Rankings in higher education don’t measure quality. Mostly they measure the status or brand of a college, so more and better applicants means a higher rank. Beyond the historical elites, most of what the public knows about colleges comes from football and basketball, both of which are essentially advertising programs for colleges. This is part of why you see so much investment here: a more visible sports program does increase applications, and often substantially.

Schools also tout their alumni networks, where the big state schools will always have more quantity and the elite privates more quality. A Harvard or a Texas transcript is about status—neither says anything about what students actually learned.

Students with the right grades and SAT scores in high school can get into a range of good colleges. The best strategy for poor students is to attend the best college they can afford: in other words, most colleges will offer a steep discount to students with better SAT scores than their current students. Students, though, often want to go to the highest ranked college to which they were accepted, and parents will either pay or borrow more money to fill these dreams. This is where colleges make money.

The average debt for graduating seniors is now almost $30,000.  When graduates borrow more money, it is often because of want, not need. At least some of the problem with college debt is because parents and students don’t want to attend a less prestigious school.

So is it worth it? Is your Ivy-league education worth $100,000 or $200,000 more than your state school?

The status of an elite degree surely has some additional value in the job market, but parents increasingly want to know the return on investment. There will always be some parents willing to pay for bragging rights, but more parents will want to know how much learning per dollar you offer. Is there really ten times more learning at a four-year college or is it just ten times the price? Will a Nobel Laureate (or her TA) really be a good teacher for introductory economics? The “draft” plan at Johns Hopkins Krieger School of Arts and Sciences, to reduce the number of graduate students (but pay them higher stipends) has drawn criticism for the suggestion that with fewer grad students to teach and fewer TAs, faculty might need to teach 3 undergraduate + 1 graduate course a year instead of 2+2.

Will a course on a college campus have more interaction than an online course, or will the teacher just stand and deliver? Colleges need to be prepared to answer these questions and how they relate to pricing and value.

University pricing resembles wine pricing: there is enormous price variation in the market, but it is difficult to tell how different the actual products are. Both wine and higher education are subject to complicated rating systems and a belief that the experts can truly tell the difference, but the abundance of exceptions seems to undermine the basic value proposition. With more than 6000 blind tastings as evidence, the relationship between wine ratings and price is small and actually negative: on average even wine experts enjoy more expensive wines less when they do not know the price! It does not matter if expensive wine is not actually better, but it tastes better if we think it costs more.

Similarly, it ultimately does not matter if a student learns more with an Ivy League education. As long as everyone else believes it is better, it will be in high demand and continue to bestow genuine benefits. In the same way that a bottle of wine is about the quality of the experience, a college degree, in the current market, is really more about buying a credential or a degree than it is about buying learning. Both consumers and providers have been willing to continue their shared misconception, since little else could justify the massive price variation in both wines and education.

Still, value will be an increasingly important proposition in the college marketplace. Parents and students already make decisions based upon cost. As competition increases and accountability provides easier ways of comparing outcomes, liberal arts colleges especially will need to justify the added expense. Knowledge is now freely available on the internet, but that only increases the value of being able to find, sort, analyze, evaluate, and synthesize that knowledge. Colleges talk about critical thinking, but we need to do more to ensure we are increasing the complexity of the mental models of our students. Employers are clamoring for graduates with better communication and thinking skills, ethical reasoning and the ability to solve complex problems. That value will only increase.

The liberal arts are under attack largely because they are misunderstood. College is the best opportunity in your life to expand your world view, think about your own thinking, expand your imagination, focus your gaze, and most importantly to prepare for the unknown. That can be delivered in different ways and at different costs, but that is our value: preparing students to explore the unknown, where they will be required to analyze new information, reinterpret what they know and maybe even, change their minds.