Addressing the declining productivity of higher education using cost-effectiveness analysis

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American Enterprise Institute


The recent fiscal crisis has brought American higher education to a watershed moment. After decades of expansive growth in enrollments and spending, state budget cuts and damaged endowments have driven double-digit increases in tuition over the past decade. In the wake of significant increases in federal student aid over the past four years, a growing federal deficit suggests that aid programs will be hard-pressed to keep up with the growth in tuition prices. Meanwhile, lackluster employment outcomes for recent college graduates and ballooning student loan debt have created an increasing sense of disillusionment among policymakers and the public alike. More than ever, Americans are questioning whether a college degree is worth the cost of admission. The author takes a rigorous, empirical look at the cost-effectiveness of popular higher education policies and programs. He argues that policymakers and school leaders have far more control over productivity than assumed, but tend to lack the requisite information on which strategies will be most productive. Running through an array of these programs and policies—from class-size reductions, to various financial aid programs, to student services— the author provides a framework that can help college leaders determine which policies and practices provide the most bang for our higher education buck.



human capital, budget deficits--United States, higher education budget, education, higher--government policy