COLLEGE TUITION HAS INCREASED 35 PERCENT in the last five years, according to the College Board. There are several reasons why tuition rises at a rate faster than inflation. The first is that there are real cost increases associated with organizations that are both personnel and technology intense-and higher education fits that model.
At Juniata College, for example, 60 percent of our budget goes to compensation. And then we add technology to the mix. When a business buys technology it is usually to improve productivity and reduce cost. A college, by contrast, buys technology to stay competitive, and it increases cost.
Market demand is the second reason for tuition increases. Prospective students and their parents want cutting-edge technology and plush dorms and recreational facilities. And in a competitive market for higher education we know that if we do not provide them, our "customers" will select one of more than 3,000 other choices.
Third, the federal government has backed away significantly from its commitment to college financial aid. This has required all colleges and universities to redirect their own limited resources toward making up much of that loss.
Recognizing that we eventually could be priced out of the market if these trends continue, a group of more than 260 private colleges and universities developed a prepaid tuition 529 plan to provide assistance and incentives to families who have realized that they must save for a college education. More about that later.
The federal government has backed away from its commitment to college financial aid.
Of the three upward pressures on tuition and student debt-the institutional characteristics of higher education itself, market demand, and the role of the federal government-it is the latter that may be least understood. So let's examine it in some depth.
American attitudes toward higher education have shifted over the years. Each move has impacted tuition. In the 19th century, when college was a privilege for society's wealthy and elite, tuition was high. Even then, however, most colleges were exempt from local taxes, a sign that higher education was valued by their communities and ought to be encouraged.
It wasn't until after World War II that the federal government and the states concluded that widespread access to higher education should be a central national goal. Due to the generous educational benefits of the G.I. Bill of Rights and other measures, Americans who before never dared to dream of college enrolled, graduated, and went on to create the enrolled affluent society we live in today.
As a college president, I know that budgets reflect priorities. After World War II, the United States decided that higher education was a priority and subsidized it accordingly. This attitude continued through the educational years of the baby boomers. Tuition was low as a result. It is revealing that the median tuition charged state residents at public universities in 1967 was $333. In that same year, public universities in California, Connecticut, Kentucky, and Idaho charged no tuition at all. Few baby boomers, even those who attended private colleges, graduated with student loan debt.
Today the situation is quite different. More than two-thirds of today's college graduates are in hock the minute they pick up their diplomas, a trend that is accelerating. As recently as 1993 fewer than one-half of graduates had student loan debt, according to the National enter for Education Statistics.
More than two-thirds of graduates are in hock the minute they pick up their diplomas.
The average level of debt for graduating seniors exceeded $19,000 in 2004, according to NCES numbers, and that figure is not much smaller at public universities. The Project on Student Debt says students graduate from public institutions with an average of $17,250 in debt.
Simply put, higher education is no longer seen as a national priority. "In 1980, the federal government began to cut back dramatically on its direct financial support to students," observed Frank Harold Trevor Rhodes, former president of Cornell University. "Prior to 1980 a full 80 percent of the financial aid the government awarded to students was given in the form of grants and scholarships that did not have to be repaid," he said in his 2001 book, The Creation of the Future: The Role of the American University.
