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Check out Marvin Olasky's interview with Charles Murray, who has written a book arguing that too many kids go to college. An excerpt:

"Upper-middle-class parents, when it comes to shopping for education for their children, act like drugged-up pop stars on Rodeo Drive. They buy by brand name, they don't check the quality of the product, they pay outrageous premiums, and they don't bother to check later to see if the product was actually delivered."

Can you imagine what college administrators would do if a great portion of their customers started opting for intensive vocational training and certification, rather than the four-year mish-mash that comprises the average university curriculum?

Following up on my earlier post about the self-serving spin generated by the Peanut Corporation of America, the company at the center of investigation into widespread salmonella contamination, The New York Times reports that not only did PCA switch testing companies because it didn't like how its previous tester was finding too many instances of contamination, it actually shipped product before getting test results back.

"Uh-oh," is the quote attributed to one of the plant's managers, after hearing that tests of the already shipped product revealed salmonella.

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"As an industry," explain the authors of a new report on college spending, "higher education still has not made the transition from cost accounting to cost accountability." According to the healthily data-obsessed Delta Project, while universities have enacted double-digit tuition increases in recent years, the bulk of this additional revenue did not go to student instruction. Instead the funds were largely diverted to research, non-instructional student "services" ( a category which often includes recruiting costs), and extra-university activities like conferences and extension services.

It's not inherently bad, of course, for a school to spend extra dollars on something other than salaries and office supplies for teaching faculty. More dollars in the classroom don't necessarily translate to better learning, whereas more dollars for research or technology upgrades can improve what and how students learn. Still, in a time of belt-tightening, customers may start to wonder whether all the added expense is necessary.

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While most university endowments took a hit in 2008, the richest managed to eke out a positive return on the year. Their secret? A blend of alternative investments like private equity M&A funds, real estate, oil and gas, and even distressed debt, combined with a relatively smaller investment in domestic equities. The Commonfund Institute reveals that other universities tried to play the alternatives game as well, but invested far more in a bucket of alternatives that includes derivatives and hedge funds. Endowment funds with the least to lose, those with under $10 million in assets, though they invested relatively little in alternative strategies, put most of it in this arguably riskiest category. Funds with over $1 billion in assets, meanwhile, spread their investments far more evenly across alternative strategies.

So what's the lesson? Are the investment pros at Harvard, et al. simply smarter, wiser, or luckier? Given that the 3- and 5-year returns at top university endowments also outpace the pack, maybe it doesn't matter. As Milton Friedman would say, what matters is the predictive power of the model. So I wonder if smaller colleges might be better off paying the big funds a fee to do their investing for them. I suspect unloading the bulk of their less effective endowment staff would more than pay for it.

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