Showing posts with label College costs. Show all posts
Showing posts with label College costs. Show all posts

Monday, September 21, 2015

Private Colleges Behave Like Car Salesmen and They Deserve the Same Level of Respect

When I was young, car buying was a very stressful experience. In the old days, car buyers were always at a disadvantage. They didn't actually know the fair price of 1962 Ford Fairlane, and they didn't know how much other people were paying for them. Thus car buying involved tense negotiations, urgent consultations between car salespeople and their supervisors, and sweaty car buyers sitting in showrooms wondering if they were about to pay too much.

And sure enough, right after you drove your shining new Plymouth Fury home and parked it proudly in the driveway, your neighbor came over to tell you that his brother-in-law got the same model for a hundred bucks less and the dealer threw in whitewall tires for free.

How much is this beauty really worth?
Today, car buyers have a lot more information about car prices, thanks to websites like Edmunds.com. But families are much in the same position as car buyers in the 1960s when they shop for a college. They really don't know what the fair price of a college education is, and they don't know what other families are paying. And colleges, just like 1960s car dealers, do all they can to obscure the fair price of a college education.

For example, Utica College in central New York and Rosemont College in Pennsylvania recently slashed their tuition prices drastically. Utica cut its tution from $35,466 to $20,000--a 42 percent price reduction. Rosemont dropped its tuition price from $46,000 ($46,000!) to $30,000--a discount of more than 30 percent.

Wow! Prices Slashed! Everything Must Go! What a lucky break for college students and their families. Just like the end-of-the-year sale at the Chevy dealer.

But wait. According to Inside Higher Education, very few Utica and Rosemont students were actually paying the full cost of tuition. At Utica, only 271 out of 2,300 students were paying the sticker price. And at Rosemont, only 9 out of 1,100 students were paying full tuition--less than 1 percent!

Rosemont and Utica, like most American colleges and universities, are engaging in differential pricing. They set a very high sticker price, hoping a few suckers will pay it; and then they offer steep discounts to the students they really want to attract--minorities, students with high SAT scores, athletes, legacies, etc. In fact, nationwide, the average tuition price at private schools is about half of the posted tuition.

Of course, all businesses adjust their prices somewhat to attract buyers at various income levels. That's the way business has been done since the beginning of time.

But American colleges have taken differential pricing so far that they've tarnished their integrity. How can a college honestly say that its tuition price is $46,000 when less than one percent of its students actually pays that price?

The hocus pocus about college tuition prices is part of the general confusion about college costs. The FAFSA form for financial aid is unintelligible, tuition varies from student to student, and the student-loan process is so complicated that many students don't know how much money they borrowed, how much they still owe, or whether their loan is a federal loan or the loan from a private lender.

But that's the way the colleges like it. Keep 'em confused. And if a customer asks too many difficult questions, throw in a set of whitewall tires to seal the deal.



My brother-in-law told me you'd give me a really good deal . . . .
References

Big price cuts, small savings at two private colleges. Inside Higher Education, September 17, 2015. Accessible at: https://www.insidehighered.com/quicktakes/2015/09/17/big-price-cuts-small-savings-2-private-colleges

Tuesday, October 29, 2013

Things Universities Don't Want to Talk About: It's Time for a Freedom of Information Act for American Colleges That Participate in the Federal Student Loan Program

LSU President King Alexander recently told a Rotary Club audience that the cost of attending Louisiana State University is very reasonable.  For the many students who receive one of Louisiana's TOPS scholarship, the cost is only about $1,000 a year for housing and other costs, according to President Alexander.
LSU President King Alexander:
It only costs a TOPS student a thousand bucks a year to attend LSU.  Really?
But that's not accurate. In a letter to the editor of the Baton Rouge Advocate, Elizabeth Welsh, a Baton Rouge homemaker, corrected LSU's president.  The true cost for a TOPS student attending LSU is between $2,000 and $3,000 per semester, Welsh pointed out--at least four times President Alexander's figure. 

How did Ms. Welsh figure out Alexander's numbers were wrong? By drawing on her family's own experience with a child in college and by looking at housing costs posted online at LSU's web site.

