Posts Tagged “college cost”
As reported last week by Ashley A. Smith in Inside Higher Education, one of the most interesting developments in higher education is how the growing concern over high tuition sticker prices is playing out in state and national politics.
Much of the discussion is a good-hearted effort to make college more affordable, especially for middle class students and their families. These efforts are noble and the cause is just.
Free College Tuition: A New Entitlement for the Middle Class?
There is also some hint, especially at the state level, that programs that address high tuition sticker prices do well in polling, especially for candidates with broader national political ambition. These programs leverage the ability to redeploy state budgets, or seek new revenue, to craft a new middle class entitlement.
While the approach may vary, these programs seek tuition relief. Referred to generally as “college promise” programs, they are tuition-free initiatives for community colleges, and in some places, four-year public colleges. They have been rising in popularity across the United States.
The “college promise” programs raise an important question in American society: Should a college education that is increasingly an entry–level expectation for millions seeking full-time employment be a right or an expectation?
It’s against this backdrop that the non-partisan College Promise Campaign launched by President Obama and the Educational Testing Service recently released reports exploring what they thought were five promising models.
Model 1: Children’s Savings Accounts Plus College Promise
The first approach supports payment by combining children’s savings accounts with a college promise model. The goal is to offer an option to increasing debt, expanding college access to families who are loan adverse or beset by rising debt before they graduate. In this model, the City of Oakland has already raised $25 million of their $35 million goal to support multi-year scholarships to supplement the children’s savings accounts.
Model 2: Publicly Funded “Free Tuition”
The second model may be the best known among the group, pioneered already in states like Tennessee and New York. The financial backing comes from strategies like tax credits, tax increment financing, outside philanthropy, and lottery revenues. Its impact, especially in New York, which has the largest number of private colleges in the nation, can be dramatic and deleterious to private colleges, particularly in states where the public-private mix is more balanced in favor of them.
Model 3: Mix of Public-Private Philanthropy, Partnerships
A third model uses philanthropy and public-private partnerships to raise support for college promise programs. It can be stand-alone, using individual donors or corporate support, or can be backed by a public-private mix, like the Michigan Promise Zones. In this case, Michigan uses an increase in the state’s education tax to mix with private donations.
Model #4: Outcomes- and Future Income-based
The fourth approach calls for the use of outcomes-based models in which the student might receive a $10,000 scholarship but must pay it back through a deduction in future earnings. If a student earns less under this income-sharing agreement, then the student may end up paying less than the $10,000. Purdue University’s “Back a Boiler” program is a good example.
Model #5: Federal Support for Two Years of Community College
The final model examines the role of the federal government, especially after President Obama’s proposal that would have made two years of community college free nationally with states partnering on the tuition bill. The authors of this report think that the federal approach should not pick winners and losers but should help states stabilize state support for colleges and students by incentivizing them.
Higher Education as a Public Good with State-Specific Solutions
There’s much to commend here. There is a predisposition in the report findings to argue that the federal government should not manage a centralized program that would increase bureaucracy at the federal level. There is a recognition that the best solution might be different in each state, depending upon the mix of colleges and universities, level of tuition paid, and the workforce needs in the region. And perhaps most significantly, there is an appreciation for higher education as a public good.
The report findings suggest that education is a right and not a privilege. It’s a fundamental debate that must be settled in an era in which the expansion of entitlement programs is unlikely.
Support for Higher Education is a Shared Responsibility
Yet at the same time, its authors agree that support for higher education must be a shared responsibility among many players. This better suits the national fiscal climate. What is less clear is that one of the partners within shared responsibility must be the student and their families. For this to work, all participants must have skin in the game to the extent to which they are able.
There is a political truce that will also need to be worked out among the various higher education sectors.
This begins with an appreciation of the contributions that each group, including private higher education, by educating the public and serving as a critical economic engine in many states. It will also mean that the role of each sector, including the value proposition for community colleges for instance, must be understood to better justify state support for access and choice.
Without defining the purpose and outcomes across the state and federal government programs that support higher education, it is unlikely that a coherent and seamless higher education pathway can develop. But the models described show great promise.
