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“Why Does College Cost So Much?”—the question on the minds of thousands of prospective students, parents, and college administrators— was analyzed at the second of three lectures in the IDEAS: �����Ƶ 2020 Lecture Series, held on April 16.

Drs. Robert Archibald (pictured), chancellor professor of economics, and David Feldman, professor of economics and department chair—colleagues from the College of William and Mary—presented the informal talk, which was based on their book by the same name, published last year.

The authors used data to describe the changes in college costs since 1948, noting that one has to examine those changes alongside the cost increases in other industries. From that perspective, higher education costs are actually mostly in line with other industries.

The reason college costs have risen so dramatically over the past 60-plus years, Dr. Archibald said, is because “higher education is a service industry that employs lots of skilled labor, and uses technology to meet a standard of care that is set in the labor market.”

The speakers described a “tripod” of factors affecting college costs: 1) “Baumol’s Cost Disease,” where technological advances decrease costs in other industries, higher education is a service industry; 2) “the college wage premium”—the fact that colleges require highly educated labor; and 3) the necessity for a “standard of care”—in order to provide up-to-date education, universities must keep up with technology, which is costly.

Other factors affecting the price of college include decreasing state appropriations and tuition discounting.

Stagnation in household income is a driving factor in the future of higher education. “For the vast majority of families in this country, real income stopped rising in 2000,” said Dr. Feldman. “The cost of college matters a lot when there’s no growth in income.”

The authors dispelled what they called the “dysfunction narrative”—false stories about the reasons for increased college costs—which included “useless research, administrative bloat, tenure and lazy professors, student amenities,” and “the government.” None of the theories are supported by real data, they noted.

In order to slow the growth of cost, the authors contended, having the facts helps us think about what is doable, and what is not. “There are things we can do, but no magic wands…it’s a holistic thing,” said Dr. Feldman when asked how increasing costs could be managed while still keeping quality. There was some discussion of the possible savings in integrating online opportunities into certain “static” courses. Year-round use of campus facilities, and finding the optimal class size to keep the cost per student lower were other strategies mentioned.

The lecture ended on a positive note. In spite of the obstacles, the speakers noted, many universities (�����Ƶ among them) are seeing high application rates and full incoming classes. The market still requires highly educated workers, the speakers noted, and that keeps the demand for higher education “humming.”

The third lecture in the series, developed to share perspectives from some of today’s leading voices in higher education, will feature Carol Aslanian speaking on “Graduate and Part-time Education in the 21st Century” on Tuesday, May 6, from 3:30-4:30 in the BCC Oak Room.