Page 211 - Crisis in Higher Education

182 • Crisis in Higher Education

and high school degrees or more for “work doers.” This argument suggests
that increasing economic success depends on more education.
Consider two reasons why this may not show up in the data: wasteful
spending and a mismatch in degrees and available jobs. Waste impacts
the relationship between spending and economic growth. If the cost of
a university degree should be $80,000 and excessive spending drives the
price to $100,000, then spending increases, but knowledge gained by stu-
dents has not changed. If the assumption is made that knowledge gained
is the factor that creates economic value, then the extra $20,000 provides
no benefit to the economy. As a result, the impact of higher education
spending on economic growth is diluted. Second, graduates from some
degree programs are unable to find jobs, or are forced to take jobs that do
not require an advanced degree, or find a job in their field that has low pay
because there are too many graduates seeking too few jobs. Once again,
spending in higher education increases and the economic benefit from the
learning is minimal.
Point 3 in Table 9.2 is that the lifetime compensation advantage of uni-
versity graduates is overstated because studies do not consider the cost
of the advance degree or the four years or more of wages they lose while
learning. The analysis in Section 2.7 in Chapter 2 shows that, on average,
there is a favorable return on investment for university graduates even
when these costs are considered. The analysis does not mean that each
individual university graduates gets a good return on his or her invest-
ments or that every university graduate earn more than any high school
graduate. One of the best known and wealthiest dropouts from higher
education is Bill Gates, a cofounder of Microsoft.

9.3 GOVERNMENT’S ROLE IN FUNDING
HIGHER EDUCATION

Given the discussion so far, it seems reasonable for government to provide
some funding for higher education, if for no other reason than creating
access for students from low- and moderate-income families. Table 1.1
in Chapter 1 shows that in 2015–2016 the average public university cost
$24,061 per year for in-state students and the average not-for-profit, private
university cost $47,831 per year, which is a difference of $23,770. The dif-
ference was caused almost entirely by the difference in tuition, which was