President Alexander's recent misstatement is just another example of the modern university's tendency to hide the truth.  LSU, after all, is the same university that refuses to disclose the names of people who applied for the LSU president's job that Alexander now holds.

Some more examples? George Washington University recently admitted that it had not told the truth when it represented that it had a needs-blind admission policy.  Sorry about that.

UC Davis refused to explain the circumstances under which Lieutenant John Pike, the guy who pepper-sprayed non-offending students in November,2011, left university employment.  Was he fired? Did UC Davis pay him off? Who knows? UC Davis won't talk.

And then there's Ohio State University, which was embarrassed to disclose how much it was paying OSU President Gordon Gee.  It took an Ohio newspaper about a year to pry that information out of the university after it filed a Freedom of Information request.

And remember Harvard Law School's refusal a few years ago to disclose which of its professors was a Native American, although it represented that one faculty member was an Indian? Why the reticence? I suspect it was because it was counting Professor Elizabeth Warren as a Native American, when in fact she is not.  Oops!

Finally, there's the College Board, which speaks for higher education in general.  In a report issued earlier this month, it actually represented that the cost of attending a private nonprofit college had  gone down over the past ten years, in spite of the fact that tuition at a private college has gone up almost every year for the past 30 years.

How did the College Board justify that whopper?  By distinguishing between the sticker price of attending college (going up) and the so-called net price, which the College Board said has gone down a bit after tax benefits, grants, scholarships, and inflation are taken into account. Of course not every student gets those scholarships, grants, and tax breaks.  You--Mr. and Ms. sucker--are probably paying the sticker price.

Why do colleges and their constituent organizations continually hide the facts about their activities? Two reasons.  First, they are accountable to no one and don't care if they get caught in a misstatement or an embarrassing activity. Do you think King Alexander cares about being corrected by a Baton Rouge homemaker?

Second, the upper echelons of American higher education are contemptuous of the American people.  Like Colonel Jessup who screamed "You can't handle the truth!" in A Few Good Men, they don't think Americans deserve to know the facts about the way their universities are being run.

That's why we need a federal Freedom of Information Act that requires all colleges and universities receiving federal funds to publicly disclose a whole range of their activities including the way they choose their executive leaders, their affirmative action practices, their admissions policies, and the way they distribute scholarships and student aid.

Until they are required by law to do so, American universities will continue to behave like Lois Lerner, the IRS administrator who assured Congress she had nothing wrong and then took the Fifth Amendment.
 
Lois Lerner of IRS
Not taking any questions

References

Koran Addo. LSU President calls for reinvestment in higher education. The (Baton Rouge) Advocate, October 17, 2013. Accessible at: http://theadvocate.com/home/7336360-125/lsu-president-calls-for-reinvestment

Elizabeth Welsh. LSU cost numbers don't add up. The (Baton Rouge) Advocate, October 29, 2013, p. 8B.

 

Sunday, October 27, 2013

Only suckers pay the sticker price. The College Board says college costs at private colleges went down over the past 10 years. Really?

I think the hand-wringing about the trend [in college costs] is greatly exaggerated.

                                                  Sandy Baum, College Board

Year after year, College Board faithfully delivers two messages.  First, college is a fabulous investment when you consider the life-time difference in earnings between college graduates and high school graduates. 

Second, a college education does not cost as much as most people think it does. In fact, last week the College Board issued a report that said the inflation-adjusted cost of attending a private college is actually cheaper than it was ten years ago!  That's right. Even though college costs have risen faster than the rate of inflation for the past 30 years, the cost of attending a private college actually went down over the past ten years, according to the College Board.

Sandy Baum of College Board
It is true, the College Board admitted, that the sticker price of a college education has gone up over the past ten years, but only suckers pay the sticker price. When grants and tax benefits are calculated, the so-called actual price is only 57 percent of the sticker price. Adjusted for inflation, the net price has remained virtually unchanged from what it was 10 years ago.

To put it another way, college costs haven't gone up that much for some groups of people.  Colleges grant huge discounts to preferred customers.  Applicants with high SAT scores get scholarships or grants, because these students help raise colleges' rankings by the various rating entities like U.S. News and World Report.

