<p>Eagle,</p>
<p>I think part of the confusion in this discussion is the commonly held belief that the sales price of a product or service has some relationship to the seller’s cost. This is only true, and only in the long run, only in so far as the price must be higher than cost in order to stay in business. Beyond that, the market (=customers) set the price by their purchase decisions. This is the essence of free, unregulated competitive markets. And, with the thousands of colleges in the US, we DO have pretty competitive markets.</p>
<p>A brief comment on the earlier theme, as well as Vedder’s book "Going Broke…) Note that Vedder’s book was supported by, and published by, the AEI Press, and arm of the American Enterprise Institute. Fan or not of the latter, we DO know where they stand. Vedder conveniently compared college costs to the CPI. Easy but misleading. The CPI is heavily weighted with manufactured goods that have manufacturing economies of scale and learning curve effects. That’s one of the reasons why computers cost less each year, as do many other manufactured goods. Note however, that education is not manufacturing. You don’t assemble students. Rather, education is a highly specialized service industry - one where obtaining productivity improvements is particularly difficult. And this is true for many other service industries. Look at health care, cleaning, etc. </p>
<p>BTW, you will love Vedder’s solutions to rising college costs:</p>
<p>“Can economies be made here? There are at least four ways these costs can be reduced: by increasing the student-faculty ratio; by ending or modifying tenure; by increasing the use of part-time or adjunct faculty; and by using more capital-intensive instructional techniques.”</p>
<p>I’ll spare you the rest of his “solutions”. Suffice to say he’s a fan of privatization, and seems to like the for profit colleges like University of Phoenix.</p>
<p>So please, those of you unhappy with higher ed costs, there are alternatives. Try U. Phoenix, or maybe a local jr. college. Otherwise…</p>