Rising tuition costs and affordability in American higher education

¶ … Tuition in Higher Education

Higher education holds the key to the future economy of our nation. However, the recent performance of our educational sector only reflects a sad state of affairs. The Enrollment curve has flattened, accessibility reduced and dropouts have increased. For higher education to become more affordable institutions should formulate plans, innovate and restructure to deliver quality education in a cost effective setting. It is high time that policy makers rethink and redefine this ailing, unhealthy and commercialized system to a more principled, productive and accountable one. The future economic success of America rests with success of the educational system in transforming itself to improve the accessibility, participation and successful completion of higher education programs.

Introduction

As we progress into the end of the first decade of the new century the value of education has increased tremendously with more and more people perceiving higher education as an important, indispensable component of our societies in order to achieve social equality and economic independence. American education system has always attracted students from around the globe due to its adherence to high standards and quality. However, just as is the case with our healthcare system, high quality comes with a price. Today, higher education has become unaffordable to vast majority of middle class and lower income American students. Economic constraints and consequent lowering of state funding has left institutions with no choice but to hike tuition. According to the recent report from the 'National Center for Public Policy' college tuition increased by 437% between 1982 and 2007 while the corresponding increase in median family income stood at only 147%. [Tamar Lewin]. The report also highlights that over the last decade student borrowing has virtually doubled. Students from small income families also receive lower value of grants compared to students from affluent families. Already having the dubious distinction of being one of the few countries in the world where 24 to 34-year-olds are less educated than the elder population, the growing trend of escalating higher education costs will only worsen the scenario. [Tamar Lewin] A brief overview of the debate surrounding the issue of rising costs of higher education and its implications would offer better insight into this important social issue.

Higher Education (Vital Statistics)

The recent 'Measuring Up 2008' national report on Higher education has shed light on the new developments and disparities in our educational system in relation to some other countries in the world. The encouraging data has been the increase in the number of 19-year-old freshmen opting for college over the last decade. As per the report this figure has improved from 39% to 42%. The report also indicates that 34% of students between 18 and 24 are enrolled in college. However, the number of students who successfully complete college education has decreased significantly at just 18 per 100 students. (ranking 15th among the 29 countries) When compared with the education levels of those above 35 years old this is a real decline. Further, 78 million of Americans will soon be retired and considering the fact that this group represents the most educated of our national population, it places us in a predicament. [NCPPHE, 2008] These declining rates of completion and the gloomy statistics of our aging population are a cause for concern as they affect the quality and the success of our workforce in the global economic environment. As Mr. Patrick M. Callan, the president of the NCPPHE says, "When we come out of the recession, we're really going to be in jeopardy, because the educational gap between our workforce and the rest of the world will make it very hard to be competitive." [Tamar Lewin]

Lowering Public Funding

The result of diminished public funding for higher education is leading to higher tuition rates and lower graduation rates. This is underscored in the study by DeMoranville & O'Donnell (2001), who indicate that "colleges and universities are faced with the necessity of raising tuition rates to meet the ever increasing costs of providing higher education. How those increases are marketed may influence the typical negative impact such! increases have on enrollments." [DeMoranville & O'Donnell, 29] . With the economic crisis worsening across the last decade, we may expect to see continued drops in the number of those graduating from top-tier institutions, private schools and other universities. This also leads to a decline in the number of people who go on to graduate. The consequence is a trend of declining population of professionals and qualified specialists in many fields. According to Trombley (2003), this is a pattern that is evident across the United States. Reporting on a recent decline in public funding for university education, Trombley indicated that "the result was the worst fiscal news for public higher education institutions and their students in at least a decade, as the economic recession struck almost every state. So far this year, the picture looks even bleaker, with states continuing to cut higher education appropriations and campuses responding by! raising tuition even higher, imposing new fees and reducing student financial assistance." (Trombley, 1)

The Raising Costs

Between July 2008 and 2009 the consumer price index fell by 2.1% but college tuition prices have continued on the upward swing. In fact, the 2009 report from 'The College Board' shows that tuition fees at public four-year institutions amount to an average of $7,020 in 2009, which is a 6.5% ($429) increase from last year. Similarly tuition fees at public two-year colleges stood at $2,544 an increase of 7.3% ($172) compared to last year. In the private for profit four-year institutions the cost surge was even more pronounced averaging 8 to 10% per year. For the current year New England has the highest average tuition fees in the country. For instance the average fee for public two-year institutes in New England is $3,992 while it is much lesser in the western states at an average of $1,475. [The College Board] Quoting Mr. Callan, the NCPPHE president, "Most governors' budgets don't come out until January, but what we're seeing so far is Florida talking about a 15% increase, Washington State talking about a 20% increase, and California with a mixture of budget cuts and enrollment cuts," [Tamar Lewin]

The most recent case is that of University of California. In the wake of the $813 million budget cut the University of California board members have decided to increase tuition costs by an unprecedented 32%. This decision has cast so much burden on the students as they would now have to pay as much as $10,000 per year. As Richard A. Mathies, dean of the College of Chemistry at Berkeley, voiced his concerns, "Dismantling this institution, which is a huge economic driver for the state, is a stupendously stupid thing to do, but that's the path the Legislature has embarked on. When you pull resources from an institution like this, faculty leave, the best grad students don't come, and the discoveries go down." [Jack Kadden]

