Scott has already noted that one causal factor in the spiraling amount of student loan debt cataloged in the current NYT series on the subject has been the eagerness of state governments to stop subsidizing higher education. Andrew Hacker points out that it’s important not to let the schools themselves, public and private, off the hook.
In his new book Failing Law Schools Brian Tamanaha makes the perceptive observation that to argue law schools have raised their tuition so drastically because of skyrocketing operating costs is getting, to a significant extent, the causality backwards: law schools have skyrocketing operating costs because they’ve raised tuition drastically. And they’ve raised tuition drastically because, as Tamanaha puts it, “they could.” I’m not familiar enough with the financial structure of higher education in general to venture an opinion on the extent to which this phenomenon applies to it, but I wouldn’t be surprised if it did.
In any case, over the past generation higher education in this country has been swept up in the ideology of the supposedly free market, which posits that if you charge $48,000 per year to attend Ohio Northern University and students and their families pay (or to an increasing extent borrow from the federal government) that amount this constitutes an economically rational transaction by definition. It turns out that postulate depends on a whole lot of highly questionable assumptions.
Another symptom of the same sort of ideological distortion is Gordon Gee’s salary of two million dollars per year. Gee has now been the president of five different universities, and has left something of a mess everywhere he’s been. His career illustrates that upward failure is a principle that doesn’t apply just to corporate CEOs.