Race For Prestige Adds To College Costs

To recruit professors, universities must pay salaries roughly in line with those made possible by productivity growth in other sectors. So while rising salaries needn’t lead to higher prices in many industries, they do in academia and many other service industries. Because universities are already rushing to use technologies for improving faculty productivity — for example, Web-based review sessions and homework evaluation — subsidy reductions won’t encourage much additional progress against Baumol’s disease. But there’s a second major source of tuition growth that universities are less able to ameliorate on their own: the escalating competition for academic prestige. Read more at:
http://www.nytimes.com/2012/03/11/business/college-costs-are-rising-amid-a-prestige-chase.html?_r=1&partner=rss&emc=rss