Legislators are concerned about college costs and a good thing, too. But of course, when they talk about costs, they don’t mean costs; they mean prices. They hear from their constituents that tuition is high and going higher quickly, too quickly for comfort, and so they are determined to mitigate the problem or at least create an incentive for universities to do so. The patient has fever; lets chill the thermometer!
Controlling the price of higher education has the illusion of virtue, in the same way you would do so for gasoline and electricity and all the other necessities of life. Easier said than done. The cost may exceed the benefit. The reason that prices are going up at colleges and universities is because costs are going up – costs for gasoline and electricity and all the other necessities of life. Not to mention professors and other talented professionals who are increasingly tempted to leave the academy and to put their skills to work in venues with compensation that overwhelms the professorial. One example: baby lawyers, just out of school, newly admitted to the bar are being paid in excess of $170,000 at America’s leading law firms. More than judges, more than law professors. Universities are one of the most labor intensive industries in the country, following closely behind hospitals.
It is important to distinguish between the independent universities and the state institutions. At private universities tuitions reflect the marketplace. They reflect an economic decision about how much endowment is available, how much philanthropy is raised, how much overhead is collected, what fees for services provide. All of these factors play a role in the public institutions, as well, but there the tuitions are decided politically: the governor and the state legislature supply tax-payer-provided subventions, and therefore can charge what they like. Smaller and smaller subventions but never the less they are not to be ignored.
The list price of tuitions are high, there is no denying that. Change is imperative. The status quo will not stand. But we must not lose sight of the millions of dollars provided as financial aid by federal and state programs and by universities themselves. The discounted tuition is much less than the list price. At the George Washington University, where I spent almost 20 years as president, we were investing about $120-million per year in financial aid when I stepped down last August. Some students paid the full price, most paid less, and there were a few cases of students who paid almost nothing — a small number who got their full tuition and fees, as well as room and board, completely free of charge.
If we are to have a rational debate about tuition, we need to acknowledge the complexity of the subject; we need to distinguish public in-state tuitions from out-of-state tuitions and the range of private tuition from coast to coast; and we need to celebrate the accessibility provided by many institutions that charge very little for very high-quality programs. To talk about tuition is to talk about curriculum, time to degree, enhanced use of facilities, and human resources and the institutional calendar. Money, after all, is the mother’s milk of academic enterprise.
Recently The Wall Street Journal reported that Rep. John Tierney, a Massachusetts Democrat, inserted wording in legislation to inquire about the size and uses of college endowments. And Senator Charles Grassley (R., Iowa) has been talking about a requirement for a minimum payout for college and university endowments. Before the government tries to put a cap — actual or virtual — on tuitions or to redistribute endowments, they might be better advised to encourage more students to spend their freshman and sophomore years in some of the quite remarkable and modestly priced community colleges. It is possible to earn one’s way through to an associate’s degree with relatively modest or no help from third parties, just as many students did “back in the day” when I waited tables, parked cars, and spent Christmas vacation working for the U.S. Postal Service. And, with a record of accomplishment achieved in this manner, through institutional articulation arrangements students can go on to earn bachelors and graduate degrees at public and private universities with a good deal of support. The headlines about tuition can obscure reality and confuse public policy. A recent report in The Washington Post about the University of Maryland’s system review of cost-cutting measures points out the good that can come from careful management of resources, along with the unintended consequences of those policies.
Of course, we need to collect better data on the why and how of tuitions. Also on the distribution of support, but it would be a mistake and hurtful to the quality of higher education to rush to a judgment not informed by thoughtful studies of costs, prices, productivity, accountability, and potential administrative and academic cost-effective innovations. With proper incentives, higher education can enhance its operations. It needs positive support from its stakeholders rather than premature intrusion by Congress or others. This is not the time for the slogan, “The beatings will continue until morale improves.” Universities can be better managed. Serving America well from colonial days until now, they have earned the right to expect encouragement and support in this challenging time, not threats.
