MORTARBOARDED BY THE COLLEGE EDUCATION MARKET

We should be brave with our talents. ~ Caroline North 

I have thought more about the market for college education now that graduation season has ended and the 2.92 million new college graduates have celebrated and tossed their mortarboards into the air this spring. We spend lot of money on college education. The latest data show that postsecondary institutions’ total expenses for the 2013-14 academic year were approximately $517 billion; public institutions accounted for 63% to the total, private nonprofit institutions spent 33%, and private for-profit institutions account for 4% of the total. This 3-year old total expenditure is within 10% what the federal and state governments now pay for Medicaid.

I’ll start by returning to basic microeconomics and examine the market for college (aka, tertiary) education. I’ve used the term “college” here to include every type of post high-school (post-secondary) education, including elite and non-elite 4-year private institutions (e.g., Harvard, Stanford, Cal Tech, Denison, Willamette and Shimer College in Chicago that has just 97 students), elite and non-elite 4-year public institutions (e.g., UC/Berkeley, Univ. of Arizona, Western Washington Univ., West Chester Univ.) and public and private 2-year institutions (e.g., Berkeley City College and for-profit schools like DeVry University). Broadly speaking, these are the 3 distinct types of colleges that comprise the “supply” side of the college market. California has the largest number of colleges of any state, 1,246, and is home to colleges in each of these 3 supply tiers. There are 3 major stakeholders in the market for college education; (1) the college suppliers of this education, (2) the students who “demand” education services of the colleges, and (3) federal and state governments who finance large parts of both the suppliers and demanders.

The demand side of the market is the students who apply to, enroll in, attend and hopefully graduate from the over 4,700 higher-education institutions (aka, colleges) in the US. The latest information indicates the total student enrollment in US colleges is more than 20.5 million in 2016. College enrollment has been steadily increasing since post WWII, when the federal government enacted the Servicemen's Readjustment Act of 1944 (aka, the G.I. Bill). In effect, the G.I. Bill helped create the 20th century version of the “American Dream” and augmented it to include not just a house but a college education. In 2015 the college graduation rate was 59% at public institutions, 66% at private nonprofit institutions, and a depressing 23% at private for-profit institutions (about one-third the rate for private nonprofit institutions).

From 1950 to 2016 student enrollment in US colleges has increased about 740% and represents an unqualified, first order achievement that has benefited not only the millions of college graduates themselves but our nation as a whole. These undeniable collective benefits are why Econ 101 teachers like me use college education as a prime example of an economic activity that provides positive externalities. This laudable, long-term increase in people having a B.A. or more is illustrated in the following chart.

Percent of US adults with a B.A. or higher degree

Source: NCES.ed.gov. Adults are defined as people between 25 and 64 years.

This market for college education is now and has been out of balance; we are nowhere near “market equilibrium” in any white-board classroom sense. Some of this imbalance is the result of public policies, as well as policies created by the colleges and finally consumer behavior. The economics of this market are, to no one’s surprise, largely demand driven.

I now examine how college supply and demand have changed during the past decades. Total enrollment in “Higher Education Institutions” (HEIs) is a National Center for Educational Statistics (NCES) term referring to what ordinary folks call colleges and universities) grew by 76.1% from 1980 through 2013. Currently, 2013 is the last year of info for HEIs – but not enrollment in HEIs – those data go through 2015.

The number of HEIs from 1980 through 2013 grew 49.9%. HEIs include both 2-year and 4-year schools. Using 2000 instead of 1980 as the “base” year for growth through 2013, HEIs grew 13.0%, enrollment grew 33.1%. The number of HEIs in 2013 was 4,724 about 2/3rds of which are 4-year schools; number of enrolled students in 2013 was 20,376,000.

Interestingly, these NCES data indicate the growth in the number of 4-year HEIs was about twice as fast as that of 2-year schools, 41.9% vs 19.5%. My expectation, based on information presented in the media, was that 2-year schools’ growth would be stronger. From 1980 through 2000 the growth in the number of 2-year colleges exceeded that of 4-year colleges. But starting after the Obama administration took office, the federal Education Dept. launched a fairly extensive “review” of degree-granting schools (especially private for-profits) to better regulate them and improve their woeful graduation rates. As a consequence of these reviews and regulations, the number of 2-year HEIs declined by 2.1% between 2000 and 2013. Nevertheless, some 2 million students are enrolled in for-profit colleges, up from 400,000 in 2000. The Trump administration is now weakening and removing such regulations. Remember Trump University, it may be back in business? In contrast, 4-year HEIs grew by over 22% since 2000.