And low-income students are eligible for Pell Grants.  As Andrew Kelly pointed out in a recent blog, Pell grant spending more than doubled between 2008 and 2011, growing from $16 billion to $37.5 billion in just three years.  The number of Pell Grant recipients grew by more than 80 percent between 2006 and 2012. 

And let's not forget affirmative action.  Not only do the leading colleges give minority applicants preference for admission, they generally give these students scholarships and grant aid--particularly at the elite colleges.

Who then pays the sticker price--the sucker price--to attend all these expensive elite colleges?  If you are a white person from the middle class with lackluster SAT scores, it's you. Citing a federal study, the College Board acknowledged that families in the second highest quartile of family income saw the cost of attending a private college go up by 8 percent from 2003-2004 to 2011-2012 (as reported by NY Times).

References

College Board. Trends in College Pricing 2013. Accessible at: http://trends.collegeboard.org/college-pricing

Andrew P. Kelly(2013, October 24. New data on tuition prices: Is it possible it's even worse than we thought? AEI Ideas blog. Accessible at: http://www.aei-ideas.org/2013/10/new-data-on-tuition-prices-is-it-possible-its-even-worse-than-we-thought/

Richard Perez-Pena (2013, October 25). Despite Risking Stick Prices, Actual College Costs Stable Over the Decade, Study Says. New York Times, p. A14.

 

Sunday, August 25, 2013

Why President Obama's Proposal for Controlling College Costs is a Nonstarter

In politics as in life, there are problem solvers and there are problem managers.

President Obama is a problem manager.  Before he was elected president, he saw Guantanamo as a problem to be solved, and he promised to close it. Five years into his term of office, Guantanamo is still open; it is being managed.

Ma'am, I don't solve problems; I manage them.


Likewise with the student loan crisis. Fifty Million Americans now hold $1.2 trillion in student loan debt.  About 6.5 million people have formally defaulted, and another 9 million are not making payments because they have been granted deferments or forbearances. 

For-profit colleges account for almost half of all student loan defaults.  The Department of Education reports that about 20 percent of student loans originating in the for-profit sector default within three years of entering repayment, but DOE estimates that almost half of all students who borrow money to attend a for-profit institution will eventually default.

Now that's a problem. Is the Obama administration trying to solve it? No it is not.

Last week, President Obama proposed the creation of a college rating system whereby the federal government will rank colleges and universities based on their costs, their graduation rates, the number of low-income students they enroll, and some other factors.  The President hopes to link this rating system to the federal student loan program, perhaps allowing students who attend high-ranking colleges to borrow money at a lower interest rate.

By introducing such a system, the President hopes to encourage colleges to keep their tuition prices down and stop the ever-increasing cost of attending college. In short, President Obama wants to manage the student loan crisis, not solve it.

Why is President Obama's college ranking system doomed to fail? Several reasons:

Colleges will just game the system. First as the New York Times pointed out in a recent editorial, colleges are very good at gaming the system when it comes to measuring college quality. We've seen how they've manipulated data to make themselves look better in the U.S. News & World Report rankings.  They will use the same tactics if the feds implement a college rating system. So why go through this charade?

DOE doesn't even give us useful information about student-loan default rates. Second, DOE has shown itself unable to provide the public with accurate information about one simple measurement--the student-loan default rate.  DOE only measures the number of people who default during the first three year of the repayment period--currently about 13 percent.  But the number of people who default over the lifetime of the repayment period is much higher--probably double DOE's posted rate.  And that''s the number the public really needs to know.

If DOE can't report an accurate and useful student loan default rate--a simple thing to do, what makes anyone think it can manage a much more complicated college ranking system?

Students and families won't choose a college based on the federal ranking system. Third, students and their families won't make college choices based on the federal government's rankings, so why set up a bureaucratic ranking system?  Texas high school graduate are not going choose between enrolling at the University of Texas or Texas A & M based on rankings reported by Secretary of Education Arne Duncan.  They choose their college based on a host of very personal factors, not the least of which involves the varsity football team's win-loss record.

