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Changing the Tuition Discussion

December 1, 2008

If tuition policy is a vexed question in normal budget years for public universities, it will be especially challenging to discuss public policy on the subject this year. States are facing record deficits and many public colleges are seeing enrollment and application increases -- a formula that could combine to create large, unpopular tuition increases.

In this environment, the leaders of a national association of public universities hope to shift the debate -- calling for better information about what really is going on with college costs, and also urging colleges to consider some potentially radical ways to control their costs. "University Tuition, Consumer Choice and College Affordability," being released today by the National Association of State Universities and Land-Grant Colleges, both defends public higher education and criticizes it. While suggesting that colleges are more affordable than many people realize today, the report sees a "looming affordability challenge" in which public institutions could move out of the reach of many Americans, a potential shift that the association sees as counter to the values of its institutions.

The beginning of the report -- consistent with efforts by others in higher education -- tries to shift public attention away from colleges' sticker prices and broad generalizations about affordability, arguing that sticker prices rarely reflect what students actually pay and that affordability depends both on the charges of a college and the means of a student, and is thus unique for individual circumstances. The report then goes on to suggest that much is unknown about whether colleges can save money through various means -- such as providing more instruction online -- and suggests that now is the time for serious research on such questions. The report faults universities for not having the data that would allow for better decision making.

Peter McPherson, president of the association and co-author of the report, said that much of the work on it predated the recession, but that getting attention for these ideas and questions is "more pertinent than ever." Even if the coming year is unlikely to be a good one for public higher education, McPherson said it was essential to make both university and state leaders understand the consequences of decisions on state appropriations, tuition policy and the way universities are run. There is not "an extra bag of money" around universities to bring out this year, he said. The report's co-author is David Shulenburger, NASULGC's vice president for academic affairs. He too acknowledged that this year may not be ideal for reasoned debate on tuition policy, but said that "this isn't a short-term problem" and will not get a short-term solution. (A podcast interview with McPherson and Shulenburger is available here.)

In terms of the present, the report notes that public universities are not expensive compared to other costs faced by Americans. The report notes, for example, that tuition and fees at the average public research university are $719 per month (based on a nine-month academic calendar), or about 11 percent of average family income.

The problems the report identifies come from trends of the recent past and the future. In recent years, the report notes, increases in public university tuition have not been used to improve the quality of instruction and other services, but to offset the declines in the relative share of support coming from state appropriations. Looking ahead, the report sees affordability issues created by shifting demographics, in which more of the potential student body will be coming from disadvantaged groups with lower family incomes. Further, based on current government projections, the report suggests that the share of family income required to pay tuition and fees (even after discounting is applied for institutional or other aid) is likely to get too large for many families. Among sectors examined, only community colleges are unlikely to see a significant shift in share of family income required, the report says.

Proportion of Family Income Required to Pay Tuition

Year Private, High-Level Research Universities Public, High-Level Research Universities Community Colleges
2006 57.3% 11.1% 5.5%
2006 (with discounting) 38.5% 9.3% 5.1%
2036 97.9% 28.5% 6.4%
2036 (with discounting) 65.8% 24.0% 6.0%

So if public universities are at risk of having their tuition levels rise to unacceptable levels, and have already made considerable cuts and adjustments in their budgets to deal with inadequate state support, and enrollments are about to rise, how should public policy change?

The report offers a variety of steps that public universities and states might consider:

  • "Unbundling" costs to better understand and perhaps control them. The report suggests that public universities are unusual economic organizations in American society in that their costs are so integrated, or "bundled." The same professors may perform research (either with or without major outside support), teach (either undergraduates and/or graduate students) and offer service to their institutions, disciplines or society. At a community college, the report says, faculty time is clearly instructional. But measuring the costs of undergraduate education at a research university may be "very difficult," and that, in turn, may make cost control "nearly impossible," the report says. While the report acknowledges that "unbundling" is easier said than done, it urges public universities to consider how costs can be separated for closer examination. And it notes that competitors to public universities -- such as for-profit higher education, which has moved into areas once dominated by public universities -- have no such difficulty.
  • Shift the tuition discussion to one about "investment," as opposed to "a consumer purchase." A long-standing goal of many college leaders has been to have the public view spending on higher education as advancing a societal gain, not just a benefit for the recipient. The report reiterates this view, and calls for a sustained effort to shift attitudes. "[A] society that tends to view higher education as a consumer good rather than an investment good will tend to perpetuate elites who have themselves had a higher education and will endeavor to afford one for their children. The children of the poor will tend to remain poor as they will get much less higher education," the report says.
  • Better define the benefits that individuals do receive from higher education. While many students (and their tuition-paying parents) believe that attending a high quality college will yield higher incomes in post-graduate life, the report says that there is little objective data on the relationships between attending certain colleges and subsequent economic success. "No university can legitimately claim that their students learn more than do students graduating from competing universities," the report says. If universities would develop "credible data" on the impact of their educations, the public would better understand the value of higher education and less credible measures (such as rankings) might lose some of their popularity, the report says.
  • Change the way higher education is delivered. Public universities should consider whether offering substantially more instruction online, or through course redesigns that change the way instructors interact with students, would be more cost-effective while assuring quality. In addition, universities may want to consider efforts to reduce time to degree, going beyond efforts for four-year graduation to more three-year programs. The report says that such ideas need to be tested and evaluated, but that public higher education needs to move away from any presumption that long-standing practice is necessarily the best practice.
  • Restore state appropriations to "more appropriate levels." While the report acknowledges all the difficulties in doing so, it urges public universities not to accept the status quo with regard to state support -- and to push for a return to the idea of a more meaningful contribution from state coffers.

McPherson stressed that NASULGC wasn't trying to impose some particular combination of these options, but that it wanted to offer a variety of ideas to get a renewed discussion under way about tuition and appropriation policy. "Public policy in hard times is always hard," he said.

 

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