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Base Rates
June 14, 2007 - 6:34am

According to a piece in IHE, Democrats in Congress are considering establishing penalties for colleges that increase tuition by too high a percentage over any three-year period.

To illustrate why this is a painfully stupid idea, I'll trot out some math. Assume 3 percent annual inflation, which is probably in the ballpark. The cap is twice the inflation rate, or 6 percent per year.

Snooty U: $40,000 this year, 42,000 next year, 44,000 the following year – 10 percent over two years; hunky-dory, no problem.

Struggling CC: $3,000 this year, 3,200 next year, 3,400 the following year – 13 percent over two years; violation.

So Snooty U can go up by $4,000 without penalty, but if Struggling CC goes up by one-tenth of that, it's considered profligate. We uppity cc's need to be put in our place. It sure is a good thing we can heat our buildings for free! Oh, wait...

Snooty U is rewarded for being too expensive in the first place, and Struggling CC is punished for being too affordable. This, in the name of affordability.

(In this context, Gov. Patrick's plan for free tuition at cc's in Massachusetts gets even scarier. What's six percent of nothing? Prepare for the ax, folks...)

The net effect over time, obviously, will be that the wealthiest schools will continue to pull away from the rest, and the schools that are actually open to regular people will erode. It isn't that hard to see. This is especially true when you consider that the most expensive colleges and universities typically have larger endowments, and depend less on tuition for revenue.

Clearly, the only rational course of action for cc's is to pass enormous tuition increases while we still can. Double or triple them now, so the base rates will give us reasonable room to move. It's only a holding action, obviously, but it might buy enough time to try to get a more intelligent bill passed.

In the spirit of constructive criticism, I'll suggest a few alternatives:

  • Get the skyrocketing cost of health insurance under control, since that's driving much of the tuition increases anyway. Move to universal single-payer and be done with it. Make those parasites at HMO's find productive work. Get our percentage of GDP devoted to health care down to, say, Sweden's, and invest the resulting hundreds of billions per year in almost anything else. I mean, sheesh.
  • Instead of a percentage cap, go with a dollar figure cap. Nobody can raise tuition by more than, say, $1000 a year for a full-time student. We never have, so that's fine, but the Cornells of the world might start to sweat a little. A little progressivity might be refreshing.
  • Some recognition of the connection between state aid levels and tuition would be helpful. Many scholars are convinced of an important link between 'cause' and 'effect.'
  • Look at higher ed as a coherent system, rather than a constellation of independent actors. Does it make sense to starve out the Nursing programs at community colleges, while providing subsidies for the Whiffenpoofs? I think not. Then again, I'm not in Congress.
  • For that matter, if you want to save a bundle on remedial ed, improve the *#%)% high schools. Let us teach college level courses in college. That might help...

Higher ed is caught in a weird bind. Our costs are climbing rapidly, even as we've spent decades (at least in the frugal lower echelons) hollowing-out the full-time faculty. We're hitting the limits of the “adjuncts will save us” strategy, especially when salary and benefits savings evaporate when student attrition levels climb. Yet parents and the public are -- rightly -- concerned about tuition levels.

In this, as in so many things, a basic failure to define our terms is leading to stupid and counter-productive decision-making. If, say, NYU raises its tuition “too much,” why punish CUNY? If the Ivy League has intimidatingly-high sticker prices, why crack down on community colleges? And hasn't anybody in Congress heard of 'base rates'?

Sigh.

I know, I know, Congress is bad at math. But this is really appalling, even for them. I'd offer to run some remedial math courses for them, but I don't have the budget for it...

 

 

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