December 7, 2021

As a parent with one kid in college and two more approaching college-age, the quality of their education is always on my mind. As an investor, I also see that tuition costs have been rising steadily for a long time, and I wonder what that’s doing to our return on investment. Is quality keeping up with the rising costs?

When I look at the education landscape, I see some reasons to worry about schools’ priorities. Many top universities seem focused on graduate programs with star professors and high-prestige research. While there are benefits to having luminaries on campus, they aren’t usually the ones who teach our undergraduate kids. When classes are huge and taught by low-cost, low-experience graduate students, I don’t think that helps tuition ROI.

It’s become commonplace for good schools to have huge endowments. Many of them run into the billions of dollars, and clearly they are great at investing for financial returns. But what does their spending say about the priorities at these institutions? Fancy dorms, dining halls, and student centers are great for enhancing prestige and attracting more applicants, but they won’t do anything to improve education.

Many universities also clearly prioritize high-profile athletics programs. In a few rare cases, these programs earn money for their school, but the vast majority are financial drains. People say they enhance prestige, but is that even true? And at what cost? I’m more focused on getting a great education for my kids than in subsidizing talent development for professional sports leagues.

I think of paying tuition as one of the most important investments I’ll ever make. I want to know that college is preparing my kids to succeed in a changing world. Are schools delivering top-notch educational programming in math, science, and writing? Are they stimulating our kids to develop the critical and analytical thinking that they’ll need?

While costs have escalated, I’m concerned about eroding returns on that investment. Endowment growth, prestigious research, high profile athletics, and fancy facilities are all nice. But university administrators need to remember they’re not running hedge funds or brand-promotion mills. We’re all counting on them to educate the next generation. As a parent and an investor, I’m keeping a close eye on their choices.

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