When did money become the yardstick by which universities measure themselves?
What prompts this question is a Sept. 24 article in The Boston Globe, reporting an increase in Harvard’s endowment during the fiscal year ending June 30, 2013, of 11.3 percent, to $32.7 billion – a gain in one year of roughly $3 billion. In the same article, the Globe mentioned that Harvard has also just announced a new capital campaign with a goal of $6.5 billion, to be completed by 2018.
Yep, that’s the title of an op-ed in Forbes on Sept. 12, 2013. (Actually, the full title is, “There’s No College Tuition ‘Bubble’: College Education Is Underpriced.”)
Well, that contention came as a bit of shock to me, writing as I have been for many months about runaway sticker prices, and how colleges and universities need to address the issue before the federal government does it for them. What gives?
The author, Jeffrey Dorfman, a professor of agricultural economics at the University of Georgia, is a believer in the free market system and a self-described libertarian. Let’s see how his reasoning holds up.
Yesterday, in my annual State of the University address to the RWU community, I spoke about matters familiar to readers of this blog: the concerns of prospective students and their parents about the cost of higher education; rising debt loads for far too many graduates; and securing well-paying jobs after graduation.
I referenced President Obama’s challenge to the higher education community to make America’s colleges and universities more affordable and more accountable.
I pointed out criticisms from the media (including a recent cartoon in The New York Times on Sept. 1 that ridiculed higher education), and I referenced many polls and surveys that found both college presidents and chief financial officers overwhelmingly agreeing that the current high cost/high aid model for higher education is broken – yet choosing not to do anything to change the model.
On Sunday 25 August, The Boston Globe ran a front-page story entitled “Colleges back off need-blind admissions.” The article describes how colleges such as Wesleyan, Williams, MIT, Cornell and the University of Virginia are reducing their commitment to meet the financial needs of the students they admit – but the story pays particular attention to Tufts University, located in the Boston suburbs.
The timing of this story is interesting, coming as it did at the end of a week where newspapers across the country were reporting on President Obama’s commitment to increase both the affordability and the practicality of a college education in America. How is it that these private schools seem to be going in exactly the opposite direction?
Colleges and universities across the country are undergoing a seasonal transformation, from relatively tranquil oases to frenetic hives of activity, as the students, new and returning, arrive on campus for another academic year. It’s the circle of life, campus style, playing out in highly predictable ways.
In the midst of the excitement of the students’ arrival, there are poignant vignettes of parents saying goodbye to their sons and daughters. It is often a traumatic time for both students and parents – and this seems to be particularly true for parents trying to cope as their first-born, or last-born, leaves the nest.
Two recent studies on low-income, high-achieving high school students and the problems they face in gaining admission to elite private schools have attracted considerable attention in both the education and mainstream media.
The first, Expanding College Opportunities for High-Achieving, Low Income Students, by Caroline Hoxby and Sarah Taylor (Stanford Institute for Economic Policy Research, March 29, 2013) received attention from The New York Times (editorial on April 10, following an article by David Leonhardt on March 16 regarding an earlier study by Dr. Hoxby). The second Hoxby study found that customized information packets, costing about $6 each, sent to low-income, high-achieving students significantly increased the percentage of these students who applied to top-tier colleges. Inside Higher Ed covered this study on April 1, 2013.
The second study, Undermining Pell: How Colleges Compete for Wealthy Students and Leave the Low-Income Behind (Steven Burd, the New America Foundation, May 8, 2013), examined actual data from the 2010-11 academic year for thousands of public and private colleges to determine the average cost for Pell-eligible students at each college and university. The study found that two-thirds of the private institutions charged families earning less than $30,000 per year a net price of over $15,000 a year. As a consequence, the study called for federal action “to ensure that colleges continue to provide a gateway to opportunity.” The Chronicle of Higher Education covered this study on May 8, and The Boston Globe ran a lengthy story that related to the study on May 28.
These two studies are interesting bookends to the same issue: low-income students, even when they are high-achieving in high school, are much less likely to apply to elite schools, and even when they do, they often face insurmountable costs.
For the past 18 months, the media (and, subsequently, the politicians) have been focused on the rising tide of student debt. Two issues have attracted particular attention: first, the fact that total student debt has (a) exceeded $1 trillion, or, expressed alternatively, (b) exceeded the total of credit card debt; and second, the fact that some individuals have accumulated more than $100,000 in student debt.
News stories have become increasingly frantic. For example:
It’s been quite a week here at Roger Williams University. We have been more than a little curious regarding the impact that Affordable Excellence would have on the retention of our current students, and on the enrollment of new students who will be entering this coming fall. Given the number of private colleges in the Northeast, coupled with a continuing decline in the number of high school graduates in New England, competition for new students in our region has never been more fierce.
A recent article in The Wall Street Journal (“Colleges Cut Prices by Providing More Financial Aid,” May 6, 2013) reports that the average discount rate (the amount of prospective tuition revenue that is returned to students as financial aid) rose to 45 percent for the 2012-13 academic year, the highest ever – and all indications are that the discount rate for the coming academic year will be even higher. When 45 percent of tuition dollars are used not for actual instruction, but simply to lure people through the front door, colleges are hard pressed to offer a quality educational experience. They try to stay ahead of their competitors by significantly raising the sticker prices for tuition each year, in order to generate new dollars that can be given as aid. Of course, their competitors do exactly the same thing. The consequence is that the published prices make college seem increasingly unaffordable.
I read an off-hand reference to a fact that all but knocked me out of my seat: tuition and fees at UCLA for out-of-state students total $35,570 for the current academic year. (Room and board is extra: another $14,232.)
I wondered how many students were paying such a huge sum. In addition to the 7 percent who are international students, only 5 percent of UCLA’s undergraduates are from out-of-state. Still, that’s more than 1,300 students – not an insignificant number. Moreover, at UC Berkeley, with a comparable out-of-state fee, 10 percent of students (about 2,500) are from out-of-state, in addition to the 9 percent who are international students.
We are in the closing weeks of college choice decision time: most institutions have a May 1 date for students to “accept the acceptance.” After that date, some colleges and universities will have a full class for the fall of 2013 and will return deposits postmarked May 2 or later; at many others, the choice (or even the availability) of residence halls, as well as classes, may be severely restricted. So prospective students should be prepared to make their choice of campuses by May 1.
But for many students, cost is a factor that limits choice. In short, can the student (and his or her family) afford the campus that is the student’s first choice?
It is at this point that the expectations of the campus and the student are often at odds. Based on extensive survey data, most students and their families expect to pay substantially less than the institution’s sticker price – and that is often the expectation of the institution as well. But there are enormous differences between and among institutions as to their willingness (or ability) to offer financial support.