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Perspective 100:
College: A Great Economic Investment
interview with Northwestern University President Morton Schapiro

RJ: Why is college tuition so expensive—up to $50,000 a year?

President Morton Schapiro, Northwestern University, and author of six books on the economics of higher education: That is a common but rather misleading way of considering tuition costs. First of all, more than 75% of undergraduates attend public universities, typically paying less than a third of that $50,000. And while is it true that many schools, including Northwestern and peer institutions, have a $50,000/year sticker price, of the 16.5 million undergraduates in American higher education, only about 500,000 attend colleges and universities in that price range, and only about half of them pay the full tuition. So, in fact, fewer than two out of 100 undergraduates pay $50,000 per year, and those who do typically come from families at the top 10% of the American income distribution and can afford it.

Hasn’t tuition become more expensive for medium and low income families?

No—it’s become less expensive as a percentage of household income because of rapid increases in aid discounts, especially at highly selective private colleges and universities. During this decade, the percentage of income charged by highly selective private schools has fallen for those families at or below the medium income level as well as for those on the cusp of eligibility for need-based aid (family income of around $200,000 per year and typical associated assets). In short, an Ivy League-type education is considerably more affordable today than it was 15 years ago. Prices might still be high, but at least they are moving in the right direction.

It is true, though, that the sticker-price rate has increased at a much faster pace than the rate of inflation in the U.S. Why?

It’s because we are so labor-intensive. Other industries typically keep down costs by becoming more efficient—which usually means employing capital to replace labor. A university, on the other hand, is like a symphony. How do you become more efficient? Take out a couple violinists? Play faster? Increase the number of audience members at the concert hall from 800 to 3,000? To be more cost-efficient, we could employ graduate students to teach courses, or double the number of students per class from 20 to 40—but that would decrease the value of our product. At NU we try to use technology effectively, and make consortial arrangements with other schools in ordering equipment and supplies for cost savings, but otherwise it’s very difficult to lower costs by raising productivity without undermining our educational mission.

Given the high cost of a college education and a tough job market, does a college education really pay?

Absolutely. A large body of research demonstrates that a college education is a great economic investment with a long-term rate of return of 9% or more a year in future earnings. The rate of return depends, of course, on where and what you study. A graduate of Cornell or UCLA can expect to earn more than a graduate of a community college. And a student with a BS in engineering can expect to earn more than a student at the same school with a BA in philosophy.

Should a student choose a major with high earnings potential?

It really depends on how you value your material standard of living. I know people in the not-for-profit world who resent not being able to afford nicer vacations, and I know people who are fabulously wealthy working on Wall Street who really wish that they were high school teachers. If you’re trying to get rich, it may make sense to major in economics and get an MBA at a school that specializes in finance. Still, there is no guarantee that professions which proved lucrative in a previous generation will pay off in this one. As author Thomas Friedman points out, make sure you’re in a job that can’t easily be outsourced to Bangalore.

What skills and qualities are valued in today’s world?

Being worldly, creative, and respectful of diversity. To be successful in navigating the global economy, for example, you not only need to understand the financial systems in China, but also its language, culture, history, religion, art, and music. For these reasons, ironically, the value of studying the humanities has increased.

Do schools consider creativity as a factor in the admissions process?

Some schools do. For example, at Williams College, where I formerly served as president, we had explicit markers for what we called “intellectual vitality.” We gave special consideration to young people who were creative and interesting but didn’t have perfect SAT scores and might have had some strange grades because some high school teachers didn’t like, appreciate, or understand them. The results aren’t in yet, but anecdotally, those students seem to have thrived. We will be experimenting with a similar approach at NU.

Is studying abroad educationally valuable and cost-effective?

There are a lot of benefits. To be more worldly, it helps to expose yourself to other cultures. And whatever your field, if you’re not comfortable with geographical, cultural, and other differences, you’re probably going to be less successful. That said, it is easier to leave for a semester or quarter if you’re majoring in art history or political science than if majoring in engineering, which usually follows a curriculum hierarchy. If you are considering studying abroad, good questions to ask yourself include: What will I be giving up? What will I be gaining in return? Is the program right for me? Is it really good? Will it deliver what it promises?

The financial ramifications often depend on whether your institution charges the regular tuition or the tuition for the program; whether your financial aid travels with you; and whether you have to pay a fee to support the school’s international studies program.

You studied economics in college. How useful has it been for you?

I became very comfortable with numbers and applied statistics, and became experienced at determining economic trade-offs. There is no free lunch. It sounds trite, but every time you make one allocation, you’re not making it for something else. As economists we’re used to making opportunity-cost calculations, and most trustees like people who understand trade-offs. I think that’s one of the reasons why so many college presidents are economists.

How does your being Jewish inform your role as a college president?

My faith is the most important thing in my life, so I am happy to share my enthusiasm for Judaism with others in the spirit of religious diversity on campus. People of all religions are welcome at the president’s house. Catholics come over to celebrate All Saints Day, and Muslims to mark the end of Ramadan. At Williams, when we broke the Yom Kippur fast, my wife and I hosted dinner for more than 200 people. About 150 of us marched from the Jewish center to the president’s house with our tallit bags in hand. It was a lovely sight. At Northwestern, we had 45 people over each night for seder. That would not have happened in the not-so-distant past, when many colleges and universities were not exactly welcoming to Jews.

—Morton Schapiro, President of Northwestern University, Hillel board member, and former board member of HUC-JIR, Los Angeles


The RJ Insider’s Guide to College Life is a collaborative project of Reform Judaism magazine and Hillel: The Foundation of Jewish Campus Life. To read and email this college section: To learn about Reform college programs, visit; for Reform Israel college programs, call 212-650-4070 or visit For additional info about Jewish life on hundreds of campuses, visit Hillel at or call 202-449-6500.


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