The Clery Act, which Congress passed in 1990, demonstrates my point.  Congress passed the Clery Act in the wake of the rape and murder of Jeanne Clery, a freshman at Lehigh University, based on the belief that parents need more information about crime rates in and around the nation's colleges and universities.  The law requires all higher education institutions that receive federal funds to report crime activity in their campus communities on an annual basis.

Although the Clery Act has some useful features--colleges are required to notify the campus community of ongoing criminal activities--I have never met anyone who made a decision about where to go to college based on the Clery Act's crime reports.

If students and their parents aren't going to make college choices based on the Clery Act's crime statistics, they are not going to make them based on Secretary Duncan's rating system.  Does anyone disagree?

Why impose more federal regulations on a host of colleges that are doing a pretty good job? Finally, President Obama wants to impose another layer of bureaucratic measurements on colleges and universities that are already overly regulated.  And a lot of these institutions are doing a pretty good job.  College tuition has gone through the roof at the Ivy League colleges and other elite universities, but a college education is still fairly reasonable at the nation's community colleges and regional universities, like the one where I teach.

The growing level of student-loan debt is a big problem that gets bigger every day, and there is no simple solution. Nevertheless, it is clear that the rapacious for-profit college industry is the source of a lot of student indebtedness and about half of the student-loan defaults. 

We won't solve the student-loan crisis until we bring the for-profit colleges under control. Unfortunately, President Obama doesn't have the political courage to tackle that problem.  He would rather rank all colleges than put the bad apples out of business.

In short, President Obama doesn't want to solve the student-loan crisis, he wants to manage it--at last until his term of office expires.

References

Editorial. A Federal Prod to Lower College Costs. New York Times, August 22, 2013. Accessible at: http://www.nytimes.com/2013/08/23/opinion/a-federal-prod-to-lower-college-costs.html?_r=0

Michael Shear and Tamar Lewin. On Bus Tour, Obama Seeks to Shame Colleges Into Easing Costs. New York Times, August 22, 2013. Accessible at: http://www.nytimes.com/2013/08/23/us/politics/obama-vows-to-shame-colleges-into-keeping-costs-down.html?ref=opinion


Sunday, February 3, 2013

For whom the bell tolls: Law schools are in touble and so is the rest of higher education


Last week, the New York Times carried a front-page story on the decline in law school applications. In 2004, there were 100,000 applicants to law schools, the Times reported. This year that number will decline by about half.

As one law professor put it, "Thirty years ago if you were looking to get on the escalator to upward mobility, you went to business or law school. Today, the law school escalator is broken" (Bronner, 2013, p. 1.)

The gravy days are coming to an end for college professors
One law school dean admitted that law school costs too much. "Most law schools are too expensive,the debt coming out is too high and the prospect of obtaining a six-figure-income job is limited" (as quoted in the Times).

What happened? As the Times article reported, law school has gotten very expensive.  As I wrote in a past post, tuition at the University of Texas School of Law was $1,000 per year when I attended in the late 1970s.  With a little savings and working part time, most students could graduate from law school with no debt. Today, it costs a Texas resident $32,000 a year to attend UT Law School.

Second, we don't need as many lawyers as we once did. Electronic legal research has made it possible for legal researchers to be ten times more efficient than they were before Westlaw and Lexis-Nexis were introduced.

Third (and I admit this is a totally subjective view), I suspect that law school faculty are not as focused on training legal professionals as they used to be. Consequently, a law school education is not as useful as it once was in getting graduates ready for the workforce.  Too many law professors are writing postmodern law review articles that no one reads instead of striving to relate law-school education with the real world. 

Fourth, I think the blog critics have done their part to discourage potential applicants from going to law school.  There are some terrific online writers who use data and savagely effective writing skills to describe what is going on in legal education, and the picture they paint isn't pretty.  I feel sure a great many young people decide not to go to law school after reading those blogs.  I applaud those writers, by the way. They have provided a real service by alerting people that law school may not be a good investment.

Non law-school academics may be thinking, "Thank God I teach in another profession." But they need to realize that the shakeup in legal education is coming to the whole field of higher education.  The colleges of education, for example, are vulnerable to declining enrollments.  There are too many colleges of education, for one thing; and online for-profit competitors are cutting into the market share of the colleges of education at public universities.