What’s happened to college faculty salaries during this time of tremendous enrollment growth and increases in the number of HEIs and tuition? Not much. The table below shows average real salaries for full-time faculty between 1971 and 2010. Faculty salaries have increased, but only nominally and far less than one would expect given the market growth. Look at the drop in real salaries that happened after 1971.

College Faculty Salaries, 1971-2010

	Average Salary	Average Salary
Year	All Faculty	Professor
	(2008-09$)	(2008-09$)
1971	$68,677	$97,035
1976	$64,479	$87,667
1980	$59,029	$78,495
1990	$67,847	$89,277
2000	$70,865    (3.2% fr ’71)	$94,350            (-2.8% fr ’71)
2010	$73,910     (4.3% fr ’00)	$102,691 (8.8% fr ’00)

Source: NCES. Figures in parentheses indicate percent change from indicated year.

From these data, it took the all faculty average salary until 1997 (not shown in the table) to get back to what it was in 1971. For professors the 1971 average salary level didn’t return until 2002. There’s no pre-1971 data so I can’t tell if this year was atypical for hiring faculty; that newly-minted PhDs were in abnormally short supply pushing salaries up, but average faculty salaries dropped after 1971 through the ‘70s, ‘80s and much of the ‘90s as shown in the table, despite large increases in enrollment. Also note the percent change in the 2000 and 2010 salaries. The average professor’s real salary actually shrank by 2.8% from 1971 to 2000, and grew a very modest 8.8% over the ten years ending 2010.

The 2015 average salary for professors from another source is listed as $114,134. This source shows the minimum/maximum salary spread for professors in 2015 from $55k to $207k. NCES data show that the full-time instructional staff at HEIs has increased over 20% since 2015 to over 620,000 people.

For the San Francisco Bay Area, Glassdoor.com states the average professor salary is $155,077, with a spread from $94k to $244k. The 2015 median “postsecondary teacher” salary is listed by the Bureau of Labor Statistics as $72,470. The BLS says they expect a humble 13% projected 10-yr growth in this college faculty salary level.

These data provide solid evidence that despite significant growth in the demand for college attendance and growth in the number of HEIs, college faculty real salary growth has been bleak. Faculty salaries’ increases do not embody the continued strong demand for the services faculty members have provided. One trend that has contributed to this low growth of faculty salaries is the increased use of non-tenure track, adjunct instructors. Or perhaps the majority of that tuition and fee revenue growth has gone to administrators, as anecdotal data seems to indicate. This information suggests that, on average, college faculty members have picked the short straws in the college market for quite some time.

College-going has deepened and broadened in the US. This is a very good thing from several perspectives. The demand for college education has increased significantly, and will continue to. The NCES now projects that awarded B.A.’s will increase 14% between 2010 and 2021, up from the 7.1% previously forecast. But the growth of supply (or capacity) of colleges to accommodate ever-more students has increased but lagged demand’s huge growth.

The bottom line regarding our college education market is that the demand for college enrollment has grown almost 3 times as fast as the number (supply) of HEIs has (33.1% vs 13%). It’s mostly a sellers’ market. 

What happens in a market when the quantity demanded exceeds the quantity supplied? Prices rise, as indeed they have in the college market. Tuition and fees have followed an upward, ballistic trajectory for quite a while. In the 15 years from 2002 to 2017 college tuition, fees and room & board have increased 40.4% in real terms (after accounting for inflation) for private, nonprofit 4-year colleges and 63.9% for public 4-year colleges. This is principally demand-pull tuition inflation that colleges are happy to oblige.

Tuition and other costs have risen for colleges, especially public institutions, because federal tertiary education funding has steadily declined since 1965; state funding of colleges has contracted since the late 1970s. Tuition revenues surpassed federally-supplied funds after 1965. In 2011 tuition revenues surpassed state funding for the UC system in 2011. Between 1996 and 2016 both in-state and out-of-state tuition at UC/Berkeley practically tripled. According to the College Board, national yearly costs for private, nonprofit 4-year colleges currently average $45,370; for public 4-year colleges it’s $20,080.

