Burning Money on the Quad? Why Rankings May Increase College Costs

Regardless of whether President Obama’s proposed rating system for colleges based on affordability and performance becomes reality (I expect ratings to appear in 2015, but not have a great deal of meaning), his announcement has affected the higher education community. My article listing “bang for the buck” colleges in Washington Monthly ran the same day he announced his plan, a few days ahead of our initial timeline. We were well-positioned with respect to the President’s plan, which led to much more media attention than we would have expected.

A few weeks after the President’s media blitz, U.S. News & World Report unveiled their annual rankings to the great interest of many students, their families, and higher education professionals as well as to the typical criticism of their methodology. But they also faced a new set of critiques based on their perceived focus on prestige and selectivity instead of affordability and social mobility. Bob Morse, U.S. News’s methodologist, answered some of those critiques in a recent blog post. Most of what Morse said isn’t terribly surprising, especially his noting that U.S. News has much different goals than the President’s goals. He also hopes to take advantage of any additional data the federal government collects for its ratings, and I certainly share that interest. However, I strongly disagree with one particular part of his post.

When asked whether U.S. News rewards colleges for raising costs and spending more money, Morse said no. He reminded readers that the methodology only counts spending on the broadly defined category of educational expenditures, implying that additional spending on instruction, student services, research, and academic support always benefits students. (Spending on items such as recreation, housing, and food service does not count.)

I contend that rewarding colleges for spending more in the broad area of educational expenditures is definitely a way to increase the cost of college, particularly since this category makes up 10% of the rankings. Morse and the U.S. News team desire to have their rankings based on academic quality, which can be enhanced by additional spending—I think this is the point they are trying to make. But the critique is mechanically true, as more spending on “good” expenditures still would raise the cost of college. Additionally, this additional spending need not be on factors that benefit undergraduate students and may not be cost-effective. I discuss both of these two points below.

1. Additional spending on “educational expenditures” may not benefit undergraduate students. A good example of this is spending on research, which runs in the tens or even hundreds of millions of dollars per year at many larger universities. Raising tuition to pay for research would increase educational expenditures—and hence an institution’s spot in the U.S. News rankings—but primarily would benefit faculty, graduate students, and postdoctoral scholars. This sort of spending may very well benefit the public through increased research productivity, but it is very unlikely to benefit first-year and second-year undergraduates.

[Lest this be seen solely as a critique of the U.S. News rankings, the Washington Monthly rankings (for which I’m the methodologist) can also be criticized for potentially contributing to the increase in college costs. Our rankings also reward colleges for research expenditures, so the same critiques apply.]

2. Additional spending may fail a cost-effectiveness test. As I previously noted, any spending on the broad area of “educational expenditures” would be a positive. But there is no requirement that the money be used in an efficient way, or even an effective one. I am reminded of a quote by John Duffy, formerly on the faculty of George Washington University’s law school. He famously said in a 2011 New York Times article: “I once joked with my dean that there is a certain amount of money that we could drag into the middle of the school’s quadrangle and burn, and when the flames died down, we’d be a Top 10 school as long as the point of the bonfire was to teach our students.” On a more serious note, additional spending could be used for legitimate programs that fail to move the needle on student achievement, perhaps due to diminishing returns.

I have a great deal of respect for Bob Morse and the U.S. News team, but they are incorrect to claim that their rankings do not have the potential to increase the cost of college. I urge them to reconsider that statement, instead focusing on why the additional spending for primarily educational purposes could benefit students.

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About Robert

I am an assistant professor of higher education at Seton Hall University. All opinions are my own.
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