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National CrossTalk Fall 1999
News Editorial Other Voices Interview

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The Scary Cost of College
Public concerns remain about the escalating expense of higher education

By William Trombley
Senior Editor


Jamie Pueschel, legislative director for the United States Student Association, displays a $150 billion check, representing money students have borrowed to pay for college.  
Jamie Pueschel, legislative director for the United States Student Association, displays a $150 billion check, representing money students have borrowed to pay for college.  
TWO YEARS AFTER a national commission reported on the escalating cost of attending college, the report has been largely forgotten, but a booming national economy, and growing sensitivity to charges of price gouging, have led to smaller annual tuition and fee increases at both public and private colleges and universities.

The soaring stock market has inflated the endowments of many private (and some public) schools, making large price increases less necessary and also making them harder to justify. At the same time, unexpectedly high tax revenues have enabled most states to spend more on higher education; a few have frozen or even reduced tuition and fees at public colleges.

As a result, the College Board reported last fall, tuition and fee increases for the 1998–99 academic year were the lowest in at least a decade. Average tuition at public four-year colleges rose 3.4 percent -- from $3,243 to $3,356 -- for the 1998-99 academic year. For private four-year institutions, the average increase was 4.6 percent -- from $14,508 to $15,380.

However, the price hikes were still ahead of the Consumer Price Index, which grew by 2.7 percent in the 12 months ending last November. Although median household income rose 3.5 percent last year, the largest increase in more than 30 years, this was still lower than average tuition increases.

"The times are good and this has helped greatly" to moderate tuition hikes, said Stanley O. Ikenberry, president of the American Council on Education (ACE), the major Washington lobbying group for colleges and universities.

"All boats are rising, except the community colleges," said Robert Zemsky, director of the Institute for Research in Higher Education at the University of Pennsylvania.

Public discontent over the hefty price increases of the late 1980s and early '90s also has played a role in holding down tuition hikes, as has increased pressure from Congress and from some state legislatures.

"The presidents are well aware of the public concern," said Tim McDonough, ACE's vice president for public affairs. "The national spotlight has certainly focused the attention of the campuses."

"There has been a recognition that unbridled growth (in costs) is not a good thing," said Jonathan Brown, president of the Independent Association of California Colleges and Universities. Brown said about half of the 73 private schools in his association "have taken the pledge" to keep tuition increases in line with the Consumer Price Index.

Williams College, a small, highly selective liberal arts school in western Massachusetts, announced in early January that there would be no increase in total student charges next year -- the college now charges $31,520 for tuition, fees, room and board. Instead, Williams will dip into its $1 billion endowment to balance the budget.

A handful of small liberal arts colleges, most notably Muskingum College, in southeast Ohio, actually have cut tuition in recent years. At Muskingum, the results have been higher enrollment and an increase in net revenue, but few institutions have followed their example.

Some private college leaders grumble that they are being forced to hold price increases to unreasonably low levels.

"Institutions are responding to the pressures of the marketplace, although they are very nervous because there is not enough money at some institutions for needed improvements," said David Laird, president of the 16-member Minnesota Private College Council. "I'm real concerned that these unilateral pressures on cost, without regard to educational quality, is not a very rational approach."

Laird is among those who blame the news media for focusing on the high cost of attending one of the nation's relatively few highly-selective colleges and universities, like Pomona College (total cost $30,920 for the 1999-2000 academic year) or Princeton University ($34,898), while ignoring the great majority of institutions, both public and private, that charge much less.

"A lot of the people who write about this have teenagers who are about ready for college, and these people haven't prepared for the cost," Laird said.

So far, smaller tuition increases do not seem to have assuaged public concern about the cost of higher education for students and families.

A recent Washington Post national survey of more than 2,000 voters found that college costs were among the top ten worries for all respondents, among the top five for registered Democrats.

"These increases may be going down but they're still the number-one reason why kids decide whether or not to go to college," said Jamie Pueschel, legislative director for the United States Student Association and a 1998 graduate of California's Claremont McKenna College.

Pueschel also said students' ever-increasing dependence on loans to pay for college was prolonging the time it takes to earn a degree, causing some students to drop out and others to forego graduate or professional school. The average undergraduate has borrowed more than $14,000 by the time he or she earns a baccalaureate degree, Pueschel pointed out.

"One of the things that bothers me" is that students are being asked to pay for an increasing share of college costs, said Edward M. Elmendorf, vice president for government relations and policy analysis at the American Association of State Colleges and Universities. At four-year public institutions, the student share rose 27 percent between the 1988–89 and 1996–97 academic years, according to AASCU calculations.

