I have a confession to make. My parents are paying for every cent of my college education: $220,000 or more over four years. I am supremely in their debt.
Sadly, I have no concept of what it truly represents. You could call me spoiled or ungrateful — and I admit sometimes I am both of those. In this case, it’s similar to how, as Americans, we look at our $16.4 trillion deficit or at our 601 percent increase in medical spending over the last 30 years. We cringe and keep walking — or spending. In fact, there is a lot that we can learn from the parallel ascent of tuitions and medical costs.
There are several problems with how we practice medicine. Part of the problem with medical care is that many consumers are too removed from the actual costs. Most people likely don’t know that it can cost anywhere from $10,000 to $32,000 to give birth to a baby. People are generally given the bill for their medical care upon treatment, when it is too late to refuse or search for cheaper options.
Normally, competition and consumer choice lead to greater efficiency and better value for the consumer. Still, if consumers don’t know the product’s true costs, then price competition cannot exist. With medical care, there is no direct incentive for consumers to push for more efficiency — their insurers will cover it. Our hospital incentive system is also terrible. Doctors are commonly compensated for how many procedures and tests they prescribe and not based on successful outcomes or efficiency. The incentives say more is better, no matter what. The result of opaque costs and backward incentives is that we pay 250 percent more per person per year than does the average developed nation — and we still have a lower life expectancy.
Our system of higher education suffers from the same fundamental issues. During the application process it is definitely easy to figure out the cost of tuition, but what about room and board, textbooks and transportation? And where does that $50,000 or more actually go? Does it fund things directly related to your concentration? Or does it go to obscure sports teams, random school conferences and lawn maintenance?
Isn’t our education about getting an education and not all the random country-club frills our school can throw at us? Just like in medical care, the majority of consumers have no real incentive to push for efficiency and greater value. Upper-class students receive family funding. Lower- and middle-class students receive need-blind financial aid, apply for scholarships or are saddled with debt. Any individual in my generation who would be sufficiently worried about the college process to start a movement against tuition hikes generally decides that a better use of time would be to apply for a couple of extra scholarships or student loans. On campus, the only sustained movement to help with the student tuition burden is fighting for financial aid, but wouldn’t it help more people to fight the tuition increases alone? Our apathy, or in some cases our misdirected action, is bleeding us dry.
Our rankings-obsessed incentive system does not help the matter either. The most influential college ranking system is the U.S News and World Report’s annual list. According to an article by U.S News and World Report on its ranking methodology, “academic quality” factors such as “faculty resources … financial resources (and) alumni giving” account for 35 percent of a school’s score. There is no mention of a tuition cost-benefit valuation or any sort of efficiency rating. The ratings suggest that the more a school pays for random crap, the better the school. We’ve seen how well that idea works in public education. This system stirs a veritable tuition arms race for any school, like Brown, that wants to stay near the top of the rankings, and it results in the nation’s massive long-term climb in tuition. If the current trend of an average annual price increase of 4.4 percent at Brown continues, then a Brown education will cost over $70,000 per year by 2026. Hurray.
So what solutions do we have? I have two simple ideas that would at least help slow the increase in costs for both industries: Inform the consumer and change the industry incentives.
Multiple studies have shown that the more informed people are about their finances, the less they spend. The government should mandate that both industries reveal costs and future costs upfront. A good model would be like the information cards car dealerships display about gas consumption, smog ratings and ownership costs. If there were a measly 1 percent annual reduction in tuition or health care due to this mandate, it would still be a massive change.
Changing industry incentives would be much more difficult. The health care battles would, once again, be huge. There would have to be some sort of popular movement against current college ranking ideology. When either system becomes too broken, the public will come to the conclusion that these institutions must change their incentives and, ideally, there will be an improved system.
Nico Enriquez ’16 likes sea turtles. Please send fan mail to nenriquez3@gmail.com.
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