And that’s a good news story.
Everyone knows that money plays a major role in students’ college enrollment decisions. How big a role?
According to a recent study by Royall & Co., the enrollment management and alumni fundraising arm of EAB, “almost one-fifth of students who were admitted to their top choice of college or university in 2016 but decided not to go there turned it down because of the cost of attendance.”
The study’s finding was echoed in my recent conversation with a well-heeled mother of a high school senior, who expressed sentiments I’ve heard repeatedly for more than 20 years. Her daughter wanted to attend an Ivy League institution that had accepted her. The mother preferred that her daughter accept a large merit award to a prestigious research university. It was a simple cost-benefit analysis by parents, who likely would not qualify for financial aid, seeking relief from high tuition sticker prices.
The Royall findings were fairly uniform with different SAT scores and minority groups. Royall’s managing director, Peter Farrell, concludes: “Something has happened more recently that’s accelerated change. It could be demographics. It could be what we’re seeing on the macroeconomic scale about low socioeconomic (status) families being pinched. I don’t know the actual causality of this change in sentiment, but the slope line of concern seems to be upticking.”
When viewed from other perspectives with different data, the conclusions are the same. The fact is that over 40 percent of the first-time college experiences of admitted students are in a community college.
How Colleges Market “Cost of Attendance” Matters
The obvious answer may be that the sticker prices – now approaching $70,000 at a handful of the selective private colleges and universities — are the culprit. In their interpretation, however, Royall argues that families are more fundamentally questioning the value proposition. Royall asserts that colleges must focus on both their marketing and aid strategy. It’s not so much the discount but the marketing and packaging of the cost of attendance.
“Cost of College” Result of Many Factors
The Royall study also highlights other problems in how Americans understand the cost of a college education. Much of the confusion emerges from a variety of factors including how colleges price themselves, what role state and federal aid play in cost of attendance calculations, the differences between need-based and merit financial aid, and the growing importance of merit aid among higher income families.
The consumer and political pressures over the level of indebtedness that stretch back to the days in which some states offered free college tuition further compounds this problem.
New York’s Free Tuition Plan Resonating Across Other States
It is especially relevant today as the progressive agenda in American politics moves forward with new free tuition plans. Governor Cuomo’s program to extend free tuition to New Yorkers whose families make $125,000 or less annually is last week’s dramatic example.
But the New York State approach will likely resonate elsewhere as the progressive wing of the Democratic Party seeks programs and strategies that will re-attach the American middle class by re-aligning the Party’s value proposition to popular middle class entitlements.
It’s gone beyond major policy shifts emerging from polling and anecdotes that have formed the basis of some education policy. The fact is that America has a growing student debt problem set against a backdrop of persistent and historically worsening income inequality.
Free Tuition Plans are Not Without Costs
It may be that free college tuition is a good next move in enlightened federal policy. It’s just that the “all in” costs of added labor, capital, marketing, assessment, and regulatory reporting expenses seem absent from the cost calculation in the program.
It is equally uncertain that free tuition will do anything to build a seamless pathway for students to improve retention and graduation rates.
For families and independent students, it’s all very confusing. Neil Swidey’s feature in the Boston Globe was a sobering assessment of how students did not fully appreciate the ramifications of their grant and loan commitments.
America’s colleges and universities must bear significant responsibility for the confusion students and families face in determining costs and indebtedness. They are hotbeds of cultural inertia, embracing college aid and pricing strategies from the last century that no longer apply, however noble the original intention might have been.
The hard truth is that the pricing of tuition, fees, room and board has broken down. It’s an “all individuals for themselves” approach that conflates and confuses grants and loans without simple definitions and clear direction. It pits one educational institution against another.
It’s a hopeless educational quagmire because the range of state, federal, corporate, donor and college partners all operate under different rules that make it extraordinarily hard to calculate what and whether to save, where to go, and how to know when you have struck the best deal.
It’s time for common sense to win out in tuition pricing strategies. For families, it begins with a better sense of who’s on first base. For tuition-dependent institutions in an uncertain political environment, time is running out.
