[Excerpt] Over 30 years ago William Bowen (1967) studied data from a set of selective private institutions and concluded that their tuition levels had been rising, on average, by 2 to 3 percent more annually than the rate of inflation ever since the turn of the 20th century. He attributed this partially to the increased specialization of knowledge and the growth of new fields of study. But first and foremost, this occurred because the nature of the educational process did not permit academia to share in the productivity gains that were leading to the growth of earnings in the rest of society.
I am going to claim in this paper that there are a number of forces, in addition to the ones that Bowen discussed, that continue to put upward pressure on tuition. These include the aspirations of academic institutions, our “winner take all” society, the shared system of governance that exists in academic institutions, recent federal government policies, the role of external actors such as alumni, local government, the environmental movement and historic preservationists, periodicals that rank academic institutions, and how universities are organized for budgetary purposes and select and reward their deans. After briefly discussing each of these forces, I will present some results from a survey I recently conducted of large research universities to obtain information on how they organize themselves for budgetary purposes. Finally, I will conclude with some thoughts on the steps that academic institutions themselves must take if they want to hold down their costs.