The phrase was new to me but the concept and the consequences are very familiar. William G. Bowen, in giving the keynote address at the recent TIAA-CREF Higher Education Leadership Conference, talked about students and their families underinvesting in higher education. Given the important economic and social benefits of higher education, why would there be underinvestment and how does this work? The reason for the underinvestment is simple — many families are looking for a bargain. They are looking to get the degree at a lower cost or possibly at the lowest cost possible. The bargain priority skews the decision making process; instead of going to the best college or university that you can get into, students are going to the schools that offer the most attractive financial aid packages. Until the 2008 economic meltdown, my impression is that the decision making worked as it had for many years – families and their college bound children attended the (academically or academically and socially) best school they could get into assuming the finances could be worked out.
Now college bound kids and their families are consciously rejecting the best schools for the best offer. President Bowen gave the example of a young woman who had gotten into Princeton but without a scholarship. This college bound student had gotten scholarship offers from all 10 other institutions she had applied to, and the family expected the same response from Princeton. Princeton’s response was to ask the young women to decide what she wanted—did she want Princeton or did she want a scholarship? Did she want a Princeton or a school with a lower (or no) net tuition?
There is nothing wrong is seeking out a bargain if the bargain provides the same quality education as the alternatives. But is that what is happening in higher education? Much of private higher education is engaged in an escalating tuition discounting (increasing scholarship) race. Scholarships are increased so as to make one institution more attractive than another. And the other institution typically responds by increasing its scholarships. As more money is allocated to scholarships, less money is available for the others costs involved in providing higher education. As this continues for an extended period of time, what is the end result?
For public higher education, more and more colleges are being asked to educate more students with fewer resources. Educate more but spend less? Initially there are likely efficiencies to be realized. But when this has happened and the number of students still increases or the budget continues to decline something has to give. And when this happens for an extended period of time, what is the end result?
Those of us in higher education need to more forcefully make the compelling case for higher education. At the same time we need to make sure we are operating as efficiently as possible. Our students and their families expect and deserve no less. We need to also draw the line on excessive tuition discounting or else we will begin to see a strong correlation between tuition discounting and quality discounting. We need to remind public officials that doing more with less, can ultimately result in doing less with less. And we need to be forthright in indicating to students, that one danger in undermatching is that if the quality has not remained constant, what appears to be a bargain is really second best.