Although colleges have been fiscally pressed to raise tuition and fees since other funding sources have declined, how can they keep raising tuition and fees so dramatically without suffering a loss of customers (aka, students)? They can because the demand for college education is very price inelastic (insensitive). The economic assessments I found of the price elasticity of demand[1] (PED) for college education range from -0.44 to -0.85. In non-econ speak this means that students don’t really reduce their demand for education much when tuition and fees increase, despite their protests. Enrollment demand decreases much less than tuition price increases. Why? Because there aren’t any real substitutes, other than going to another college or a lower-tier one that has lower tuition.

Colleges don’t really compete on price; they compete on reputation and expected benefits. This lack of substitutes differentiates college education from a host of other retail services and products, and strengthens the colleges’ ability to raise tuition, especially when federally-subsidized college loan funds have increased. Exactly how colleges determine what their tuition and fees will be is far beyond the scope of this analysis. Adam Davidson wrote an interesting, insightful article several years ago that examines the tuition-setting process and expressed his belief that the top elite private colleges are probably underpriced.

Students and their families know that the only thing more expensive than a college education is not getting a college education. As one woman put it that is supporting her 2 sons with a part-time manufacturing job, “If you don’t have a college degree, your job choices are fast food or factory.” So students begrudgingly take out larger loans and/or apply for greater financial support with all fingers crossed. Given such numerically low price elasticities, increases in tuition and fees provide increased revenue for colleges. The price elasticity of demand is likely even lower for elite public and private colleges, as ever-lower acceptance rates demonstrate.

College students and their professors have been mortarboarded by this market. Students are always paying more, faculty members aren’t gaining much financial benefit and educational institutions rule the academic roost.

Given these substantial increases in college tuition and fees and the rising demand for tertiary education it’s easy to see why promises by liberal politicians to make college “free” have such wide appeal among young people. The “free” part of no-tuition public college is a chimera, especially for taxpayers. Bernie Sanders’ 2016 free-tuition program for all could have cost well over the $75 billion per year that he suggested. He hoped it would be paid by a new financial transactions tax. This April, he renewed his utopian legislative efforts to create free public-college education in America. Good luck with that, Bernie.

Last week’s surprisingly strong results for the British Labour Party were in no small part due to Millennials voting for Jeremy Corbyn, who pledged to make British colleges tuition-free. Unlike America where only 17% of Bernie’s young followers actually cast a vote for their free-tuition man in the presidential primaries, 57% of British young adults voted for Mr. Corbyn last week and rejuvenated the Labour Party.

Will free tuition rule? As a taxpayer, I hope not. A good friend of mine says that one of the most expensive services that government can provide is “free” stuff. Expanding Stafford loans and Pell grants is a much better policy option, though far less poltically entrancing.

Increased college graduation has greatly benefited individual graduates and our nation. Within the market for college education the process of getting such an education has become more complex, more time-consuming and more costly. The suppliers of this education – colleges and universities – excluding their faculty, seem to have benefited the most.

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[1] Formally, the PED is the ratio of the percent change in quantity demanded of the product/service (here college education) to the percent change in price of the product/service (here tuition), ceteris paribus. The PED is usually negative because for normal (non Veblen or Giffin) goods Q_d  is inversely related to P. PED = dQ_d/Q_d  / dP/P. If PED<1, it’s called inelastic and the percent reduction in Q_d will be less than the percentage increase in price. 

PUBLIC UNIVERSITIES ARE CAUGHT BETWEEN HOBSON AND A HARD PLACE

The whole purpose of education is to turn mirrors into windows. ~ Sydney J. Hams 

These are roiling times for our vast edu-industrial complex – public and private colleges and universities and their attending students. Even the most renowned public universities are being tested, as a new batch of freshman will soon enter their hallowed halls.

The prestigious University of California (UC) system, founded in 1868 in Berkeley, has over 238,000 undergraduate and graduate students going to its 10 universities throughout the state. More than 71,000 freshmen will begin classes at UC later this month and next month. Echoing the formidable challenges facing public colleges-universities, UC President Janet Napolitano said several months ago that because of substantial budget cuts, nearly every state university in the nation had been forced to make a “Hobson’s choice, and they all have reached the same decision: Open doors to out-of-state students to keep the doors open for in-state students.”

