Monday, February 29, 2016

NC State MBA team excels in case competition

The Kellogg School at Northwestern took 1st; other participants included Duke, UNC-CH, Chicago Booth, Oxford and Manchester.   Kudos to Graham Givens, Shannon O'Shea, Anindo Chatterjee, Mike Vigars, and Rafael Estevez for representing the NC State Jenkins MBA program so well.  

NC State placed second at the Invest for Impact competition at UNC-Chapel Hill
last Friday.  This is a unique competition where students play the role of investors looking for opportunities that pay off socially as well as financially.  They evaluate business plans for three potential startups, decide which one is most worthy of funding and make a pitch for that startup.  Actual investors and entrepreneurs participate in the process as well, with the investors serving as judges.

Sunday, February 14, 2016

Why tuition is rising

As Margaret Spellings takes over as the new UNC system president, I am sure that tuition in the UNC system will be getting a careful look.  Harvard economist Greg Mankiw recently did an NYT Upshot column where he noted three key factors:

  1. No increases in productivity accompanied by rising costs.  Higher education remains a labor-intensive industry with limited opportunities for capital-labor substitution.  There has been some labor-labor substitution as schools use more non-tenure-track and part-time faculty.  But this has not been enough to offset rising salaries for faculty and staff.  
  2. The widening gap in earnings between highly educated labor and less educated labor.  Colleges make extensive use of workers with advanced degrees and such workers are about the only ones getting ahead in today's economy.  If colleges employed more roofers and gardeners than professors, their labor costs would be holding steady or even dropping.  
  3. Sticker versus actual prices.  Everyone knows the sticker price at Harvard, but no one knows the actual price paid by the average student.  Mankiw shows that list prices have risen by 70 percent over 20 years, whereas the net price (after scholarships) is up 32 percent.  
Two other factors that may be at work behind the national trend: (a) rising financial aid and loan access serves as a subsidy and pushes prices even higher and (b) declining teaching loads for tenure-track faculty.  

In the UNC system we have seen declining state support lead to tuition increases over the last eight years.   

Spellings has put a stake in the ground around expanding access to higher education.  Looking forward, I imagine the UNC system will be looking at innovative ways to deliver education in a more cost effective manner.