One of the striking features of the new presidential administration appears to be the difference between fact and perception. On most levels, it seems that optics matter more than words. It also seems that facts are an afterthought to the positions floated. Further, it looks like many positions shift regularly depending upon how the outcome is likely to play with the American public.
It’s not that outcomes don’t matter; in fact, they do. But words also matter in the end. And facts inform the words that are spoken. Facts are the foundation that opens the dialogue, builds the trust, and sets a policy on which interested parties can agree. Facts aren’t subjective and they can’t be taken too literally. Facts are just facts.
For the moment, those of us who think and write about higher education can’t be certain about what’s coming.
While President-elect Trump has named a Secretary of Education, there’s not really enough to go on yet to forecast an education strategy.
What will be the policies of the Trump Administration? Will they reflect traditional priorities established by Congressional Republicans? Are there likely to be new Executive Branch initiatives?
Is the combination of national higher education associations, policy institutes and think tanks, and campus-based higher education leadership part of the swamp that Mr. Trump promised to drain or are they a resource to which he can turn as an outsider seeking informed opinions?
President-elect Trump has a right to claim some time to set up his shop. We’ll know more soon. We can withhold our powder and wish him well until perceptions become proposals. But it’s a short grace period when the issues are so pressing, consumer dissatisfaction is increasing, and pre-election campaign positions potentially threaten how colleges operate.
Colleges are a microcosm of American society. Almost every action taken will have some effect on them. It’s important to watch and learn.
It is even more critical for state and federal legislators to understand how colleges work and the pressures that they face. The facts always matter.
A recent example demonstrates the danger of creating a quagmire in the so-called “Washington swamp.” US Representative Tom Reed (R-Corning, NY) has reported that he is confronting the college cost crisis and the student loan debt issue through a variety of proposals that he will sponsor and support.
For Congressman Reed, the effort is personal: “I have firsthand experience with this myself having $110,000 worth of student loan debt when I completed my studies . . . Now, with my own daughter being a freshman at the University of Buffalo, this is something I have dealt with personally.”
Congressman Reed is justified to worry about high college tuition sticker prices and rising student debt. He supports the expansion of the Perkins Loan Program and Pell grants, for example, to help families deal with these costs. But many of his proposals suggest that he is not especially well versed about higher education issues that go well beyond legitimate questions about high sticker prices before tuition discounts and where comprehensive student debt originates.
Most troubling are two proposals grouped under what Mr. Reed has developed as a “Vision for Students” platform. The proposed federal legislation has the unfortunate and pejorative title of “Reducing Excessive Debt and Unfair Costs of Education Act.” In this bill, Mr. Reed targets about 90 institutions that have over $1 billion in endowment funds. His proposal would mandate that these endowment funds reduce a student’s tuition by 25 percent. This mandate might be expanded to other institutions as well.
If these colleges and universities failed to provide tuition relief, they would become subject to hefty tax penalties. Further, Rep. Reed’s proposal would require college campuses to submit plans to keep their costs below the rate of inflation. Colleges that failed to comply could lose federal aid.
Let’s set aside the issue of why the federal government that fails to keep its own expenses below the rate of inflation, suffers from growing consumer discontent, and has not modernized its own infrastructure should pick out sectors of the American economy – in this case higher education – for special regulatory treatment.
Instead, let’s look at the facts. There is no particular reason that $1 billion should be a cap for Rep. Reed’s proposals. Colleges and universities differ by purpose, scale in size and operations, and student income levels. A $1 billion cap is meaningless.
Further, endowments are often a collection of donor-restricted funds and not an unrestricted pot of gold that colleges use as discretionary accounts.
Finally, a five percent drawdown annually on a rolling twelve-quarter average will not generate the revenue necessary to support a 25% cut in tuition at most institutions.
In addition, colleges and universities that raise tuition – or allow their tuition discounts to rise beyond the level where net tuition revenue no longer increases – will either adjust to marketplace dynamics, merge, or close. It’s one of those pesky inescapable facts that should guide progressive federal policy.