And the social sciences and liberal arts will probably see a further decline in student enrollments. If a potential law student can do some research and conclude that law school is a bad economic bargain, the potential history major and philosophy major can come to the same conclusion.

According to a report prepared by the Center for College Affordability and Productivity, nearly half of all  employed college graduates who held a job in 2010 were employed in a job that did not require a college education (Bidwell, 2013). A high percentage of these underemployed college graduates borrowed money to attend school, and they must pay back their loans whether or not their post-college income justified the investment. 

More and more, we are going to see young people calculate the odds when they make decisions about higher education.  And many will conclude that the odds aren't good.

Private liberal arts colleges are likely to suffer the most from the new economic reality. Fewer and fewer young people are going to seek a a liberal arts degree from an expensive private college--particularly the nonprestigious liberal arts schools that were founded years ago by religious denominations.

In other words, in the world of higher education, it is not only the law schools that are in trouble. We can tell the college professors in nearly every discipline: "Ask not for whom the bell tolls." It tolls for a lot of us working as college and university professors.

References

Bidwell, Allie (2013, Januatry 28). Millions of Graduates Hold Jobs That Don't Require a College Degree Report Says. Chronicle of Higher Education.

Bronner, Ethan. (2013, January 31). Law Schools' Applications Fall As Costs Rise and Jobs Are Cut. New York Times.



Tuesday, April 17, 2012

The New American Serfs: Student-Loan Debtors in the Federal Income Contingent Repayment Plan


Slavery in the United States ended with the Civil War, but slavery in another form lived on.  Slavery was replaced by a new kind of bondage, whereby tenant farmers and share croppers basically became serfs to their landlords and were as bound to them as if they were still human chattel.  The age of the share cropper and the tenant farmer did not end until the Great Depression, when the rural poor fled the land and migrated to the cities or to California.

But those days are over, right? No one in the United States is a slave or an indentured servant in the 21st century. 

Sadly, our national government has created a new form of bondage, which it imposes on college students who participated in the federal student loan program but can’t pay back their loans.  Some of these former students are burdened with student-loan obligations for decades--hounded by the loans they cannot repay and the accumulating interest on their debt. Some of them have become true indentured servants--bound to pay a portion of their income to their federal student-loan creditors for a majority of their working lives.

The Disturbing Case of In re Stevenson

If you think I have overstated my case, you should read In re Stevenson (2011), a recent decision by the U.S. Bankruptcy Court in Massachusetts. Janice Stevens took out two student loans in 1983 to obtain additional education beyond her bachelor’s degree. She took out a third loan in 1987 and another in 1992. By 2008, when she filed for bankruptcy, Ms. Stevenson was in her mid-50s, and her total indebtedness was approximately $112,000, including accrued interests and costs.

Ms. Stevens filed an adversary proceeding in bankruptcy court, seeking to have her student loans discharged on the grounds of undue hardship.  Most people would think she had a pretty good case. Although she had held good jobs over the years, she had suffered periods of joblessness and homelessness and had sometimes lived in homeless shelters. In addition, Ms. Stevenson had health issues--back problems, high blood pressure and an autoimmune disease that required her to take medicine.

During the bankruptcy proceedings, Ms. Stevenson held a part-time job at Walgreens, earning less than $500 a month. She supplemented her meager income with unemployment checks, which were scheduled to terminate in a matter of months.  She also received a monthly subsidy from the State of Massachusetts to help her pay her rent.

In spite of Ms. Stevenson’s bleak economic circumstances, Judge Joan Feeney ruled that her student loans were not dischargeable in bankruptcy. Judge Feeney concluded that Ms. Stevenson should continue paying her loans through the federal government’s Income Contingency Repayment Plan (ICRP), whereby she would pay a percentage of her income toward paying down her loans for a period of 25 years.  At the end of the 25 year period, any remaining balance would be forgiven.  

Did Judge Feeney Make Ms. Stevenson an Indentured Servant?

