washingtonpost.com
When States Pay Less, Guess Who Pays More?
By Robert B. Archibald and David H.
Feldman
The most charitable description of "The College Cost Crisis" is that it doesn't get its facts right. The primary cause of rising tuition costs is not irresponsible university administrators, but the erosion of a public commitment to providing affordable higher education to children of less affluent families.
The cost of providing a college education has indeed risen much faster than
the rate of inflation. This trend has been building for many years, and the
forces behind it are well-known. First, higher education is a service, not a
manufactured commodity, and labor-intensive services have become progressively
more expensive. Long before the 1965 Higher Education Act, which controls the
federal government's major student aid programs, educational costs per student
were rising
Since 1980, college costs have begun to rise even faster. In this same period, the earnings gap between full-time workers with more than four years of college and the rest of the American workforce has widened considerably. This is another cause of cost increases in higher education, as colleges and universities use a lot of highly educated labor for which they compete with major corporations and a myriad of private- and public-sector employers.
Lastly, state governments have beaten a 25-year retreat from their commitment to public, low-tuition higher education. In the late 1970s, students and their families paid only 36 percent of the total cost of a college education. The federal government kicked in 12 percent. State government picked up the rest of the tab, mostly in the form of direct funding for public universities. Today, the federal contribution is roughly 10 percent, and the family share has soared to 50 percent. Although states, meanwhile, are spending more dollars on higher education today than in the late 1970s, the real value of spending per full-time student actually has fallen.
This state retreat began with the tax revolt of the 1970s. States have acted to reduce the growth rate of public spending as a whole, but other demands on their budgets -- from increased prison expenses to rapidly rising Medicaid costs -- are crowding higher education out. Since 1978, higher education appropriations have fallen from 7.5 percent of state spending to barely 5 percent today, despite a nearly 20 percent rise in enrollment at public institutions.
This harms the quality of our public institutions while reducing access to higher education. For every dollar private institutions spend per student, public colleges and universities today spend less than 55 cents, down from 70 cents in 1979. And every $900 rise in college tuition reduces enrollment by roughly 4 percent.
The language of "The College Cost Crisis" suggests a form of federal donor fatigue about these rising costs. Its authors claim that federal grant support has grown explosively since the mid-1970s. Yet the maximum need-based Pell Grant today ($4,050) has $700 less purchasing power than the $1,400 Pell Grants offered to students in 1975. The government's total spending today is higher because 3 million more students are seeking a post-secondary education. This is what the grant program is supposed to do. Now it needs to cover a greater fraction of a financially pressed student's needs.
Some legislators have a different view. They want to force down costs by forcing down the list price (tuition plus room, board and books) of a college education. This is like telling the Dutch to push down the level of the ocean instead of strengthening their dikes. It doesn't work and it diverts attention from the real issue of affordability.
If schools are to cover their rising costs in an era of declining state support, and do so without pricing the least fortunate families out of the market, the list price of a college education has to rise dramatically, and additional need-based aid must be found.
There are good options for generating the needed aid. The federal government could make Pell Grants larger by scaling back or eliminating the existing tuition tax credit program. These credits do little to improve access; those who need aid the most come from families with incomes too small to benefit from the credit. Universities could help by redirecting their growing "merit scholarship" programs into internally generated need-based grants. Merit scholarships not tied to need actually reduce access because the money for them must come either from higher tuition or from reduced need-based scholarships.
Our universities are not inefficient institutions built on a bad business plan. Their administrators understand that a college degree is the ticket to the 21st-century economy. There is a crisis in higher education today, but it's not well-publicized tuition spikes. It's the long-term decline in political and financial support for the idea that all students should have access to higher education, regardless of ability to pay.
Authors' e-mail:
Robert Archibald and David Feldman teach in the economics department at
the
© 2003 The Washington Post Company
Readers interested in more information on the role of state
financing should see the paper by Thomas
J. Kane, Peter
Orszag, David
L. Gunter, titled State Fiscal Constraints and Higher
Education Spending. It is
available at the following link:
http://www.taxpolicycenter.org/research/author.cfm?PubID=310787