The bottleneck in U.S. higher education

Given the current preoccupation in the United States with economic inequality, it is natural that a certain amount of attention has turned to higher education, and the fact that America’s most prestigious universities no longer really serve as a conduit for class mobility. Thomas Frank, for instance, has been on a tear (here and here) complaining in particular about the fact that tuition rates have gone up 1,200 per cent over the past 30 years. But he – along with all other American commentators that I’ve read – misses a more obvious problem. Even if America’s best universities stopped charging any tuition at all, it would hardly make a dent in social inequality. That’s because it would leave unaffected the most fundamental problem with America’s elite universities, which is that they have almost no students.

Canadians are used to hearing lamentations from south of the border about how competitive parenting has become in the United States – how if you want to get you kid into Yale, you have to start early, with a nanny with a BA delivering “enriched” care, piano or violin lessons, and entry into the most selective kindergarten as a gateway to the better private schools. Many Canadians think that’s a bit weird – after all, if you want to get your kid into a comparable school in Canada, like McGill or University of Toronto, it doesn’t seem to be that hard.

But of course there’s a reason that it’s so difficult to get into Yale – it’s because Yale has only 5,400 students, in a country of over 315 million people! By contrast, McGill has over 30,000, and University of Toronto has 67,000 undergraduates, serving a country of only 35 million people. That means there’s roughly one spot at Yale for every 58,000 Americans, compared to one spot at McGill for every 1,100 Canadians. No wonder American life is more competitive.

Furthermore, all of the best schools in the United States are tiny. Here is a list of the top 10, as ranked by U.S. News & World Report, along with the number of students (undergraduate, I believe):


Princeton: 5,336

Harvard: 6,658

Yale: 5,405

Columbia: 6,068

Stanford: 7,063

Chicago: 5,590

Duke: 6,655

MIT: 4,503

Upenn: 9,682

CIT: 997

Dartmouth: 4,193


That means the top 10 universities in the United States – a country of over 315 million people – at any given time are educating a grand total of only 62,150 students.

By contrast, here are the rough numbers of undergraduates at the top 3 Canadian universities:


McGill: 30,000

UBC: 47,500

UofT: 67,000


So the top 3 Canadian schools are at any given time educating a grand total of 144,500 students – more than twice the total of the top 10 U.S. schools. (In fact, the University of Toronto alone has more student capacity than the top 10 U.S. schools combined.) The United States has almost exactly 9 times the population of Canada, so in order to have the same sort of capacity in higher education, the top 27 schools in the United States would have to have 1.3 million students.

The other striking thing about U.S. universities is that they easily have the facilities to handle several times more students than they are currently enrolling. I was at Princeton earlier this year, which apart from being very posh, has a campus that is probably three times the size of McGill’s, with certainly quite a few more buildings. As a Canadian, if you asked me to look at their physical infrastructure and guess how many students they have, I would have said 35,000. The fact that they have fewer than 5,500 is ridiculous. And Princeton is not even that big. Duke is enormous, like a vast, sprawling country club. It seems to me they should be able to handle 50,000 to 60,000 students without batting an eyelash.

Part of the problem stems from the fact that these schools are private non-profit enterprises. One of the problems with non-profits is that they tend to become overcapitalized. They have to earn sufficient revenue to cover their expenditures, but because they have no owners or investors they do not have to cover the “cost of capital.” As a result, the capital tends to just pile up over time, since no one cares whether it is being put to good use.

Whenever I walk around a fancy U.S. university, the one word that always springs to mind is: overcapitalized.

What is perhaps even more wasteful than the overcapitalization with respect to physical infrastructure is their overcapitalization with respect to human capital. Again, the faculty at these universities could easily teach 5 to 10 times more students – there are important economies of scale in university lecturing. But instead, the top 10 U.S. schools hoover up all of the best and brightest, then sequester them so that practically no American students have any access. It’s an unfortunate misallocation of resources. Imagine that Hollywood studios made amazing movies, but then let only a couple thousand people see them – at a cost of $50,000 per ticket. This might be a viable business model, but it certainly wouldn’t be maximizing social welfare.

Now without getting too ad hominem, I would just like to point out that many of the players in the recent debates over inequality in America teach at some of the universities listed above (I’m looking at you, Paul Krugman). One simple way that they could make a tangible commitment to reducing this inequality would be to press for a dramatic expansion in the student population. At University of Toronto, we effectively doubled the size of our two suburban campuses – from 7,000 to around 15,000 students each – over a period of under five years. The top U.S. schools could easily do the same. To the extent that they don’t, it’s a tacit admission that their basic business model is not really one of education, but rather of rent extraction.


The bottleneck in U.S. higher education — 3 Comments

  1. Why should we believe that faculty teaching “5 to 10 times more students” will produce the same quality of education? (Sincere question: I’m not sure of the answer here.)

    Another factor comes to mind was well. There certainly are way fewer students in the top U.S. schools versus the top Canadian schools, but the U.S. also has WAY more “top schools” (in other words, if you ranked the top 50 or 100 schools in North America, only two or three Canadian schools would make the cut, with only UofT in the top quartile). So you don’t have to go to Yale to get a world-class education in the U.S., whereas in Canada if you pretty much do have to go to UBC, McGill or UofT (which is actually a nice selection for the population size, though). So I wonder what the comparison would look like you added together the numbers for UBC, McGill and UofT and then compared them to the total number of students at every U.S. university ranked, say, 95-or-higher (or wherever UBC is ranked).

    This also means that some U.S. schools provide educational experiences that are totally unlike anything you can get in Canada (at least at a comparable level of quality): liberal arts, Ivy League, private research universities, denominational schools, etc. So the “Canadian model” partly seems to involve homogenizing the type of educational experience offered, which might have an equalizing effect – but, again, I’m not sure that it should count as an improvement…

  2. If you picked out the top 25 universities in the world, or maybe even the top 50, the bottleneck would still be there — Canada would have almost as many spots available as all the U.S. schools on the list combined. That’s because UofT usually places in the top 25 and is so big, and once you expand a bit you bring in UBC and McGill. In the U.S., the first big schools that rank are Berkeley and Michigan (i.e. state schools), both of which are smaller than UBC.

    There’s a more general point though about status and name-recognition. The top 10 schools in the U.S. are important because of the prestige associated with their name. University of Texas at Austin or University of Wisconsin-Madison may rank highly in the world, and so count objectively as “top schools,” but they don’t really function that way when it comes to providing class mobility in America. If you pit a Princeton graduate against a Wisconsin-Madison graduate, when competing for a job, the Princeton graduate will have a distinct advantage. And so the fact that the “Princeton graduate” label is available to so few people tends to stratify the society. By contrast, the “McGill graduate” or the “UofT graduate” label is available to so many people, in Canada, that it serves as much less of a source of distinction.

  3. Fully understanding this phenomenon would require a more complex analysis than I’m capable of undertaking. For instance: my impression is that if you’re from a blue-collar background in Wisconsin or Texas, going to UW-Madison or UT-Austin does give you a prestige bump relative to your background, even though it won’t put you into the national elite. By the same token, the “Princeton graduate” label helps Canadians who get their degrees abroad once they return to Canada – which is partly fair (because Princeton is a higher-ranked school than any place in Canada), and partly unfair (because a Princeton transcript is hugely grade-inflated, whereas a Toronto transcript isn’t). Indeed, my guess is that a disproportionate number of the Canadian elite have benefited from getting graduate degrees in the U.S. (just think of Mackenzie King and CD Howe) – though that is admittedly a somewhat different phenomenon. The whole set of issues definitely merits further study though! Very interesting topic.