Her use of the phrase “Hobson’s choice” to characterize her difficult job is interesting. Thomas Hobson was a 17th century livery stable owner in Cambridge, England who had over 40 horses for rent. Having so many horses made it appear to customers that they had many choices available to them. But there actually was only one choice, because Hobson required his customers to choose only the horse in the stall nearest the door, so his best mounts would not be overused by perceptive customers. Hobson’s choice has thus come to mean a situation in which you are supposed to have a choice but really do not have any choice because there is only one thing you can really have or do.

Thomas Hobson is alive and well at virtually every public college-university. Over the past several decades California and many other states have substantially reduced the amount of public funding they provide their universities – 40 years ago UC received 32% of its budget from the state, now less than 16% is provided.

As usual, legislators wanted it both ways; cut higher education funding and suffer no negative consequences. But there have been predictable consequences, tuitions have risen (to replace the lost public funding) and the composition of students has changed (to increase revenue). In order to garner more income universities have made their Hobson’s choice and raised tuitions and accepted more out-of-state students, who pay far more tuition than in-state students. In the case of UC/Berkeley, the 2016-17 tuition for in-state students is $13,500/yr, out-of-state tuition is $35,850/yr. Unsurprisingly, ever-rising tuition has created headwinds for students, universities and politicians.

In-state students and their parents have been none too pleased that universities have raised tuition and are accepting more out-of-state students – this fall, 32% of UC/Berkeley admitted freshmen are either from out of state or other nations. After a series of public protests California legislators, Ms. Napolitano and the UC Board of Regents had several discussions. UC agreed to reduce the number of out-of-state students and increase the number of in-state students in return for receiving more state funds.

Everyone agrees that US colleges and universities have long produced storied and positive benefits for our society and their graduates. This is why going to college has been an essential ingredient for attaining the “American Dream.” Over the past century the ranks of baccalaureate (BA) degree holders have increased spectacularly, as shown in the figure below. People who have a BA now represent 34% of young adults, more than a ten-fold increase since 1905, when my grandfather graduated from college. Having a BA is fast becoming the new norm rather than the exception for young adults.  In 2013-14 more than 2.7 million adults graduated from a 2- or 4-yr college.

Source:  National Center for Education Statistics.

This dramatic, continuing upsurge in people receiving BAs is creating challenges for more recent college graduates. Their Associate or Baccalaureate degrees may not be worth as much as they were decades ago when just 10% or 20% of young adults earned a BA.

The law of diminishing returns, first posited in the 18th century, applies to college grads as well as other productive inputs. As more of any given input (like skilled, BA-holding workers) are added to the productive work force, their incremental contribution (“return”) to output will diminish. This is beginning to happen for college graduates. But not just the returns from a college degree are weakening.

With ever-more young people (and their parents) demanding a 2- or 4-college education, the costs of attending college have risen significantly, in part reflecting the relative insensitivity of costs to levels of demand. In economic terms, college attendance seems fairly price inelastic, especially for “selective” colleges. Thus, the expense of going to a public college-university has increased 94%, after adjusting for inflation, during the past 15 years; for private colleges-universities the increase is 46%. And yet even with these substantial cost increases, college attendance has skyrocketed to 20.2 million (M) in 2015 from 15.3M in 2000, an increase of 32%. Faced with more demand for their product, colleges are more able to charge what the market will bear.

Recognizing the benefits of having a more educated work force, federal and state governments have long subsidized college attendance, starting with the 1944 GI Bill (formally called the Servicemen’s Readjustment Act) that provided returning WWII veterans with cash to attend college, high school or vocational school, among other benefits. The cost of sending veterans to college paid for itself many times over through increased post-war economic growth fueled by their increased productivity.

In April when I first heard of Bernie Sanders’ free college tuition plan I wondered that if his idea were ever to become law, would it have an effect similar to that of the 1862 Homestead Act ratified about 60 years after the pioneering Lewis and Clark expedition traversed some of the new US territories. Why? Because like promising free tuition in the 21^st century, this Act provided virtually everyone in the US with 160 acres of free land in the mid-19th century.

The US wanted its citizens to inhabit its then very sparsely-populated new western region, so it offered free land to incentivize its settlement. Similarly, when the government wanted to improve the US labor force in the mid-20th century, as service men and women were returning from the WWII, it began subsidizing college education with the GI Bill.