Higher education is a little like the patient who will not improve if the wrong medicine is prescribed. As a start, it might be better to sit down with higher education’s leadership to ask how higher education works, what efficiencies can be created, and how the state and federal governments can be helpful and knowledgeable partners in a shared need to ensure an educated workforce.
In The Hechinger Report’s recent story, “University Bureaucracies Grew 15 Percent During the Recession, Even as Budgets Were Cut and Tuition Increased,” reporter Jon Marcus examined the confounding trend that many university systems are showing “new resolve . . . to improve the efficiency and productivity of stubbornly labor-intensive higher education” when “statistics suggest the opposite is happening.”
Looking at a variety of public systems across the country, Mr. Marcus found that “the number of people employed by public university and college central system offices . . . has kept creeping up, ever since the start of the economic downturn and in spite of steep budget cuts, flat enrollment and heightened scrutiny of administrative bloat.” Mr. Marcus reports that this growth happened at a time when states have collectively cut their higher education spending by 18 percent. He also notes that some systems like Maine’s central office grew by 26 percent – despite an enrollment decline and budget cuts.
There is a silver lining according to Mr. Marcus, however, who suggests that “after years of promising to save money by streamlining operations, cutting duplicate staffs and maximizing purchasing power, some university systems have been forced by political pressure and economic realities to finally start doing it.”
In Maine, for example, Mr. Marcus found under a new “One University Initiative” in which the system consolidated the budget, legal, personnel, information technology, insurance, purchasing, and other departments from its seven campuses resulting “in a 37 percent decline in the number of administrators at the universities that will save about $6.1 million a year.”
The findings are modestly encouraging and hardly surprising. Elected officials are increasingly placing American colleges and universities – at all levels – under greater scrutiny especially at the state and federal levels.
There is, of course, an ongoing historic frustration in the higher education community when politicians – most of who are not skilled in finance and who have not run businesses of substantial scale – wade into the management of higher education.
It’s easy for higher education officials to point privately to great gaps in how the state and federal government runs and finances their own enterprises in terms of archaic, disruptive, and conflicting management practices and protocol across all levels of government.
The complaints are not often voiced publicly, of course, because colleges and universities depend on government partnerships to fund student and institutional aid.
The Incremental Inertia of Higher Education
But in the end that may not be the point. The argument still holds that America’s colleges and universities operate in a culture dominated by incremental inertia.
No place is more conservative in its management practices than a college or university campus.
Smaller campuses operate on a time-worn academic cycle which can inhibit transparent decision-making when the campus powers down in the summer and during academic breaks, effectively five months a year at many colleges.
Challenge of Shared Governance
Shared governance is also a problem. The key to good governance is transparency and communication. It’s critical because key stakeholders – trustees, administration and faculty – have important roles to play. It sometimes means that everything takes longer than it would in a corporate setting or in government regulated in the days before the overuse of the “continuing resolution” by an annual budget cycle.
Decentralization Can Make Cost-Cutting More Difficult
Another problem, depending upon the institutional setting, is decentralization. In a decentralized setting without strong administrative leadership, college and university divisions, departments, and programs are their own fiefdoms. It’s impossible to create a standard data protocol because of bad record keeping and the differences among divisions like enrollment, financial aid, alumni, and advancement, or so the argument goes.
At the opposite end, the college’s adherence to state and federal regulation, its need to commit to key residence life programs, including athletics, mental health and wellness counseling, diversity initiatives, and internship and career counseling programs, as well as support accreditors’ demands for tighter accountability standards can cause administrative bloat.
One impact of the Great Recession has also been to “beef up” enrollment and advancement operations – a practice that demonstrates their importance to bottom line revenue so critical in weak admission markets. Should these programs be scaled back?
On any level, an ongoing effort to streamline to create efficiencies and economies of scale is a good idea.
But the practical dimension of the problem is that the operational model doesn’t work anymore for American colleges and universities.
Higher education cannot reasonably address the question of cost until its leadership understands that cost is first about whether the older operational models continue to serve them well.