What drives increases in University fees? Bennett hypothesis vs Baumol’s cost disease

Over the last 15 years, increases in higher education fees have accelerated and are now rising faster than any other part of the economy.  Outstripping even the rising cost of medicine and health care.  And yet we see no meaningful improvements in productivity or GDP growth over the same time period.  Since 1978, the cost of higher education has increased in the US by 1,120% – more than 11 times.  This graph from Bloomberg clearly illustrates the anomaly of higher education fee inflation.

 Bloomberg tuition (s)Source: Bloomberg, Data: Bloomberg Labor Department

 What’s driving higher education fees higher? 

What we see in the wider economy does not justify an explanation that fees are increasing in line with improved earnings expectations.  There is some improvement in earnings overall but productivity and GDP are not rising anywhere near as fast to justify this optimism.  If we had a matching 1,120% increase in productivity or GDP over the last 30 years the world economy would be a lot more rosier place than it is at the Continue reading

Call for unis to carry HECS loans risk

I was interviewed yesterday on my submission to the Australian Senate inquiry into higher education deregulation.

“Vice chancellors are being disingenuous at the moment. They are freeloading and are comfortable with the government taking all the risk. They need to get out of the sandpit and into the real world,”

The attached pdf is a copy of the resulting article in The Australian today.

Call for unis to carry HECS loans risk

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