Northwestern president Morton Schapiro explains why $60,000 a year can be a very good deal
Morton Schapiro is Northwestern University’s 16th president. He’s also one of the academy’s most respected minds on the economics of higher education, having testified in front of both houses of Congress and written more than 100 articles on the subject.
Schapiro specializes in college financing and affordability. That expertise, coupled with his position atop an elite university with a sticker price of almost $60,000 a year, makes him a good person to direct questions about spiraling tuition and the value of a diploma in today’s economy.
Grid: Northwestern made waves when the law school announced its decision to cut class size by 10 to 15 percent.
MS: When the markets change, you have to change. If you just hold onto the size — we’re a law school that’s most famous for sending students to the big national and international firms. We still lead the nation in that, but that percentage has gone down by a pretty sizable amount since the economic debacle in ’08, ’09. So you have to be responsible. You have to be responsible to the kids you let in.
Grid: Do you think you’ll push it back to previous levels when the market recovers?
MS: [Law School Dean] Dan Rodriguez sees a secular, not a cyclical trend in the changing opportunities for law school grads. I don’t think it’s going to be one of those things that we go back up if the market recovers. I think this is a long-term bet that he’s making, and I’m very supportive of that. The greatest responsibility we have is to educate the kids who are here.
Grid: Does the high sticker price and complex financial aid process at elite universities like Northwestern scare away applicants from less affluent backgrounds?
MS: I’ve done some studies on sticker shock, and it’s actually less than you’d think. Take some high school student — not a magnet in Chicago — and they get into us, Washington University in St. Louis, University of Chicago. It’s not the net price or the FAFSA forms that gets them — it’s not fully realizing the opportunities for going to a selective school are very different from not going to a less selective school.
The bad part of the discussion of “oh, just go to college” is it treats college as a commodity. And, you know, economists define a commodity as a good or service which is undifferentiated by quality. It’s wood, it’s steel, it’s coal. But college is not a commodity — there’s a very big difference between our state flagship and other publics. Differences in wealth, differences in prestige, differences in educational expenditures per student, differences in graduation rates, differences in diversity.
The problem with a commodity is, you just go to college. And there are studies that show that up to two out of three of the most talented CPS graduates who could go to a very selective school go to an open enrollment school.
When we talk about competition from the for-profit sector, does the same logic apply? Is it just hands-down a qualitatively different experience?
There are a lot of presidents of not-for-profits who have open disdain for the private sector. I think if they knew more about it, they’d feel a little differently. The for-profit sector is incredibly heterogeneous. It goes from scam, corner-mall stores that are just milking the naivete and generosity of state and federal aid to very good alternatives to publics and privates.
At the upper end, they do a really good job. They do a really good job not just by lowering price by leveraging aid in a legal way, they pass the gainful employment test—they get people jobs. Whenever I see in the press, whenever I hear other presidents talk about, “oh they’re money grubbers, they’re stealing our money,” it’s a very heterogeneous group. It goes from the worst to some that could teach absolutely all of us something, including Northwestern.
Grid: Are you saying disadvantaged kids are taking the path of least resistance?
MS: I actually think it’s more psychology and sociology. There’s some economics in there, but it’s more about leaving the neighborhood and realizing that going to Urbana or coming to Evanston opens up a lot of doors, even if it’s a little scary. Not a little scary — very scary.
Grid: Northwestern gives away almost no merit aid, only need-based. Are you comfortable with losing out on students to schools that do offer merit aid?
MS: Oh yeah, absolutely. I’d rather have kids not get bought, kids that want to be here because they want to be here. And I’d rather those millions of dollars that we save compared to many other institutions on merit aid and invest more in the academic product.
Grid: I’m going to ask you a question you get asked a lot. Tuition rates moving up as quickly as they do — why? Is it getting more expensive to educate students?
MP: Well, you know, we increase educational cost per student at a pretty hefty rate. The average, if you look at the highly selective privates, they spend about $80,000 a year, maybe a little bit more, to educate an undergrad. And the most any of us charges with room and board is about $60,000. So there’s a general subsidy of about $20,000 a year. So [critics] can look at the 80 and say why is it that you spend 80? It must be waste, fraud and abuse, inefficiencies.
You look at the cost to incarcerate someone in California, and it’s $55,000 a year, and we have smaller classes and nicer rooms. And the food’s better. So if it costs you almost 60 to keep someone in jail for a year, spending 80 for this kind of an education doesn’t sound all that outrageous.
Grid: Accounting for the complexity of these numbers, you’ve said that everybody but the wealthiest five percent of students will receive need-based aid. Meanwhile, 40 percent of Northwestern’s student body doesn’t receive any need-based aid.
MS: The typical COFHE school [a consortium of 31 highly selective liberal arts colleges and universities], and that includes us, Harvard, Stanford, Duke, Georgetown… You get at least a third of the kids who come from very high up in the income distribution. That’s exactly right.
Grid: Do you want to see that percentage come down?
MS: It’d depend on who you’d replace them with. Would you replace them with kids who weren’t as intellectually engaged? I don’t know if I’d want to do that. Would you have kids as talented from needier backgrounds? Sure. For me, as someone who’s studied this for so many decades, it depends on the opportunity costs.
Grid: So how do you examine the context in which a kid’s achieving? There are plenty of talented kids out there who didn’t get the secondary school education that affluent kids did.
MS: Yeah, that’s right. The real key is you have to evaluate each kid given the chances that he or she had to put together a great record. And it’s a lot easier for the New Trier kids to show that they care about society by going on alternative spring break or going to some Latin American country and doing Habitat for Humanity. I’m not doubting the sincerity of those kids, but it’s a lot easier from the more affluent communities, Highland Park and Stevenson, etc. than it is for many of the high school [students] in Chicago.