Tuesday, April 3, 2012

Universities Should Cap Tuition and Fees Until National Unemployment Rate Goes Down

In an article that appeared this week in Chronicle of Higher Education, Gary Fethke argued that college tuition is going up because taxpayer support for higher education is going down.  (Fethke, 2012). Although his essay discusses economic theory on a sophisticated level, Professor Fethke’s argument can be summarized in in the essay’s last sentence: “Students are required to pay more in college tuition] because taxpayers are paying less—it’s that simple.”
Professor Fethke is partly correct.  Taxpayer support for higher education has gone down as a percentage of total costs, and this increase has contributed to higher tuition costs at publicly supported universities.  My own law school experience illustrates the point.  When I attended law school at the University of Texas many years ago, tuition and fees amounted to only $500 per semester.   I was able to put myself through law school by working part time as a law clerk at the Texas Attorney General’s Office, and I graduated from UT Law School—one of the top ranked law schools in the United States—with no debt.  I will always be grateful to the people of Texas for making this educational opportunity so affordable.
Today, of course, UT Law School is not such a bargain. According to the law school’s web site, tuition and fees now amount to more than $32,000 a year—32 times higher than when I attended law school.
Inefficiency Contributes to Rising Tuition Costs
Taxpayer support for higher education has declined over the years as a percentage of total costs, but this does not fully explain why higher education has gotten so much more expensive, with costs going up every year at a rate higher than inflation.  Part of the problem lies in the universities’ lack of efficiency.
  I will provide one example from the first university where I worked as a professor; let’s call it Generic University.  At the time I worked at GU, the university required every doctoral-level class to have at least five students. Otherwise the course was cancelled. One of my colleagues repeatedly had low enrollments for his doctoral-level classes; and one semester, he could not attract five students to enroll in either of his two courses.  Consequently, both courses were cancelled that semester, and the professor taught nothing at all.
At a profit-driven institution, this development would have attracted some attention. Supervisors would want to know why a particular professor’s classes attracted so few students.  Perhaps someone would have asked questions about the professor’s overall productivity; how many doctoral students was he supervising, for example? Undoubtedly, a profit-driven enterprise would have taken some action to ensure that the professor became more productive.
As it turned out, the professor’s small classes were not only an indication of his lack of popularity with students; they were a sign that enrollment was dropping in the program as a whole. Yet GU administrators did little to reverse the decline in enrollment during my years at the institution.
I think most people who work in higher education can provide a similar example of institutional inefficiency that was not addressed by university administrators. Instead of becoming more efficient and keeping costs down, it has been easier for university governing boards to simply raise the price of tuition.  Consequently, students have been forced to borrow more and more money every year in order to pursue a college degree.  Today, postsecondary students borrow about 100 billion dollars annually; and total student-loan indebtedness is one trillion dollars.
Of course, inefficient faculty is but one part of the problem of escalating tuition costs.  University administrators have enjoyed enormous salary increases in recent years, so that the spread between faculty salaries and administrators’ salaries has grown wider and wider.
Colleges Should Cap Tuition and Fees or Get Out of Federal Student Loan Program
As the economy continues to sputter and college graduates struggle to find employment, the rising cost of higher education in the United States has become an enormous problem. The Obama administration has addressed this problem in various ways, but tuition costs keep going up.
If the federal government is really serious about rising tuition costs and rising student-loan indebtedness, it can implement a simple solution that would go a long way toward keeping tuition costs in better control   Congress could simply amend eligibility requirements for colleges and universities to participate in the federal student loan program.  Under the new rules, higher education institutions would be required to freeze tuition and fees at their present levels until the national unemployment rate drops below a certain level—let’s say 6 percent.
If the federal government would require colleges and universities to cap their tuition and fees at the present level until the unemployment rate goes down, higher education institutions would be forced to become more efficient. Currently, universities are free to raise their tuition at will, permitting them to pass of the cost of their inefficiency onto students and forcing students to borrow ever larger amounts of money.  A cap on tuition and fees is the simplest and quickest way to deal with this problem.  College and universities that are unable or unwilling to rein in their costs should be expelled from the student loan program.
Fethke, G. (2012, April 1). Why does tuition go up? Because taxpayer support goes down. Chronicle of Higher Education. 

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