Making College Textbooks More Affordable: Part II

This is a guest post blog by Jim Farmer, Coordinator, Scholarly Systems Group at Georgetown University and editor at the eReSS project, University of Hull.

On Friday, June 1^st, the Advisory Committee on Student Financial Assistance released their report “Turn the Page: Making College Textbooks More Affordable.” Responding to a Congressional concern about high and rapidly increasing cost of “textbooks,” The Committee was asked “to conduct a one-year study of the cost of college textbooks and to make recommendations on increasing the affordability of textbooks.”

The report relied heavily on two commissioned papers. Dr. James V. Koch authored “An Economic Analysis of Textbook Pricing and Textbooks Markets” distributed in September 2006. He made some suggestions how the “markets” for textbooks could be improved to provide lower prices. (He did not use the term “textbooks and other learning materials” later used in the Advisory Committee’s report).

The “textbook” product

Koch cites the rising costs of textbooks and the relationship of textbooks to the cost of education. As the Advisory Committee report itself shows, the price of textbooks increased 107% (two-year public) and 109% (two-year public) from 1987 through 2004 as compared to 67% for the Consumer Price Index (CPI). The cost of tuition for the same period appears, from the report charts, to have increased more than 180% for two-year public colleges and 240% for four-year colleges and universities. The report points out this represents a substantial cost increase for all students and especially for low-income students where the cost of textbooks increase from 2.0% to 2.2% of family income-an increase of 10%.

However, there is a substantial difference between the effectiveness of current “textbooks and other learning materials” and the 1987 textbook. During this 17-year period colleges and universities implemented digital projection equipment in classrooms to use the professional created (and often publisher provided) colored slides, students began to use first “Walkman” and then “MP3” podcasts, and publishers offered on-line assessments and test-banks and on-line coursework. None of these digitally-based products were available in 1987 as part of a textbook “bundle.” The Internet became ubiquitous in higher education. For reference, CERN initiated the World Wide Web in 1991; the Mosaic browser was released by the University of Illinois in 1993. In 1997-a decade later and the first year the U.S. Department of Commerce included the data in the Statistical Abstract 16% of adult Americans used the Internet; in 2003 63% used the Internet).

Koch acknowledges the differences:

“Comparing textbook prices in 2006 with those twenty years previous is an apples and oranges comparison because the products have changed so significantly. For example, today’s textbooks, specially in courses that enroll tens of thousands of students nationally, are bundled packages of items. The package often now includes the conventional textbook, a student workbook, supporting technology such as a CD or DVD, an instructor’s manual, a test bank of questions and answers for faculty use, PowerPoint slides for faculty use and a well-developed web site that may include some or all of the above.”

The Advisory Committee correctly used the current price in estimating the impact of the price on student choice-especially low income students. The use of these data is also appropriate for the student price response research cited by Koch.

But “textbook and other learning materials”-the “bundle”-costs have to be adjusted for the difference in the product to make valid statements about the market as a whole or to argue publishers are increasing costs without cause. The data and analysis to justify these conclusions was not presented and may not be available.

Faculty Selection of “textbooks and other learning materials”

Koch writes “Faculty make their textbook choices independently, and often with little regard to the cost of the textbooks, because they are not the individuals who pay for them.” The Connecticut Board of Governors for Higher Education study (2006) “revealed that only 58 percent of that state’s faculty were aware of the cost of the textbooks they selected for their courses.” But faculty could also select the textbook “bundle” on the basis of effectiveness. For example, in a survey of faculty “More than three in four say that supplemental materials available in their course of instruction, including online and digital supplements, ‘clearly enhance most students’ learning.’ Two in three professors say that supplemental course materials help retain students who might otherwise fail to complete courses.” In 2006 86% either require or recommend supplementary materials; 75% in 2004. 77% agreed “supplementary course materials … clearly enhance most students’ learning.” 79% said “less-prepared students would do significantly better in [their] introductory courses if they spent more time using supplementary materials.” At the same time, Only 30% adopt bundles-some textbooks do not have supplementary materials-and 72% agree that price is important when the textbook is chosen.

The cited Connecticut study could have asked “On what basis do you select textbooks and the associated materials,” not suggesting cost was the only factor. Because there is a lack of consistent data, the Advisory Commission could have suggested that students be given a questionnaire that asks about their use of supplementary materials. If this questionnaire is related to the students performance, some evidence of good practices could emerge that would provide further guidance to faculty.

The Value of Supplementary Materials

A brief exercise may illustrate what faculty may do intuitively. Data suggests that publisher-provided online learning courses in early mathematics will improve retention and course completion 5 to 30%. The cost of the supplementary service or materials (software license) is $7 to $30 per student per semester (from the U.S. Department of Education study on effectiveness). The cost to a student of taking a course in the low-cost community colleges, from the Advisory Commission report, is $4,739 without “textbooks,” and $5,739 with “textbooks.” Assuming four three-unit courses per semester, the cost of taking a course is $717. The value of using the supplementary materials to increase the probability of completing the course by 20% is then about $143 not including any value of higher grades. Faculty may be intuitively making this kind of analysis and choose the more expensive textbook bundle. Because textbooks have similar costs (by level, discipline, and subject) it is unlikely the differences in cost for the textbook bundle would exceed the $143 value. The value would be different for other subjects where the completion rates are already higher or where the differences in textbook bundle prices are higher. By choosing the more expensive and more effective option, the faculty member also saves state and local governments. In 2004-2005 the state and local government contributed $5,825 per full-time equivalent student. This is approximately $728 per course. By selecting to use the more expensive bundle over the textbook itself, the faculty member also saves the state and local governments $146 per enrolled students.

