Higher education productivity, as measured by academic degrees granted by American colleges and universities, is declining….
… Since the early 1990s, real expenditures on higher education have grown by more than 25 percent, now amounting to 2.9 percent of US gross domestic product (GDP)—greater than the percentage of GDP spent on higher education in almost any of the other developed countries. But while the proportion of high-school graduates going on to college has risen dramatically, the percentage of entering college students finishing a bachelor’s degree has at best increased only slightly or, at worst, has declined.
Basic Elements of Cost-Effectiveness
•Using effectiveness-cost ratios (ECRs): The primary metric for understanding the relationship between a program’s cost and its effect is the ECR, which divides effectiveness (“bang”) by costs (“buck”) to give a simple estimate of cost-effectiveness. Generally, larger ECRs imply greater productivity.
•The challenges of ECRs: On the cost side, data on higher education costs are notoriously incomplete. It is also unclear what is meant by a program’s effect. In his analysis, Harris uses reliable data and informed assumptions to determine costs, and defines a program’s effectiveness as increasing degree completion.
Cost-Effectiveness Varies across Policies
•No single strategy stands out, but some appear to be more productive than others: The results vary most within the instructional category (student-faculty ratios, full-time versus adjunct faculty, and remediation), while financial aid programs seemed to generate more consistent but low cost-effectiveness ratios.
What are the Implications for Leaders?
•Collecting better data: Going forward, policymakers and institutional leaders should collect more detailed measurements of what higher education programs cost to better assess cost-effectiveness.
•College leaders have more power than they typically assume: ECRs can be used to make comparisons across programs, so we can say whether one program is more cost-effective than another. This helps leaders allocate limited dollars in ways that are most likely to help students.
•Avoiding rote use of ECRs: Cost-effectiveness analysis cannot and should not replace the judgment of educational leaders, but the information that comes from it can provide useful guidance and perhaps improve the way those decisions are made.
- Common reasons for failing to graduate college in four years (Cost of College)
- U.S. spends ‘extraordinary amounts of money to produce college dropouts’ (Cost of College)