The Homestead Act distributed 270 million acres of federal land (nearly 10% of all the area of the US) to 1.6 million homesteaders (about 4% of the US population). One consequence was that many people who didn’t know much about farming, moved to the Great Plains (where the climate was not benign at all) and beyond, claimed their 160 free acres and had difficulties being successful. Only 40% of the land-grant applicants who started the process were able to complete it and obtain title to their homesteaded land. Despite this low success rate, the Act served to populate the American west.

The timing of now offering a 100% subsidy for public college tuition is very different than the Homestead Act, because one-third of young adults have already “populated” public universities, paid for that education and has college degrees. In addition, it will be challenging for some new students (like the Homestead Act’s new farmers), who are enticed by free tuition but not completely prepared to successfully graduate. Who will be responsible for their success? This job would probably become another potentially significant indirect cost borne by public colleges-universities. Even without a free-tuition incentive, only 52% of incoming college students actually graduate within 5 years (and just 25% from for-profit colleges). This percentage may further fall when more students show up.

Other than offering political enticement for young people to vote for Democrats, is there a broader rationale for spending billions per year on a federal free tuition plan? I don’t think so.

Receiving a BA degree has intrinsic and realized value for each graduate. Every college student and her/his parents understand the value of graduating from college. It is far from zero. Two ways of measuring it are: $610,000 and 2.2%. Over their entire working life, the typical college graduate will earn $1.19 million. This is $610,000 more than the lifetime earnings of a typical high school graduate and $335,000 more than that of a typical associate degree graduate. The national unemployment rate is 4.9%; for high-school graduates it is 5.4%; for young adults with a BA it is 2.7%, 2.2% less than the overall unemployment rate. College graduates both earn more money and have an easier time finding a higher-paying job.

This college earnings premium has existed for a long time, but has not increased recently. According to the Pew Research Center this leveling of the premium is due in part to the reduction in annual real (inflation-adjusted) earnings for high-school and 2-year college graduates since the 1980s, rather than actual gains in college graduates’ salaries. The Pew report found that the median annual real earnings for young college-educated workers was $45,500 in 2013, compared to $28,000 for high-school graduates — a premium of $17,500. College graduates’ real earnings increased only 1.8% between 1986 and 2013; but high-school graduates’ real earnings decreased 7.7% between 1986 and 2013. A Goldman Sachs’ assessment found that students who graduate from universities that rank in the lower 25% of college rankings (often including lower-cost schools like 2-year community colleges and less selective 4-year colleges) enjoy no salary premium at all, and earn less than high school graduates.

More and more college graduates are entering the US work force as macroeconomic growth has dissipated. In 2015 the US real GDP increased only 2.4%; in 2016Q2 annual growth was a meager 1.2%. Thus, with increasing supply of college graduates and lessening demand for their services, more are “underemployed” in jobs that do not require a college degree or are working part-time when they want a full-time job. In July, the Economic Policy Institute found that 12.6% of college graduates were underemployed, much higher than 9.6% in 2007 during the Great Recession.

With more than one-third of young adults now gaining BAs, having an undergraduate degree is becoming a standard, not the exception. Markets, including the employment market for college graduates realize this. Despite increasing costs, college-based wage premiums will diminish because of the pending “normalcy” of having a BA. But, as pundits have stated, what’s more expensive than going to college? Not going to college.

This disquieting trend has prompted some analysts to say that the nation has reached a point of diminishing returns from increased work force educational attainment (referring to college graduation). Harvard economist Dale Jorgenson and his co-authors state that increasing the quality of the US work force through higher educational attainment may no longer provide the same, prominent benefit as a source of US economic growth that it has since the 1950s.

At this point, the US economy may have all the college-educated workers it needs. Jorgenson instead argues that getting low-skilled (non-college educated) workers who have exited the labor market – and thus are not counted as being unemployed – back into the labor force, together with increased private investment, will revive higher growth more than producing more BAs.

And yet the politics for spurring college attendance are inescapable. Hillary Clinton has largely usurped Bernie Sanders’ proposal to dramatically lower the costs of attending college by providing students who attend public universities and colleges with “free” tuition. Unlike Bernie’s original plan, hers wisely caps the provision of free tuition to families who make less than $85,000/yr now, rising to $125,000 in 2021. Nevertheless, such a huge, new subsidy would disproportionately benefit more well-off families than others because as family income rises, so too does college attendance. Only about 20% of children from the poorest 2% of families in the country attend college. For the richest 2% of families, who are far more likely to attend higher-cost, more selective colleges, around 90% of children attend college.