As the both Koch and Advisory Committee suggest, faculty should be given cost data for textbook bundles when they make choices. But they also be aware of the impact that choice has on student enrollment and on the effectiveness of instruction. Cost data is necessary, but not sufficient for a rational economic decision. Comparative benefits are important to choice. The colleges and universities can, through further data collection and analysis, provide evidence of faculty methods of instruction, student uses of learning materials, and evidence of effectiveness.

Differing Prices of Textbooks

By anecdote, Koch illustrates how a textbook could cost less in the United Kingdom than it does in the U.S. I am frequently on campuses in the UK and find it is cheaper to purchase Oxford Press books in the U.S. than in the U.K. (often at Blackwell’s in Oxford)-perhaps because of the 17+% Value Added Tax. As usual, the most important factor is availability of the book, not price. Like others I use Amazon for guidance on price and availability.

The price differentials for most consumer products are narrowing-because products are available over the Internet where pricing is transparent and the cost and time of distribution has declined sharply over the last twenty years. Amazon changed the bookselling business and offers effective competition with any local bookstore for purchases that are not immediately needed. College bookstores are aware of these differences and adjusting margins to remain competitive. The Advisory Committee has suggested providing information to students in sufficient time to use alternative sources; this will add competitive pressures without legislation and improve the market.

Unbundling the “textbook bundle”

Koch writes,

Many observers believe that the total amount students spend on textbooks would decline if textbook packages were unbundled and students could purchase what they wanted on an a la carte basis. This seems plausible, but whether it actually would occur depends on each student’s choices. Consider the cost of developing and producing a bundled item such as a CD. That cost is substantial and publishers attempt to recoup that cost in the price of bundled textbooks they sell. If textbook packages are unbundled and many students choose not to purchase the CDs, then the price of the CDs to those who do purchase them will be higher, perhaps substantially.

The pricing analysis is valid, but the results may not support Advisory Committee goals for student success. Analysis of survey data show that low-income students (with more less-well prepared) are those that would most benefit from supplementary learning materials, but less likely to purchase at higher prices. Middle-income students are less likely to need supplementary learning materials (fewer less-prepared students), and would purchase less than high-income students, but more than low income High income students may purchase the materials for two reasons: They are less price sensitive and, as evidenced by survey data, eager to do as well as possible to establish a record for graduate or professional school admission-a goal beyond “just graduation.” Unbundling would transfer some of the cost of the supplementary learning materials from middle and upper-income students to lower income students if they were willing to pay the higher prices. The transfer of costs depends upon price response and prices, and could be estimated from current data cited by Koch. This differs from traditional unbundling in the sense the value of the product is different for those of different price responses.

Adopting a policy of unbundling may lead to increased prices-spreading fixed costs over fewer purchasers-and, in this case, these prices may discourage purchase by students who could benefit most. Retention rates and completion rates could decline for low-income students as a result of unbundling.

eBooks and Print on Demand

Koch is pragmatic writing “Electronic textbooks, then, are more attractive in theory than in practice. Interestingly, electronic scholarly journals appear to hold greater promise than electronic books for institutions to achieve cost economies and enhance access.”

All campuses are aware that students often print excerpts from electronic journals, copies of digital documents, and selection of Web pages. The volume of print, reported reaching several thousand pages per student per term, has forced colleges and universities to charge for printing. This suggests print remains a preferred alternative.

Early discussions considered the impact of print-on-demand. The Advisory Commission’s report cites two examples: The University of Queensland and Texas University’s Coop Bookstore. As suggested, “the supply chain” for publishers could be sharply changed if customized textbooks could be “printed on demand” at competitive prices-eliminating much of the distribution costs. Currently Connexsion’s use of Lulu for this service suggests the “tipping point” may be near. It would be helpful if the Advisory Committee extended its work to analyze, perhaps with publisher contribution, how a possible revision of the supply chain could meet the demands for custom documents, printed copies, and reasonable prices. In addition to the two universities cited, the University of Alberta is beginning such a program.

When the effectiveness and convenience of learning materials is considered, the representations decisions become more multi-dimensional and difficult. Focusing only on price may fail to best achieve student success or best meet public policy objectives.

Further Reading

Advisory Committee on Student Financial Assistance. 2007. Turn the Page: Making College Textbooks More Affordable.Washington DC. (May 31).

Dynarski, M. et al. 2007. Effectiveness of Reading and Mathematics Software Products: Findings from the First Student Cohort. Washington DC: Institute of Education Sciences, U.S. Department of Education. (NCEE 2007-4005 March 2).

Engle, J. and O’Brien, C. 2007. Demography Is Not Destiny: Increasing the Graduation Rates
of Low-Income College Students at Large Public Universities. Washington DC. (April 11).