Tuition Puzzle
Published May 15, 2014
- Tuition Levels Increase Five-Fold, Outpace Inflation & Income
- Policymakers and Institutions Playing "Tuition Chicken"
- Declining Revenue, Erratic State & College Policies Cited
Washington, D.C., Feb. 9, 1999—A new national study proposes solutions to one of the nation's most pressing, perplexing, and longstanding problems—rising college prices. The report outlines structural shifts in financing patterns by states and colleges that have shaped the two-decade-long rise in tuition levels.
The report finds conflicting spending patterns within higher education—including a pretense of keeping tuition levels low—and a de facto "high tuition/high aid" mode of operation. It cites government policymakers and college officials as co-contributors in perpetuating the rise in college prices by playing a kind of "tuition chicken," where states allow their contributions to higher education to lag knowing the balance will be made up by higher tuition levels and increases in student aid. The report recommends that annual rates of tuition increases be “no greater than per capita personal income” growth, among other recommendations.
Tuition has not only risen five-fold in the last two decades, says the report, but has increased at significantly higher rates than inflation and personal income. The study calls rising college prices "the biggest single threat to public and political support for higher education." The level of public anxiety about it is unprecedented, near the top of all issues of concern for parents—greater than education quality, health care, and even crime affecting their children.
The report, "The Tuition Puzzle: Putting The Pieces Together," was produced by The Institute for Higher Education Policy, a Washington, DC-based education research group, and sponsored by the Ford Foundation.
The persistent and long-term rise in college prices has caused most Americans and policymakers to believe that tuition escalation is inevitable, the study says. The major government responses to rising tuitions—increasing loan options and tax credits—are not designed to actually reduce the price of college. The major college responses—cutting or reducing costs in key areas, and improving public information—also have not produced evidence of reduced tuitions, thereby adding to the complex “tuition puzzle.”
The report recommends multi-pronged efforts by both states and institutions to alter their goals, structures, and financial plans. It calls for states to: set a clear goal to stop the decline in higher education's share of revenues; reexamine state aid programs and restructure prices across the different sectors of higher education; and set tuition increases at rates no greater than annual per capita personal income growth. The study calls for institutions to: set tuition limits first, then plan for raising revenue from other sources—replacing a cost-plus pricing approach with a value-based pricing strategy; establish greater price differentiation by level of instruction and program of study; integrate academic and program planning with long-term resource planning; protect instruction at the same time that costs are cut and productivity increased; and strengthen their public accountability.
"Like many seemingly unsolvable problems," stated Jane Wellman, Senior Associate at The Institute for Higher Education Policy and principal author of the report, "escalating college prices have become the symptom of an entrenched culture unwilling to take the risks needed to address it. We don’t have to accept the inevitability of escalating tuitions. Working together, states and institutions can get a handle on this persistent problem."
The report's other findings and conclusions show: institutions and states both have maintained a pretense of low tuition policies rather than face price restructuring and address cost management; spending on instruction—often believed to be a major cause of increasing tuition—has not kept pace with spending in other categories at most institutions; access to college overall is being maintained despite higher prices, largely due to widespread perceptions that a college degree is essential regardless of the price; and higher education is at risk of being more "economically stratified" than at any time in the last two decades, with low-income students staying primarily in public two- and four-year institutions and higher income students moving away from community colleges toward research institutions.
"Rising college prices are complex and confusing to the public and government policymakers," stated Jamie Merisotis, President of The Institute for Higher Education Policy. "By putting the different pieces of the tuition puzzle together, we can see more clearly where the problems are and how to match solutions to the existing problems. This will help to protect the essential goals of college access, choice, and quality."
“The Tuition Puzzle” report is one in a series under a multi-year project, "The New Millennium Project on Higher Education Costs, Pricing, and Productivity."
