University of Minnesota President Eric Kaler likes to remind people that “the university,” as a social institution, has been around awhile.

In a recent Minnesota Monthly article, “Is College Worth It?” — concerning what many consider a crisis of soaring higher-education costs and student debt — Kaler was quoted revisiting a theme he’s explored in the past with the Star Tribune Editorial Board:

“There are a certain number of institutions that were doing business in 1500 and still [are] doing business today,” Kaler said. “The Parliament of Iceland. The Catholic Church. And then there’s the university. I just don’t think the business is going to change very much … .”

It’s an impressively medieval attitude, one has to admit — this scoffing aversion to the idea that significant change might be required in the way higher-education institutions operate. No doubt the leaders of monastic orders and merchant Guilds and the landed aristocracy and the horse and wagon industry once basked in similar confidence that nothing was apt to disrupt their venerable traditions.

(Fact is, in remarkably recent times, people in the newspaper and media business thought rather like that.)

Another reminder that the notion of fundamental change is a bit of a novelty among academics came when Mark Gordon, the energetic new president of William Mitchell College of Law in St. Paul, called on the Star Tribune Editorial Board the other day.

Gordon is preparing to lead an unusual merger between Mitchell and the Hamline University School of Law that is itself a sign of changing times. He spoke of the need to update “the traditional model of legal education,” which he said hasn’t changed much since the mid-19th century.

Today’s law school leaders will quietly admit that maybe “that model doesn’t work anymore,” Gordon said, but only after “a drink, or maybe two.”

The sobering reality, of course, is that average tuition at American higher-ed institutions rose by nearly half, after inflation, between 2001 and 2012, while annual student borrowings more than doubled. These “exploding tuition costs and loan balances” are documented in a new study from the Federal Reserve Bank of New York.

The report notes that the punishing trend has “attracted much policy attention” but not enough serious analysis.

The Fed study is serious, and is itself attracting attention for the eye-opening conclusion it draws about one cause of the tuition rise. Basically, the Fed researchers found that as government boosts subsidized loans and grants available to students, schools raise tuition and capture many of those dollars (as much as $65 out of every $100, they say).

Borrowing a bit of blunt language, the report cites something called the “Bennett Hypothesis” — named after outspoken Reagan-era Education Secretary William Bennett. In a 1987 New York Times op-ed titled “Our Greedy Colleges,” Bennett claimed that “increases in financial aid” simply allow “colleges and universities blithely to raise their tuitions … .”

The Fed report demurely notes, in several places, that its dryly detailed findings are “consistent with” and “provide support to” the Bennett Hypothesis.

If we find ourselves in a situation where efforts to make college more affordable instead merely inflate costs, well, it sounds a bit familiar. The cost crisis in higher education looks suspiciously like the cost crisis in health care.

In both sectors, spending has no natural place to stop because the ordinary market mechanisms that discipline buyers and sellers, confronting both with limits, have been buried beneath an impenetrably complex bureaucratic contraption designed at least in part to broaden access and affordability.

Just as hardly anybody today pays their own medical bills with their own money, the “bills” in higher education are paid through a bewildering tangle of revenue streams — federal grants, loan subsidies and tax credits; state appropriations and student aids; private donations and scholarships; institutional grants and discounts — and of course, tuition and fees.

Meantime, again much as in health care, hardly anybody knows the true total price of higher education. There is typically a “sticker” tuition rate, but discounts and adjustments of many kinds lower the “net” cost and increase the net confusion.

Leaders of public colleges and universities insist that declines in state funding in recent decades are the main cause of tuition hikes. Undoubtedly that is part of the story, though many federal aids and tax breaks, and enrollments, have increased in the same era.

It’s useful, in any case, to keep the health care analogy in mind when considering the sweeping college affordability plans politicians far and wide are now rolling out for voters’ consideration.

Hillary Clinton’s complicated, $350 billion, 10-year initiative could be seen as a kind of Obamacare for higher ed. It would expand subsidies and regulation and establish new joint efforts between states and Washington, intensifying centralized government intervention while preserving private and decentralized elements in the system.

Naturally, Clinton’s left-flank Democratic rival, Bernie Sanders, goes further. His plan is basically free college for all — a single-payer plan, you might say.

But whether it’s through big-government visions like these — or through more free-market-based reforms Republicans bring forward — or simply through a continuing buildup of pressure for cost-cutting coming from higher education’s discontented and indebted customers — it seems likely that, before long, one more tradition-bound realm is going to emerge belatedly from the Middle Ages.

 

D.J. Tice is at Doug.Tice@startribune.com.