Open Letter to Newt Gingrich

Newt Gingrich recently began a series of Fox TV News Specials to address compelling public policy issues with "Why Does College Cost So Much and Is It Worth It?"   The program scored higher than expected ratings - outperforming a CNN special on Osama bin Laden that ran at the same time - and was subsequently re-run.   Gingrich solicited audience response.  With college admissions deadlines approaching and Gingrich laying the groundwork to be selected the GOP presidential candidate in 2008, an objective review is merited.  Here is the response of Velma Montoya, an economist who writes about higher education. 

TO:  Newt Gingrich newtspecials@foxnews.com

Dear Newt Gingrich:

Your recent Fox special "Why Does College Cost So Much and Is It Worth It?" added more confusion than light.

Dueling Economists  

You first presented an economist who complained that college costs are too high.   A second economist, a Nobel laureate, asserted that college fees are too low - based on an estimated 15 percent return from a college education over high school - and should be raised.  Their contradictory views were left unresolved.  The first economist later denounced the Nobelist for "intellectual arrogance" and "a contempt for financially suffering parents of college kids," among other assertions.

But growing global jobs competition has reduced the payoff to U.S. college attendance.   Exports of skilled U.S. jobs to foreign countries have rapidly narrowed the income differences for college- and high school-educated workers.  Indeed, White House economists report that earnings of workers with four-year degrees fell 5.2 percent while those of high school graduates rose 1.6 percent from 2000 to 2004. [1][iii]  High-paying, post-college jobs now are either for academic and athletic college superstars or those willing to go on for graduate or professional training.   The Nobel Laureate should update his estimate of the private return to a college education.  Perhaps he could just ask college graduates serving coffee at Starbucks.

Incorrrect Conclusions

Your first economist presented examples of college costs being too high.   They included Washington State University's 53-person jacuzzi and Ohio State University's $140 million recreation complex with indoor batting cages and a climbing wall for 50 students to scale simultaneously.

But, as the costs-are-too-low economist pointed out, contemporary college students expect these amenities.   Indeed, public college students vote to pay for them.  Private colleges compete for students by offering similarly luxurious amenities.  Score one for the costs-are-too-low economist:  students are purchasing the college amenities they prefer.

Next, you featured the decision of an offputting middle-class family concerning which of two colleges its daughter would attend so as to earn a teaching credential.  The father is convinced that his past difficulties in securing work stemmed from his lack of a college degree, and was "disgusted" to learn the family's combined $135,000 income disqualified the daughter from receiving federal education loans.  The mother, a college graduate, was openly hostile to her daughter's attending a less-costly community college.

The choice came down to the most luxurious environment for daddy's little girl in a green-lawned setting like "she is used to."  The family's choice requires the father to take a second job, and will leave the daughter $40,000 in debt.

This family purchased an elite, luxury good for their daughter that the parents could brag about.  They turned down lower-priced alternatives such as starting college at a neighboring community college or earning college credit while in high school with advanced placement or online or other courses.

Your third example was a woman who had just graduated with a major in special education from the University of Scranton with $80,000 in college loans.  Your interviewer fixated on the large debt amount.  This woman could have benefited instead from advice to cut her debt by negotiating a job that offered a signing bonus for her highly marketable specialty and a multi-year, loan-forgiveness program, among other possibilities.

The costs-are-too-high economist then opined that college attendance likely adds little or nothing to students' productivities - that college simply serves to label students who come to college with above-average skills, motivation, discipline and genes.  If this were the case, the recommendation to these students - who enter college knowing they are able - should be to skip college.  For such students - like Bill Gates - the value of college is zero.   Indeed, the lone college-age male depicted in your program had dropped out of college to create a successful computer-service firm.

The College Gender Gap

Your program illustrated - but failed to mention - a notable feature of current U.S. coeducational college life: women constitute the majority of college undergraduates. With gender parity last achieved around 1980, females now make up about 57 percent of college students with the percentage expected to rise.

It makes sense that women are now more willing to attend college:  U.S. service-sector jobs (such as elementary and secondary school teaching) continue to grow; women now dominate some well-paying professions such as public relations (with 75 percent of the slots);institutions, organizations and professions worldwide are being "feminized," with a consequent growing demand for traditional feminine traits; and women college applicants are now better-prepared than male applicants (with high school boys correspondingly exhibiting higher rates of disciplinary and behavioral problems and spending far lower amounts of time on homework).

Other Neglected Higher Education Trends

While your program described how college tuition costs have escalated since 1981 relative to the cost of living, it could have discussed still other basic changes in our society that are responsible for higher college tuitions.   One is simply that our society has been growing wealthier.  Since the demand for higher education as a kind of luxury consumption good grows more than in proportion to wealth as the society becomes wealthier, the demand for high-quality college education has been significantly growing over the past quarter-century.

In addition, since the U.S. defeat in Vietnam and the corresponding replacement of conscripted citizen armies with professional armies, there has been a sharp decrease in U.S. tax contributions to programs that benefit our country's youth, including government funding of higher education institutions. [1][ix]  Colleges have responded to these reduced government subsidies to them by raising tuition.

The above three fundamental changes in our economy, which easily explain the growth in college tuition, were not even mentioned in your program.   As a result, the program's theme was little more than hand-wringing and policy-posing about simple changes in the market for U.S. higher education.

Your future TV programs would benefit by a change of policy advisors.