Although tuition charges and other college costs had been gradually increasing for at least a decade, it was not until the early to mid-1990s that the issue dented the public consciousness and aroused concern among some politicians. Major newspapers and weekly magazines began to write about the issue. Most notable, perhaps, was the April 29, 1996, Newsweek cover story: "$1,000 a Week. The Scary Cost of College."

A September 1998 report from the U.S. General Accounting Office noted that average tuition for a full-time resident undergraduate increased by almost 44 percent between 1990–91 and 1995–96, while in the same time period the Consumer Price Index increased by only 15.4 percent, and there was a 13.8 percent increase in median household income, in inflation-adjusted dollars.

As college costs were rising in the early 1990s, state and federal support for higher education was generally declining. In California and some other states, smaller appropriations led to enrollment cuts at public institutions. The maximum Pell Grant award -- the federal government's main financial aid program for low-income students -- dropped 24.2 percent between 1980 and 1998, again in inflation-adjusted dollars.

Last November, Thomas G. Mortenson, editor of the monthly publication Postsecondary Education Opportunity wrote, "This, in a nutshell, reflects the higher education financing dilemma faced by families: higher costs, stable incomes, declining financial aid."

Washington was slow to respond.

"When it comes to higher education, the federal government really steps back," said Joseph J. Eglund, co-author of the General Accounting Office report. "There's a hesitancy about seeming to dictate what colleges and universities should do."

"Congress tends to see this as a ‘states rights' issue," said his co-author, James W. Spaulding.
The Clinton Administration proposed, and Congress approved, a massive tuition tax credit program that benefits middle- and upper-income families but offers little help to low-income students.

Several states followed the example of Georgia and launched ambitious merit scholarship programs -- again, helpful to the middle and upper-middle classes but not to those most in need of financial aid.

In Congress, there were whispers of possible federally imposed tuition price controls but few took such talk seriously, especially with Republicans in control of both the Senate and the House of Representatives.

"That's just a lot of rhetoric," Edward Elmendorf said. "The 50 states simply aren't going to let the federal government set tuition levels."

When the Higher Education Act was up for reauthorization last year, some consideration was given to penalizing states that had increased tuition sharply. There was talk of reducing their federal appropriations for special "opportunity grants" and work-study programs, a key congressional staff member said, but it was decided there was little point in punishing students for the actions of a state.
"Congress can't figure out how to do anything about tuition increases without hurting students," said Jay Diskey, a Washington public relations consultant and former communications director for the House Education and Workforce Committee.

Diskey also said congressional inaction could be blamed in part on the lack of sustained news media interest. "I kept hearing from the same 20 reporters all the time," he said, so Congress felt little public pressure to deal with escalating tuitions.

In fact, the pressure came from the opposite direction -- from higher education leaders who argued that increases were justified.

"Colleges and universities are an incredibly powerful lobby here," said a congressional staffer who deals with higher education issues. "College presidents know members of the House and Senate personally, and they're seen as working in the public interest. There is a lot of respect for them, so we can't, on the basis of a hunch and some anecdotes, run out and impose price controls."

College officials argue that they have trimmed costs and have become more efficient, but that higher education is a labor-intensive activity in which only limited savings are possible. A companion argument, made by research universities, is that they must spend vast sums on libraries and laboratories to be effective.

Terry Hartle, senior vice president of the American Council on Education, argued that tuition increases have run ahead of the Consumer Price Index "for most of the 20th century, except in the '70s, when they were slightly below the CPI, and the late '80s and early '90s, when they were higher. Now we seem to be returning to a normal range of two to three percent above the CPI."
By the spring of 1997, however, concern over college costs forced Congress to appoint a commission to look into the matter.

As originally envisioned by Howard P. (Buck) McKeon, chairman of the House Subcommittee on Postsecondary Education, Training and Lifelong Learning, the commission would have seven members, including people from outside higher education "with expertise in the management of business efficiency and cost reduction programs."

However, by the time Congress created the National Commission on the Cost of Higher Education in the summer of 1997, there were 11 members, all with ties to higher education, none with special cost-cutting credentials. The commissioners included four college or university presidents, one chancellor of a statewide system, four higher education lobbyists, a think tank scholar and a political science professor.

Several Congressional sources said the make-up of the commission was heavily influenced by ACE and by the National Association of Independent Colleges and Universities.

"This was a life-or-death issue for the four-year schools," said one. "They needed a friendly commission."

The commission's final report, published in January 1998, said colleges and universities should do a better job of containing costs and should be "more transparent" in explaining to the public why tuition and fee increases were necessary. But there was no criticism of the increases themselves.

