooling at cato​.org/​store.