Those rankings are infamous for their gauzy attempt to measure academic quality, a nonquantifiable abstraction. They don’t even measure job placement after graduation. Instead, they gauge factors such as campus life and spending per student—and by those criteria, a pricier school is also a better school.
The way Trachtenberg saw it, selling George Washington over the other schools was like selling one brand of vodka over another. Vodka, he points out, is a colorless, odorless liquid that varies little by maker. He realized the same was true among national private universities: It was as simple as raising the price and upgrading the packaging to create the illusion of quality. Trachtenberg gambled that prospective students would see costly tuition as a sign of quality, and he was right. “People equate price with the value of their education,” he says.
Trachtenberg was hardly the first to reach this conclusion, but under his leadership, George Washington was peerless in following its logic. He didn’t spend the tuition windfall to shift the professor-to-student ratio or overhaul the curriculum. Instead, he covered the campus in cafés, beautiful study spaces, and nicer dorms. Trachtenberg thought that construction on campus gave the appearance that the school was financially sound and was progressing toward a goal, so his policy was, “Never stop building.” If he wanted to erect or renovate two buildings, he would stagger the projects so that jackhammers could be heard constantly around campus. He also introduced a three-day orientation, known as Colonial Inauguration, that featured ice-cream socials, casino nights, and a laser show that cost $2,500 per minute.
Meanwhile, more and more applicants were choosing George Washington over its rivals, which realized that they, too, had to telegraph value to attract top students. The result was a tuition arms race. Between 1988 and 2008, private schools’ spending on noneducational assets outstripped their outlays for research, academic support, and instruction. (Class size remained the same at GW and its competitors during Trachtenberg’s 19-year tenure, and the nationwide percentage of full-time faculty fell from 80 percent to just over 50 percent between 1970 and 2007, according to the National Center for Education Statistics.) Those buying sprees cost money: Many registrars, at both large universities and small liberal-arts colleges, have raced to cross the $40,000—then $50,000—tuition threshold in the last decade. George Washington now costs more than $56,000, and still there are 20 schools more expensive.
This wasn’t pure class warfare. Along with spending on campus amenities, private colleges also focused on merit scholarships, diverse student bodies, and even, at the richer schools, need-blind admissions. GW was the nation’s most expensive school, but it still had one of the most economically diverse student bodies, Trachtenberg says. (At least that’s what he remembers telling his board of directors to say if its members felt self-conscious about the rising cost of matriculation.) Private schools across the nation discount their tuitions by an average of 42.8 percent today, up from 26.7 percent in 1990.
While critics accused Trachtenberg of “educational socialism” for squeezing money out of top-earners, he called it “buying talent” and said that students were more interested in attending a $40,000 school with a $20,000 discount than they were in attending a $20,000 school.
Jeff Denneen, a partner at Bain & Co, and the head of Bain's higher-education practice in the U.S., calls Trachtenberg’s philosophy “the law of more.” Rather than distinguishing themselves from their competitors—by offering a special course of study, for example, or concentrating on an exceptional athletics program—many universities have tried to be everything to everyone. At tuition-dependent schools with low endowments, this has led to a kind of stratification: Students at the top of the income ladder can absorb tuition hikes and those bottom can win financial aid. But those in the middle are feeling an ever-tightening squeeze.
Cornell, which costs $57,000, is a good case study. Students from families that make less than $120,000 are eligible for unlimited financial aid. But the university recently capped aid at $7,500 for students from families making more than $120,000. Wealthy applicants can pay the difference, but middle-class ones have to take out loans. The quality of campus life for students across the country is surely better than what Columbia offered Trachtenberg and Small in the 1950s, but college graduates leave school with loads more debt—$24,301 on average—and aren’t any better equipped to pay it off now than they were when Trachtenberg started GW on this course. Delivering newspapers and waiting tables during the summer can’t solve a problem that large.
Meanwhile, all those capital outlays to attract the best students have punished university budgets. Many of the facilities Trachtenberg added to the campus in the 1990s, for instance, will need major repairs, such as new air-conditioning or electrical systems, when they hit their 25-year anniversaries, according to Sightlines, a firm that advises colleges and universities on when to schedule construction.