When she came into bankruptcy court, Ms. Stevens had unpaid student loans stretching back to 1983. Instead of discharging her debt based on undue hardship, Judge Feeney concluded that Ms. Stevenson should participate in a federal repayment program that would obligate her to pay a percentage of her income toward her debt for 25 years.

If Ms. Stevenson goes on the ICRP, she will be nearly 80 years old when her payment obligations cease.  By that time she will have been burdened with student-loan debt for well over half a century.

Solutions?

It seems to me that the Income Contingent Repayment Plan, which Judge Feeney endorsed for Janice Stevenson, is nothing more than a modern version of indentured servitude, whereby student-loan debtors like Ms. Stevenson pay a portion of her income to student-loan creditors for the balance of her working lives.

The federal student loan program is out of control, and the Income Contingency Repayment Plan is making life harder for overburdened student-loan debtors, not easier.

Congress needs to do two things. First, it should amend the bankruptcy laws to allow insolvent student-loan debtors to discharge their debts in bankruptcy just like any other overburdened debtor.

Second, Congress should pass legislation abolishing the ICRP option for stressed out student-loan debtors. People who are insolvent deserve the fresh start that bankruptcy is designed to give them. They don’t deserve to be saddled with a 25-year repayment plan that will cripple them financially for the rest of their working lives.

References

In re Stevenson, 463 B.R. 586 (Bkrtcy. D. Mass. 2011).

Tuesday, April 10, 2012

The Pepper Spray Incidents at UC Davis and Santa Monica College: Universities Need to Listen to Students' Concerns about the Rising Cost of a College Education

Earlier this month, campus police at Santa Monica College pepper-sprayed more than two dozen students who were trying to enter a Trustees meeting to protest a tuition hike.  Chui L. Tsang, the college’s president, defended the police officers’ conduct, insisting that police used appropriate restraint and did not arrest anyone.  (Rivera, 2012).
Last fall, campus police at UC Davis pepper-sprayed students who were peacefully participating in an Occupy Wall Street demonstration. A video of this incident, posted on You Tube, shows a helmeted police officer calmly pepper spraying students who are passively huddled on a campus sidewalk.
What’s going on here?  Don’t colleges realize that students are the customers? Don’t they understand how bad they look when people view these incidents on You Tube? How many UC Davis students and Santa Monica College students who witnessed their classmates being pepper sprayed are going to donate money to their alma maters after they graduate?
Campus police should not pepper spray anyone—student or nonstudent—who is not behaving violently or physically threatening other people.  The students at UC Davis and Santa Monica College were not behaving violently (although some of the Santa Monica College students were a bit rowdy), and they should not have been pepper sprayed. 
Instead of pepper spraying their students, colleges and universities should listen to student protests about the rising cost of tuition and burgeoning student-loan debt; and they should demonstrate that they are taking action to address their students’ concerns.
What should they be doing?
  • First, colleges and universities should stop raising tuition while they continue paying extravagant salaries to college presidents and senior executives. They should freeze or reduce the salaries of their highest paid employees—at least until the national economy recovers-- instead of tacking the cost of these excessive compensation packages onto students’ tuition bills.
  • Second, college and university trustees should cap tuition and fees until the economy improves, and they should work harder at making their institutions more efficient.
  • In addition, higher education should demonstrate their empathy for overburdened student-loan debtors by urging Congress to amend the Bankruptcy Code to give overburdened student-loan debtors reasonable access to the bankruptcy courts. They should also support legislation that would stop the federal government from garnishing the Social Security checks of elderly people who defaulted on their student loans. 
The cost of higher education is out of control, total student-loan indebtedness approaches one trillion dollars, and student-loan default rates are alarmingly high. Colleges and universities need to show students that they are helping to solve these problems.  Pepper spraying student protesters is the wrong thing to do.
References
Rivera, C. (2012, April 4). College president defends pepper spray against 'unlawful' crowd. Los Angeles Times. http://latimesblogs.latimes.com/lanow/2012/04/students-unlawful-pepper-spray-santa-monica-college-president.html

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.
References
Fethke, G. (2012, April 1). Why does tuition go up? Because taxpayer support goes down. Chronicle of Higher Education.