Sincerely yours,                                                                                            

Velma Montoya

Velma Montoya, a Ph.D. economist, is a consultant and writer on higher education.   She was a member of the University of California Board of Regents from 1994 to 2005 and represented the Board on the California Postsecondary Education Commission.
Newt Gingrich recently began a series of Fox TV News Specials to address compelling public policy issues with "Why Does College Cost So Much and Is It Worth It?"   The program scored higher than expected ratings - outperforming a CNN special on Osama bin Laden that ran at the same time - and was subsequently re-run.   Gingrich solicited audience response.  With college admissions deadlines approaching and Gingrich laying the groundwork to be selected the GOP presidential candidate in 2008, an objective review is merited.  Here is the response of Velma Montoya, an economist who writes about higher education. 

TO:  Newt Gingrich newtspecials@foxnews.com

Dear Newt Gingrich:

Your recent Fox special "Why Does College Cost So Much and Is It Worth It?" added more confusion than light.

Dueling Economists  

You first presented an economist who complained that college costs are too high.   A second economist, a Nobel laureate, asserted that college fees are too low - based on an estimated 15 percent return from a college education over high school - and should be raised.  Their contradictory views were left unresolved.  The first economist later denounced the Nobelist for "intellectual arrogance" and "a contempt for financially suffering parents of college kids," among other assertions.

But growing global jobs competition has reduced the payoff to U.S. college attendance.   Exports of skilled U.S. jobs to foreign countries have rapidly narrowed the income differences for college- and high school-educated workers.  Indeed, White House economists report that earnings of workers with four-year degrees fell 5.2 percent while those of high school graduates rose 1.6 percent from 2000 to 2004. [1][iii]  High-paying, post-college jobs now are either for academic and athletic college superstars or those willing to go on for graduate or professional training.   The Nobel Laureate should update his estimate of the private return to a college education.  Perhaps he could just ask college graduates serving coffee at Starbucks.

Incorrrect Conclusions

Your first economist presented examples of college costs being too high.   They included Washington State University's 53-person jacuzzi and Ohio State University's $140 million recreation complex with indoor batting cages and a climbing wall for 50 students to scale simultaneously.

But, as the costs-are-too-low economist pointed out, contemporary college students expect these amenities.   Indeed, public college students vote to pay for them.  Private colleges compete for students by offering similarly luxurious amenities.  Score one for the costs-are-too-low economist:  students are purchasing the college amenities they prefer.

Next, you featured the decision of an offputting middle-class family concerning which of two colleges its daughter would attend so as to earn a teaching credential.  The father is convinced that his past difficulties in securing work stemmed from his lack of a college degree, and was "disgusted" to learn the family's combined $135,000 income disqualified the daughter from receiving federal education loans.  The mother, a college graduate, was openly hostile to her daughter's attending a less-costly community college.

The choice came down to the most luxurious environment for daddy's little girl in a green-lawned setting like "she is used to."  The family's choice requires the father to take a second job, and will leave the daughter $40,000 in debt.

This family purchased an elite, luxury good for their daughter that the parents could brag about.  They turned down lower-priced alternatives such as starting college at a neighboring community college or earning college credit while in high school with advanced placement or online or other courses.

Your third example was a woman who had just graduated with a major in special education from the University of Scranton with $80,000 in college loans.  Your interviewer fixated on the large debt amount.  This woman could have benefited instead from advice to cut her debt by negotiating a job that offered a signing bonus for her highly marketable specialty and a multi-year, loan-forgiveness program, among other possibilities.

The costs-are-too-high economist then opined that college attendance likely adds little or nothing to students' productivities - that college simply serves to label students who come to college with above-average skills, motivation, discipline and genes.  If this were the case, the recommendation to these students - who enter college knowing they are able - should be to skip college.  For such students - like Bill Gates - the value of college is zero.   Indeed, the lone college-age male depicted in your program had dropped out of college to create a successful computer-service firm.

The College Gender Gap

Your program illustrated - but failed to mention - a notable feature of current U.S. coeducational college life: women constitute the majority of college undergraduates. With gender parity last achieved around 1980, females now make up about 57 percent of college students with the percentage expected to rise.

It makes sense that women are now more willing to attend college:  U.S. service-sector jobs (such as elementary and secondary school teaching) continue to grow; women now dominate some well-paying professions such as public relations (with 75 percent of the slots);institutions, organizations and professions worldwide are being "feminized," with a consequent growing demand for traditional feminine traits; and women college applicants are now better-prepared than male applicants (with high school boys correspondingly exhibiting higher rates of disciplinary and behavioral problems and spending far lower amounts of time on homework).

Other Neglected Higher Education Trends

While your program described how college tuition costs have escalated since 1981 relative to the cost of living, it could have discussed still other basic changes in our society that are responsible for higher college tuitions.   One is simply that our society has been growing wealthier.  Since the demand for higher education as a kind of luxury consumption good grows more than in proportion to wealth as the society becomes wealthier, the demand for high-quality college education has been significantly growing over the past quarter-century.

In addition, since the U.S. defeat in Vietnam and the corresponding replacement of conscripted citizen armies with professional armies, there has been a sharp decrease in U.S. tax contributions to programs that benefit our country's youth, including government funding of higher education institutions. [1][ix]  Colleges have responded to these reduced government subsidies to them by raising tuition.

The above three fundamental changes in our economy, which easily explain the growth in college tuition, were not even mentioned in your program.   As a result, the program's theme was little more than hand-wringing and policy-posing about simple changes in the market for U.S. higher education.

Your future TV programs would benefit by a change of policy advisors.

Sincerely yours,                                                                                            

Velma Montoya

Velma Montoya, a Ph.D. economist, is a consultant and writer on higher education.   She was a member of the University of California Board of Regents from 1994 to 2005 and represented the Board on the California Postsecondary Education Commission.