Why Tuition keeps going up at Colleges and Universities and how to fix it

Information contained in this article is supported by articles by Gary Wolfra, George Munson Professor of Political Economy at Hillsdale College in Michigan link at http://www.cato.org/pub_display.php?pub_id=3344; The College Cost Crisis September 4, 2003 A Congressional Analysis of College Costs and Implications for America’s Higher Education System by: Rep. John A. Boehner (R-OH), Chairman, U.S. House Committee on Education and the Workforce & Rep. Howard P. “Buck” McKeon (R-CA), Chairman, U.S. House Subcommittee on 21st Century Competitiveness link at http://cssp.us/pdf/CollegeCostCrisisReport.pdf and private research conducted by the author.

It should be pointed out that increasing tuition costs have been an issue since the early 1980s. Congress has passed many bills aimed at assisting incoming students with affordable student loans with an emphasis on those coming from financially disadvantaged families. Institutes of higher learning (colleges and universities) are provided appropriations by the individual States and the amount appropriated varies by State. In addition, several Colleges and Universities are private and receive no appropriations from the State but do receive funding from private sources.

What were the reasons that caused tuition to begin escalating in the early 1980s? Let’s take a look.

1. College and University administrators are more concerned with their institutions profile than with streamlining operations.

2. The Federal Government continues to subsidize tuition costs regardless of how much they rise. Currently, the Federal Government guarantees 97 percent of student loan amounts to lending institutions.

3. Academic institutions have made little effort, either on campus or off, to become more transparent, in explaining their finances. As a result, there is no readily available information about college costs and prices nor is there a common national reporting standard for either.

4. Finally, even with the large number of colleges and universities, there is little competition among them.

There may be more reasons such as inflation, higher salaries and benefits, decrease in State funding, etc. However, let’s look at what can be done to solve this problem.

The first step is to contact your State Congressmen/women and Senators. Demand that legislation be passed requiring public release of all financial records including salaries paid, benefit packages, severance packages, building costs and maintenance, classroom furniture, equipment, as well as any and all additional expenses. Also to be included should be the amount of tuition, parking fees, cafeteria revenue, dormitory charges, and any other amounts collected from students and charged public events (football games, basketball games, all sports and civic events), amounts provided by the State, and any grants or other amounts provided by the Federal Government. From this disclosure it will be possible to determine where cost-cutting measures can be applied.

The next step is to contact your Federal Congressmen/women and Senators. Reform is needed in the student loan process. As I mentioned, currently the Federal Government guarantees 97% of the value of a student loan, regardless of cost. When not paid (and many of them are not), the taxpayer foots the bill. The Federal Government needs to issue vouchers instead of open-ended student loans. Here’s how it would work. Each voucher is good for one semester (or quarter depending on the school). The Federal Government would establish a set amount for the value of these vouchers. All Colleges and Universities that receive any type of Federal or State assistance would be required to accept these vouchers as full payment for each semester or quarter up to a maximum of 60 percent of the current year admissions. If not – no Federal or State aide (including grants). The Department of Education (since we’re stuck with it for now) should create a scale for Professors similar to the GS scale used by the Federal Government. This scale would list the criteria for each level of Professor and what range of pay they could receive. This should be applied uniformly across all 4-year colleges and universities. Finally, each applicant for voucher will sign a loan agreement with the Federal Government to repay within four years of graduation but with a caveat that they could perform Government service at a pay level equivalent to a private in the Armed Forces. For each year served, the debt would be reduced by one year. After four years of Government service, the loan would be fully paid.

The final step is to allow Colleges and Universities to purchase goods and services off the GSA schedule, established by the Federal Government to provide uniform cost across all the various Departments. This would keep College and University administrators from contracting with relatives and friends at inflated prices for goods and services.