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Tuition rising faster than inflation

Posted by gradefund on December 5, 2008
Tuition rising faster than inflation
Students taking on more debt to cope

Bill Virgin, SeattlePI

While the nation deals with its economic crisis, individual Americans who are in college, have been or hope to go are confronting their own financial calamities, with the cost of higher education right in the middle of it.

College is expensive, and getting more so. The latest College Board data show that tuition and fees for in-state students at public schools and at private colleges continue to rise faster than inflation.

To cope, students are taking on more and more debt; 60 percent of bachelor’s degree recipients borrow money, the College Board says, with the average debt for borrowers rising 18 percent (after adjusting for inflation) between 2000-2001 and 2006-2007.

The prospect of ever-higher bills for tuition and room and board is prompting pressure for even more assistance in the form of loans and grants to students.

That’s one way to get the boat past the obstacle: Raise the bridge.

But maybe there’s another way: Lower the river.

Are colleges and universities capable of lowering their expenses so that students’ bills, if not reduced, at least don’t increase faster than inflation?

They may be about to find out, especially in the public higher-education sector, where state governments are already pinched between declining tax revenues and increasing demands for spending on everything else.

The conventional response has been to throw more budget-setting responsibility, in lieu of financial support, to the schools. But unless those schools have gargantuan endowments, and a willingness to tap them for operational spending, what the colleges are left with is the freedom to raise bills on their own.

Colleges are making some stabs at trimming budgets. The National Association of Independent Colleges and Universities says initiatives by its members range from standard moves such as consolidating departments, cutting energy bills by making buildings more efficient and outsourcing functions such as the bookstore and dining services to more innovative approaches, including the sharing of purchasing, courses and programs, computer systems and libraries among schools that are in the same city, region or state.

But colleges have limited flexibility in slashing budgets. “It’s tough to roll those costs back because inflation, even though it’s been moderated, is still rising,” said Lee Gorsuch, president of City University of Seattle. “The costs of all the services we purchase, whether it’s utilities, lease agreements, payroll, contracts, things of that sort, have built-in escalators. There’s only so much you can do with increased productivity, which is largely trying to increase your class size.”

At least one college president questions whether conventional notions about budget balancing through spending cuts apply to higher ed.

“The higher education business model as it has stood for decades does not permit the assumption that lowering cost lowers price,” meaning tuition, William Durden, president of Dickinson College in Carlisle, Pa., said in an e-mail interview.

“In fact, I would assert that the business or financial model for higher education in the United States is broken, and we can’t get to where you want to get with your question. What ‘business’ starts off with a model in which cost is always far higher than price, and must be, to get done what the producer and the ‘consumer’ expect of it?”

What the consumer of American higher ed expects is something more than training for a trade; many colleges are expected to be both a school and a major research institution. That consumer also expects the social and cultural accoutrements of American college life, including athletic programs.

“These are big-ticket items with no clear agreement from producer or consumer of what is enough,” Durden writes. “Would America accept for all its youth an undergraduate education that has no athletics, no residential life (all online), no new knowledge? I sincerely doubt it. If they did, we would lose the distinction of a distinctively American education.”

But if colleges can’t trim their costs to the point that the total bill isn’t galloping beyond students’ reach, will Americans be driven to rethink what they will accept?

Might they, for example, find more appeal in the City U model, one that has in the past been aimed mainly at working adults using evenings, weekends and online instruction to pursue a degree part-time? Might more be pushed to community colleges (public two-year colleges constituted the one category in the College Board survey in which inflation-adjusted costs declined last year)? Might still others head for specialized vocational training programs, particularly if (as some in the manufacturing community contend) there are still good-paying jobs to be had that don’t require the time or expense of a college degree?

There may be expanded opportunities for all those approaches to attract more students, and there may be opportunities created for new systems and structures of post-high-school education that are less expensive.

Not that any of those, or all of them combined, are the definite and definitive answer. Each has its own problems and drawbacks. Gorsuch notes that while institutions such as City U have greater flexibility than traditional schools to reshape and restructure the courses and degrees they offer and how they deliver instruction, private institutions such as his are more expensive than the public schools, and they face budget squeezes of their own (employers cutting back on the subsidies they offer to employees to get degrees).

Students cannot continue to emerge from college with thousands of dollars in debt. Colleges can’t afford to keep jacking up tuition bills with the hope that students, state government or someone else will cover any budgetary shortfalls.

If ever there were a time for a new model to emerge, this would be it. Without one, about the only aspect of college most students will be able to afford without ruinous levels of debt is the sweatshirt bearing the school’s name and logo.


Students are in a money crunch, but this is ridiculous
  • 60 percent of bachelor’s degree recipients have to borrow money to get through school
  • Colleges have limited flexibility in cutting budgets and costs
  • Community colleges only institutions where costs are declining

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