profit growth has followed. Despite the new option presented by for-profits to
students, applications for admission at prestigious public and private not-for-
profit research universities have continued to grow. Can tuition at research
universities continue to climb at present rates without this new for-profit
competition or competition from liberal arts colleges, regional universities,
and community colleges siphoning away students?
The conventional answer has been that the prestige and value of a research
university education was worth the price differential. That is, for-profit, liberal
arts college, regional university, or community college higher education was
not really a substitute for research university higher education. Is that true now?
If so, will it continue to be in the future?
Some research into earnings suggests that equally bright students from
similar socioeconomic backgrounds will have roughly the same annual earnings
over their lifetimes regardless of where they get their bachelor’s degrees. It may
be a myth that rubbing shoulders with the children of the prosperous leads to
contacts that makes one prosperous throughout life. But enough students hang
onto that conventional wisdom to permit private not-for-profit universities to
charge a tuition differential over publics and for public research universities to
charge a tuition differential over public regionals. Of course, each maintains a
tuition differential over community colleges.
But what happens if this conventional wisdom is confronted with actual data
on earnings of graduates, specific to university and degree? Such data might
emerge from the trauma created by the for-profits. The Education Department is
attempting to put in place an earnings test for graduates, measuring whether the
income each institution’s graduates earn is sufficient to enable them to pay off
student loans. Earnings of program completers would be tracked using an
existing federal database, probably the Social Security database. This is
referred to in the press as the “gainful employment” test.
For now, this proposed requirement would apply only to non-degree
programs, but such regulations applied to one segment of higher education
tend in the longer run to be applied to all segments. This raises the specter
that brands and prestige might be confronted by hard data on earnings with
the result that those brands may be devalued. If the demand for education
effectively becomes more price-elastic, the ability of research universities
to charge higher tuitions to finance their higher cost levels will be
severely weakened.
RLI 274
5
The Future of the US Research University
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C O N T I N U E D
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FEBRUARY 2011 RESEARCH LIBRARY ISSUES: A BIMONTHLY REPORT FROM ARL, CNI, AND SPARC
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