From an individual student’s perspective, it is worth remembering that free tuition does not mean free college. Tuition is a sizeable piece of total college costs, but represents only a part of all college-associated expenses that include living expenses, books, ancillary fees, and room & board in addition to tuition. For the 8 colleges and universities that my family members attended, tuition accounts on average for 51% of total college expenses, according to the College Board.

About 73% of post-high school students going to college attend public colleges-universities. If implemented (and that’s a very large IF, given the political composition of Congress and the cost of such a subsidy), a free-tuition policy will dramatically increase the demand for publicly-funded tertiary education, despite the aforementioned relative price inelasticity of demand for college education. Nothing beats free. Such a free tuition policy will undoubted unleash a lecture hall’s worth of unintended consequences, in addition to diminishing the college earnings premium.

Clinton's plan will not increase the capacity of public colleges-universities to meet the augmented attendance. For several reasons her plan may place public colleges-universities between the rock of satisfying larger numbers of students and the hard place of not having a way of meeting this increased demand. A possible consequence may be that her plan could perversely lead to increased tuition levels that may have to be covered by the federally-funded program. A direct federal subsidy of college tuition would likely increase the already all-too-weak incentives of universities to reign in tuition, unless forced to limit their increases.

There are a plethora of calculations for how much the Hillary-Bernie free-tuition program may cost. My round-number guesstimate of Hillary’s income-capped plan is at least $60 billion per year. For some perspective, this potentially-worthy tuition subsidy cost is about 3 times as much as farm subsidies and almost 2 times as much as the oil and gas industry’s principal subsidies. Mrs Clinton’s overall plan to make college more affordable will cost $350 billion.  

In this time of historically-low growth and missing-in-inaction, Republican austerity-flavored Congressional economic legislation to promote economic progress, it may be that the supply of college-educated people is rising more than demand for them. Promising billions of federal and state dollars annually to zero-out public universities’ tuition may be politically advantageous, as demonstrated by young ex-Bernie acolytes. But by itself it will not help that many people. Certainly not the majority of young (and older) workers without BAs, whose job prospects and wages have dissolved as employers require college degrees for more and more jobs. Moreover, nations like Germany, Finland and Brazil that offer free college education have lower levels of post-high school educational attainment than the US does now. Norway, another free-tuition nation, has a slightly higher level than we do.

Better ways to reduce college costs would be to increase the number of Pell Grants and the grants’ allowable maximum amount, increase the availability of federally-guaranteed Stafford loans and increase federal and state direct funding of colleges in return for their agreeing to stringent limits on allowable increases for in-state tuition. Make all public and private loans’ payments based on the student’s post-graduation income level and increase the payment period from the standard, too short 10 years to at least 20 years that is common in other countries. Also, simplify and consolidate the loan process, such as Jeb Bush, of all people, has suggested.

Qualified students would receive a single line of educational credit and take what they need each semester. For every $10,000 you borrow, you turn over an additional percentage point of your income each year for 25 years. It’s prorated to the exact amount of what you borrow, so that if you have a debt of $28,000 you would be paying 2.8 percent of your income after graduation. The payoff term runs out in less than 25 years if your total payments hit 1.75 times the amount you originally borrowed. Borrowers would pay through payroll deduction or quarterly payments, as they now pay estimated taxes. This would reduce the number of people who are behind or in default (11.6%), often because they are not aware of the confusing array of income-driven repayment programs that already exist.

The media’s fixation with the “student loan crisis” is unduly focused on a tiny fraction of exceptional situations, not the circumstances facing the vast majority of BA holders. The median monthly student loan payment is $203, or about 4% of earnings – roughly comparable to an average household’s monthly expenditures on entertainment. 

Progressive politicians need to recognize it’s no longer the 1960s or 1970s when only 10% of young adults got BAs. Promoting piecemeal policies like free tuition sound admirable, but have drawbacks. Less inviting but more appropriate programs such as simplified, expanded college loans and more direct public funding of 4-year (and especially 2-year, vocationally-focused) colleges-universities will be much more cost-effective for increasing the educational attainment of our young adults. Thomas Hobson needs to be dismissed from academia’s ivory towers.