Price Back in the Spotlight

WASHINGTON -- In recent days, members of Congress and Education Secretary Arne Duncan alike have struck a common refrain: colleges charge too much, and new and innovative solutions are needed to make higher education more affordable. 

On Wednesday, two experts on higher education cost and affordability and two university presidents testified before a Congressional subcommittee on how institutions should change to make college more affordable for students. The day before, in a speech to the Federal Student Aid conference in Las Vegas, Duncan depicted rising college prices as an urgent problem, listing a wide range of solutions.

In recent months, the Occupy Wall Street movement has intensified concern about student debt -- and, as a result, about the price that students and families pay for college. When the Federal Reserve Bank of New York recently announced in a quarterly report that it had significantly undercounted student loans and now estimates the current total of outstanding loans at $845 billion, not $550 billion, it seemed likely only to add fuel to the fire (other calculations have outstanding loan debt at or nearing $1 trillion).

Now (as many times before), elected officials are trying to join the conversation. But whether that conversation will lead to any meaningful change seems uncertain; the Congressional hearing was only the latest development in a series of efforts, from a national commission in 1998 to provisions in the Higher Education Act reauthorization a decade later, to stop the inexorable rise of tuition.

Duncan called on college officials to “think more creatively -- and with much greater urgency” about the rising price of college. Rep. Virginia Foxx, a Republican from North Carolina and chairwoman of the Committee on Education and the Workforce’s higher education subcommittee, said institutions “must do their part to streamline costs and lessen the burden for students whenever possible.”

Testimony at the subcommittee focused on both broad trends in college pricing and specific efforts to make college more affordable. Jane Wellman, founder and executive director of the Delta Project on Postsecondary Costs, Productivity and Accountability, which will cease operation in early 2012, provided an overview of trends in higher education's own costs (what colleges spend to educate students and finance their operations). A common pattern has been the combination of cost-cutting at universities accompanied by tuition increases, she said, with a “slight but consistent erosion” in the proportion of money going toward the direct cost of student instruction rather than administrative activities, technology and other “support” functions.

Still, she said, the recession has made colleges more budget-conscious, which could be considered a positive outcome. “Big public systems as well as small institutions are paying a lot of attention to cost-cutting and productivity,” Wellman said. “There are a lot of good examples -- more than we’ve ever seen before.”

Many members of Congress said they were intrigued by one of those examples, a three-year degree program at Grace College and Theological Seminary in Indiana. The president of Grace, Ronald Manahan, said the option was offered after a comprehensive review of the college’s degree programs and expenditures in 2008. Several colleges have begun offering shorter-term degrees, which have been heralded by politicians like Sen. Lamar Alexander and higher education experts such as Robert Zemsky.

“We believe our changes address cost and strengthen education and access,” Manahan said.

Foxx also praised a model put forward by Jamie Merisotis, president of the Lumina Foundation, who called for a higher education system based on knowledge rather than time in the classroom -- a model used by Western Governors University, an approach praised by both the subcommittee and Duncan. “Obviously we need to do more on that in higher education,” Foxx said.

Duncan, for his part, offered a plethora of examples: shorter degree programs at the University of Charleston, in West Virginia; fixed tuition in Florida and a four-year tuition freeze in Ohio; and a program in Oregon that pays for additional semesters if a student takes a full courseload but does not graduate in four years, among other efforts.

“The truth is that every state and institution of higher education should be spelling out ambitious but achievable goals to substantially boost completion and control the growth in college costs,” Duncan said.

Whether any approaches from the collection cited by Duncan and the witnesses at the subcommittee hearing will catch on widely is still unclear, but many praised the diversity of approaches. The last federal efforts to make colleges more cost-conscious, including publishing a “wall of shame” of colleges with the highest prices and greatest price increases, as well as mandating a net price calculator so that students and families can more easily comparison shop, seem unlikely to have a widespread effect -- with some colleges even turning their “most expensive” label into a point of pride. And previous proposals to more directly constrain tuition in some way have been rebuffed by colleges and derided as "price controls."

Still, administration officials indicated that Duncan’s speech is only the beginning of an increased focus on college costs. And subcommittee members described Wednesday’s hearing as “informative” and promised to revisit the subject.

“Farsighted leaders in higher education and the states are helping to point the way to challenging the status quo,” Duncan said. “They are demonstrating how to do more with less.”