The ROI From College

Human Capital: The Cost of College

by Elaine Schwartz    •    Aug 24, 2013

Explaining his proposal to make colleges more “accountable and affordable,” President Obama said we need some criteria to rate schools. Why? Measures that would include tuition, graduation numbers, and the proportion of enrolled lower income students can be used to determine the amount of federal financial aid.

The President’s proposal reminded me of Benoit Mandelbrot, the fractal mathematician who looked at the British coastline and said it was much longer than we think because the closer you look, the more curves and inlets you see.

So too with college ratings. What first appears clearcut and objective becomes very different when we take a closer look.

In a New Yorker article on ranking, Malcolm Gladwell looks at U.S. News and World Report‘s school ranking questions. He points out, for example, “The first difficulty with rankings is that it can be surprisingly hard to measure the variable you want to rank—even in cases where that variable seems perfectly objective.” Gladwell’s concern took me straight to tuition. As NY Times financial journalist David Leonhardt points out, the cost for some is a list price and for others, a lower amount.

In an Atlantic article, Colin Diver, the past president of Reed College detailed the impact of the U.S. News and World Report‘s ranking procedures. Summarizing the downside of rating schools in order to rank them, he took me to a slew of unintended consequences that included an “irresistible pressure toward homogeneity” and the temptation to elevate scores by changing institutional procedures. Thinking of Diver’s comments, I wondered whether more aid for higher graduation rates created the incentive to accept only those students most likely to graduate.

Where are we? Connecting student federal financial aid to a college rating is problematic because categories are tough to quantify and unintended consequences are inevitable. The challenge is like measuring the length of the British coast. The closer you look, the more complex it becomes.

In the following graph, you can start to see the complexities that rating tuition can involve.

From: Washington Post

From: The Washington Post

Sources and resources: Although many articles have said college costs are skyrocketing, journalists who looked more closely included David Leonhardt in his NY Times economix blog, and Dylan Matthews at The Washington Post in Wonkbook. To consider further the difficulty of rating schools, here is more about President Obama’s college cost proposals and also more about Malcolm Gladwell’s superb New Yorker article. Finally, you might want to judge a White House schools scorecard that already exists.

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