This significant increase in college fees is a discouraging trend, particularly for low income and middle-income households and under the prevailing economic downturn will add more burden to the students and their families. This is more amplified by the declining trend in the grant aid given to the lower middle-income students. Over the last 5 years grant aid for lower and middle income students fell from 47% of the amount paid by higher income students to only 34%. On the contrary grant aid increased for the higher income students by around 3% between 2004 and 2008. [The College Board]

Even though need based aid has increased over the last decade it has failed to match the increase in tuition. As per the 'Measuring up 2008' report, since 2000, the percentage of family income required to pay a four-year college program has continued to increase in all but two states (even after discounting financial aid). Students from poor income families have to spend as much as 40% of their family earnings for studying in public four-year colleges. State investments have been uneven with some states such as Georgia (4% to 0%), Hawaii (8%to 5%) reducing their funding while others such as Nevada (2% to 48%) and North Carolina (3% to 70%)have improved their funding. [NCPPHE]

Student Loans (The Pitfalls)

Another report by the NCPPHE focused on the growing cost burden of higher education and the financial management. This report focused on the aspect of student loans and the increasing burden on students. One recent report from the Washington education trust revealed that, "hundreds of thousands of young people leave our higher education system unsuccessfully, burdened with large student loans that must be repaid, but without the benefit of the wages a college degree provides.." [Lawrence Gladiex] National statistics show that almost half of the freshmen borrow loans and among these one-fifth dropout from college. This implied that in 2001 around 350,000 dropped out students were struggling without a degree certificate as well as being pressed with the burden of loans. Statistics further indicate that college dropouts are twice as likely to be unemployed compared to degree holders and ten times more likely to default on their loan repayments. The report also identified some important aspects that determined successful completion of higher education. It was found that among both borrowers and non-borrowers, working part-time or fulltime and/or delayed entry into college carried a significantly high risk for dropping out. The fact that almost all of the students who successfully completed higher education were enrolled in college right after high school, attended fulltime and did not work part time or full time implied that external distractions had a major negative impact on successful completion. Since borrowers are under financial burden they are more prone to take up part time jobs and therefore carry a greater risk for dropping out. Essentially, one of the main findings and recommendations of this report is to "Make college more affordable so as to reduce dependence on loan financing and student employment, especially for those with the greatest need." [Lawrence Gladiex, pg 16]

Loans cannot be a sustainable solution for the growing costs of higher education. As Mr. Callan, the NCHPP president said, 'Given the financial hardship of the country, it's simply astonishing that colleges and universities would have this kind of increases,." "It tells you that higher education is still a seller's market. The level of debt we're asking people to undertake is unsustainable." [Tamar Lewin]. The simple transfer of the burden on to the students as it is today is not contributing in a productive way. In the future the burden of such an approach will be distinctly felt much to the detriment of our society. More students on debts, more students forced to work part-time jobs is a formula for disaster, as it is known from national data that these pressures only lead to an increase in dropouts. This is not at all a good prospect for the future of our nation. This calls for a fundamentally different approach towards managing the escalating costs that educational institutions have to deal with. Mr. Callen emphasizes this need for innovation, "A lot of people think we can solve the problem with more financial aid, but I think we have to have some cost containment. For all the talk about reinventing higher education, I don't see any results " [Tamar Lewin] As is evident not much progress has been achieved in this direction.

UTAH (A role Model)

In the Measuring Up 2004 report UTAH was singled out as one of the most successful states that steadily improved enrollments, maintained accessibility in the wake of increased enrollments, and also improved on graduation completion rates. In fact UTAH has doubled the number of enrollments over the past two decades while still maintaining affordability. The secret of UTAH's success is the government policy, which considers access to higher education as a high priority. Many institutions in the state have continued to expand to increase seats to accommodate more enrollments. The following statement clearly explains the state's policy towards higher education "Lawmakers should view enrollment caps as the last option. The Utah System of Higher Education offers citizens an educational service that many Utahns find of great value. For years, citizens have flocked to colleges and universities in above-average numbers," [Kathy Reeves Bracco]. Also Utah has always favored a policy of low tuition and low financial aids. Two of the two-year institutions were empowered to offer four-year programs to cater to the growing enrollments. Such proactive and innovative approaches have contributed to the success of UTAH in offering accessible and affordable higher education to all eligible students. [Kathy Reeves Bracco]

Conclusion

Higher education holds the key to the future economy of our nation. However, the recent performance of our educational sector only reflects a sad state of affairs. The Enrollment curve has flattened, accessibility compromised and dropouts have increased. With more than 78 million educated American workforce approaching retirement age the need for more educated and skilled workforce to replace them is a very urgent one. Going by our declining graduation rates it is clear that we have lost our claim to superiority to other developed nations in the educational sector. There are limits for the amount of educational costs that could be shared with the students and their families. Beyond that it is not a productive system.

For higher education to become more affordable institutions should formulate plans, innovate and restructure to deliver quality education in a cost effective setting. The savings from the cost cutting measures should be reinvested to ensure affordable access to higher education for students from low-income families. The onus lies with the government policy makers and academic institutions to reform and to improve the present situation. Since the education system is one of the basic pillars of our national economy and since students are the future prospects of our nation it is high time that policy makers rethink and redefine this ailing, unhealthy and commercialized system to a more principled, productive and accountable one. The future economic success of America rests with success of the educational system in transforming itself to improve the accessibility, participation and successful completion of higher education programs.