Duke donor no longer

With interest, I recently read about the upcoming transition in leadership from President Richard Brodhead to Dr. Vincent Price this July. I wish President Brodhead well, but some criticism is warranted on matters pertaining to leadership for both him and the university. 

No one should ever forget the vacuum of leadership in 2006 when three Duke lacrosse players were wrongfully accused of rape. The administration’s rush to judgement and lack of support for due process will forever go down as one of the great college leadership blunders of my generation. While some fail to capitalize on leadership opportunities in acute settings, others fail on chronic matters. And some, like Duke, do both. It is for the chronic matter of rising tuition costs in the midst of a student debt crisis that I write this letter, and it is why I stopped giving to Duke this year.

When I began my studies at Duke in 1997 the sticker price for tuition was a lofty $21,000. Today, some 19 years later, that figure stands at $51,510. For the half of Duke families who are lucky enough to pay this full cost, this represents a 4.8 percent compounded annual growth rate and an inflation-adjusted 69 percent increase in cost. Do we honestly believe the annual value of a Duke education has risen by nearly 70 percent? What statistics can Duke provide to half of Duke families that answer this question? Have those students’ lifetime salaries increased by 69 percent in real terms? Is the utility of one year’s educational and campus experience really that superior to that which I achieved? They mustn’t know about my frequent trips to Han’s take-out, which I thoroughly enjoyed.

An analysis of average post-aid tuition gleaned from Duke’s financial statements doesn’t fare much better. These show a 27 percent real-growth rate over the same period. We can’t peek under the hood and see the net tuition and debt burden for all income classes, but we can look to national trends and say that, sticker price or not, these numbers are bad optics. While colleges like Rosemont and Utica take a leadership role and slash annual tuition by 43 percent, Duke increases theirs by 4.8 percent annually. 

Pew Research recently showed that the group whose borrowing rates have increased the most for college were the high income group, now standing at 50 percent. This rate compares to 62 to 77 percent in other income brackets and is now equivalent in dollar amount terms. These data indicate that while traditional college tuition gouging belongs in every economics text under first degree price discrimination, its days may hopefully be numbered. Price eventually matters to everyone when the value doesn’t follow.

The question here is whether Duke’s cost equals its value. In some instances it may. But I question both the cost growth as well as the lack of discrimination among different degrees. Sorry to pick on a particular field, but do we honestly believe that a major in Romance Studies and a certificate in Marxism and Society holds the same value as a major in Computer Engineering? Duke may pat itself on the back for giving financial aid to a middle-income or low-income student, but if that student majors in something that society doesn’t place a high value on all you’ve done is contribute to the debt problem. Incorporating more risk into the college payment model may help, whereby students pay a percentage of their income back to the school in exchange for loans from the school. Debating these ideas in depth is beyond the scope of this letter, but the point is that not all degrees have the same value although they may have the same price. Duke should take a leadership role in addressing this systemic problem.

Duke’s poor leadership on the tuition front has contributed to social and political unrest. We nearly had a president who wanted to make state colleges “free” because of the clamoring of the masses—mostly comprised of those who couldn’t afford the sticker price and took out loans, despite receiving financial aid. Should that “free” college plan have come to pass, the marginal value of a degree from Duke for those masses would undoubtedly drop. Duke would be wise to look a few pages back from the price discrimination page in that economics text to see the effect relative price has on demand when holding all else stable. They would also be wise to take a 30-thousand-foot-view of new educational and business models, particularly as it relates to life-long learning and online education. These threaten to disrupt a traditional, high-cost, brick-and-mortar institution like Duke. But Duke can’t be completely blamed for their actions. After all, the US News and World Report rankings encourage them.

Much of what underpins these rankings are not under the direct control of Duke, but some important ones are, and they are incentivized to address them. It’s hard for Duke to differentiate itself based on acceptance rate or SAT standards, and some of this depends on factors not under direct control such as the number of applicants. But something given equal weight to SAT scores is faculty salary, something that (surprise) has increased by roughly 4 percent yearly over the last 20 years. In fact, salary is viewed as being seven times more important than faculty-to-student ratio. Please. How much a school spends per student is also more important than any student-specific factor. This encourages more spending, but not better value.