Getting a master's degree. The cost.

This semester I'm teaching one undergraduate course and one graduate course, and I'm administering an undergraduate program as well. A student was interested in getting into our online graduate program, and he wanted to know the cost, the total cost he would have to pay. I didn't know the answer, and it had been a couple years since I last studied the tuition and fees my university charges my students, so I've taken a close look again at the figures.

For an out-of-state student, like someone from California or New York who wants to get an online degree with our department, the cost per course this year is a little under $1,200, but there are various fees online students must pay, and fees for part-time students, and when you add all these fees, a person who takes just one class per semester ends up paying about $1,384.50. That figure is something I should think of when I'm working on my graduate courses. Students who take courses on campus (assuming they're local and paying in-state rates) pay a few hundred dollars more per semester in fees. Assuming a graduate student starting in August of 2009 needs 42 units of credit in our program to earn their master's degree, and assuming they take one course per semester, including one course in each of two of the upcoming three summers, then that student would probably graduate with their master's degree in May of 2013. If each year tuition increases by 8%, their total cost in tuition and fees will be about $16,500. If each year tuition increases by 16%, the total cost will end up being $18,500.

I'm not really clear on why the cost of online education might go up 8% or 16% per year. Since I've worked in academia (about ten years now) I've seen only one year when faculty salaries went up by (slightly) more than 2%. I once compared figures on average faculty salaries in 2006 to figures from the mid-1980s, and realized that after adjusting for inflation the purchasing power of average faculty salaries had declined by about 11% over the two decades after I started college. I don't know that the fixed costs associated with delivering online education are going up much either. Computers and software seem not to be costing so much more. Energy costs have gone up, but they are only a tiny fraction of the total cost to my university of delivering online education. There are more support staff now, I suppose, but I believe their salaries have also been stagnant or declining relative to inflation, and the increase in numbers of staff and faculty were, I thought, matched by increases in student enrollment here.

A few of the biggest reasons for tuition to be increasing at our public university are related to public policies. First, state subsidies for education, particularly public higher education, have declined relative to inflation, especially when considered on a per-student basis. So, while students here maybe once paid tuition to cover 35% of the real cost of their education, they may now be paying something like 60% of the real cost of their education, with only 40% or less being covered by Illinois taxpayers. Something along these lines is certainly very true for our residential and commuter students, but I don't know if this applies to online graduate students.

Of course, it's a legitimate question to ponder: how much of a person's education after secondary school is a social good that benefits all of society (and therefore ought to be paid for by the public through taxes and government spending to keep tuition low)? Clearly much of the benefit from an undergraduate degree, and especially a graduate degree, is enjoyed purely by the student who gains the education and increased salary (if education even leads to increases in salaries, which it usually does, but not always). If the benefits of a master's degree are split about 50/50 by the student who personally benefits and the society that benefits by that individual's enhanced productivity and contributions to the common good (including non-economic contributions), then I suppose a 50/50 split on the cost of paying for the graduate degree makes sense.

The State of Illinois has made some other policy decisions that increase tuition specifically in this state. For one thing, the government used to pay tuition for Illinois veterans of the American armed services, but now the government has evidently stopped paying their tuition, but is still requiring public universities to allow veterans to take their graduate courses without paying tuition. Basically, the costs of educating these veterans are now shifted from the general tax-paying public of Illinois to the employees (including faculty) of the state universities (who will now have lower wages and salaries) and the students without military backgrounds (who must pay higher tuition costs to cover the costs of educating their classmates who served the nation in the armed services). I actually think the policy of offering people who serve the nation in military service a form of compensation that includes lifetime access to free higher education is a good policy, but the costs of such a policy ought to be carried by the military, so that people can see that this is a cost of having a large military, and recognize that paying for this higher education is part of our military spending. When states mandate this sort of policy and then don't fund their policies, the costs are shifted to educators and students, and what is really a form of military spending (albeit legitimate and justified military spending, I think) gets covered up in education budgets.

Another way to consider the cost of higher education is to start with an idea of what a reasonable cost should be. It seems to me a two-year graduate degree is probably comparable to a car in terms of value and usefulness, and ought to cost about the same as a new car. It's odd to compare a more intangible benefit like a graduate degree (and the educational experience it represents) to a mundane tool like a car, and I think in the long-term a graduate education is far more valuable to a person than a new car, but still, it seems to me somehow that a master's degree ought to cost significantly less than a house, but significantly more than a three-week vacation to Europe or whatever, and a car fits in the middle ground between these two extremes.

And, as it happens, a master's degree from my department earned by a part-time online student will in fact cost somewhere between $16,500 and $18,500, about the same as a new car. That actually seems like a reasonable cost to me for a master's degree. It works out to be about 1/3 of the median full-time year-round wage. Considering the costs involved in providing such an education and the benefits to the students, that seems to me about right. I'd be happy if a master's degree cost closer to 1/4 or even 1/5 of the median year-round full time wage, but 1/3 doesn't seem to me extraordinarily high, although it is perhaps on the high end of the range of what seems acceptable and reasonable to me.

However, our online master's degree is one of the less expensive ones, I believe. I think other people might pay $40,000 or $50,000 or even more for a master's degree. I wonder how much of that extra cost is justified by the value of the education, and how much is merely a sign of inefficiency or rent-seeking by more schools with more prestige. No institution is perfectly efficient, and I suppose that almost any price asked of a customer or student will include some amount of money commanded by the seller simply because they want to get the highest price they can get without respect to the value of what they are selling. It has sometimes seemed to me that many brands (and some universities as brands) do add to their prices because of brand prestige, although in fact the the prestige of consuming that brand (or attending that university) is worth far less than the addition to the price.