How to Cut College Costs

Over the past two decades, the cost of a college education has risen dramatically.  Tuition and fees have increased at twice the rate of inflation, rising more quickly than market goods or services and outstripping the growth in family incomes.  This dramatic rise in college costs is due to the ways in which traditional colleges and universities organize and allocate resources, and not due to lavish university facilities and extra student services, says Oklahoma State University professor Vance Fried.

The root cause is the high cost of performing the instructional, research and public-service missions of the undergraduate university.  Undergraduate colleges should consider five major cost-cutting strategies:

• Eliminate or separately fund research and public service.
• Optimize class size.
• Eliminate or consolidate low-enrollment programs.
• Eliminate administrator bloat.
• Downsize extracurricular student activity programs.

Rather than focusing only on the big-ticket items that tend to dominate debates about college costs, the real levers for increasing efficiency include rethinking student-faculty ratios, eliminating under-enrolled programs and trimming unnecessary administrative positions, says Fried.

Source: Vance H. Fried, "Opportunities for Efficiency and Innovation: A Primer on How to Cut College Costs," American Enterprise Institute, June 24, 2011.