The commissioners spent a lot of time trying to figure out why college costs were rising. Too many administrators? Too many government regulations? Too many expensive new facilities? Are faculty members not devoting enough time to teaching? Is there too much remedial instruction? They reached no conclusions.

"Linking specific cost increases to price increases is a tricky matter," the report stated. "Quite simply, the available data on higher education expenditures make it difficult to ascertain direct relationships between cost drivers and increases in the price of higher education."

For some higher education finance experts, however, the reasons for rising college costs, and for resulting tuition and fee increases, are not that mysterious.

David Breneman, dean of the Curry School of Education at the University of Virginia, sees little reason to question the conclusions reached by economist and former college president Howard R. Bowen, in his 1980 book, "The Costs of Higher Education."

"My own view is that Bowen had it right," Breneman said. "Revenues determine costs, in the sense that institutions raise all the money they can and spend it, and that determines cost. In order to cut costs, therefore, revenues have to be cut. Higher education is highly adept at finding new sources of revenue and keeping the juggernaut going. Simple, but I think broadly accurate."

William E. Troutt, who chaired the commission, is pleased with the results.

"When we began our work, there was quite a bit of conversation about federal price controls," said Troutt, who was then president of Belmont University, in Nashville, Tennessee, and is now president of Rhodes College, in Memphis. "I haven't heard much about that since."

David L. Warren, president of the independent college association, said the report has prodded many private schools into becoming more cost-effective -- by such measures as contracting out jobs that once were done by campus employees and by forming cooperative groups to share expensive equipment, even to hire new faculty.

However, others think the report has had little impact and already has been forgotten. Indeed, several people interviewed for this article had to be reminded that there was a national "cost commission" and that it had issued a report.

"Most people think they dodged a bullet and they're happy about that," said Arthur Hauptman, a Washington higher education consultant.

Said a key congressional aide, "they were able to keep Pandora's box closed… most of the important questions weren't answered."

In the report's aftermath, the American Council on Education commissioned an opinion survey which revealed that the public thinks higher education costs much more than it actually does and has inadequate knowledge about financial aid that is available to students.

"There was an incredible gap between actuality and the public view," ACE President Ikenberry said in an interview.

ACE then launched a "College is Possible" campaign that so far has spent more than $1 million on everything from tee shirts to an "800" phone number and a Web site to persuade young people and their families that higher education is not beyond their reach financially.
Since this campaign began, media coverage of the tuition issue has been "much more balanced and thoughtful and better informed," Ikenberry said.

...Ivan Frishberg, director of the Higher Education Project for the U.S. Public Interest Research Group, sees it differently.

..."If you fundamentally believe this is a PR problem, then you engage in a PR effort," Frishberg said. "That's what ‘College is Possible' is all about."

...Another consequence of concern about rising tuition levels was a congressional mandate to the National Center for Education Statistics, part of the Department of Education, to study college costs and also to improve and speed up the nation's higher education data collection system -- IPEDS (Integrated Postsecondary Education Data System).

...However, Congress appropriated no money for this work in the budget for fiscal year 2000, so what originally was envisioned as a $6 million study apparently will be done for about $200,000, and few people are expecting the results to be especially enlightening.

Meanwhile, the National Association of College and University Budget Officers (NACUBO) is attempting to produce a "template" that will measure college costs and prices in a "uniform, simple, acceptable" way, said Gregory Fusco, a former Columbia University vice president who is acting as a NACUBO consultant on the project.

Thirty-eight institutions are participating in this effort to create a document that would enable colleges and universities to compare their financial practices and also make them more understandable to the general public.

There is still some flickering interest in Congress. Senator Joseph Lieberman (D-Connecticut) might hold hearings this spring on college costs and tuition increases, but an aide said they would be "more of a dialogue…we don't have any particular legislative goal in mind."

An occasional Cassandra warns that good economic times won't last forever and, when state budgets grow tight again, higher education, which is a large discretionary spending item for most states, will be slashed again, as it was in the early 1990s.

"Now is the time when the state and federal governments ought to be making investments in student financial aid, in anticipation of an economic downturn," David Warren said. "Otherwise, institutions will have to increase their tuition because, for many, that's their only other source of income."

But most of those interviewed in Washington doubt that the subject of college costs and tuition increases will receive any serious attention again until the Higher Education Act once again comes up for reauthorization in 2004.

"Congress has a hard time doing things unless there's a national crisis or a perceived national crisis," said consultant Jay Diskey. "Right now, nobody sees this as a crisis."

Photo by Dennis Brack, BlackStar , for CrossTalk

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