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Why does college cost so much? St. John's president answers

Posted by: Jenna Ross Updated: October 29, 2012 - 2:56 PM

Why does college cost so much? Here's one college president's answer.

In St. Cloud Times column, St. John's University President Michael Hemesath starts by dismissing a common complaint -- "the arms race in amenities: fancier dorms, gourmet dining options, fabulous athletic facilities." Focusing on those costs "misunderstands the economics of higher education," he says.

Instead, Hemesath turns to "technology, student services and labor costs."

Here's his argument about that last cost, labor:

The final and most important cost driver for colleges is their highly trained and expensive labor force. Known as the cost disease of the service sector, this challenge was identified by economist William Baumol back in the 1960s. He noted that in some labor-intensive industries with low increases in productivity (output per worker), such as education or health care, labor costs may still rise sharply over time if wages of other highly skilled workers are rising. Baumol offered the example of a string quartet. To play a Beethoven string quartet in the 19th century took four talented and highly trained musicians. To play that same piece in 2012 with the same quality experience for listeners, it still takes four talented and highly trained musicians. If we want individuals to play music, we have to pay them a salary commensurate to their next best career option. Likewise, if we want quality teachers at colleges, we need to pay them a competitive wage. A chemistry lab or lecture on Jane Austen still takes the same one faculty member for 25 students at a small liberal arts school such as CSB and SJU that it did in 1980.

Tuition and fees at St. John's reached $35,486 this fall. When you add on room and board, the total comes to $44,124. As the university's website points out, scholarships and grants "can significantly reduce your family's out-of-pocket costs."

What do you make of Hemesath's explanation? 

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