“Why not have
committed, knowledgeable stakeholders – cut loose from self-interest – at the
helm? A more proactive stance by college
leaders is in the best interest of good business and good education.”
“Colleges on the Fiscal Cliff: Students Bearing the
Burden”
This week we have seen college leaders take what has been
tabbed “baby steps” by some and “cop out” and “proxy for meaningful change” by
others regarding financial aid reform.
This was followed by the Moodys’ report on the continuing divergence between college
price and families’ ability (and willingness) to pay. Some themes are becoming familiar….
When I was asked to speak to groups twenty to thirty
years ago it was almost all about admissions.
Recently the focus has taken a sharp turn away from the getting in part to
the paying part. Affordability IS
becoming the “hot new college amenity.”
A guidance counselor group just invited me to present on
a topic they have titled “Colleges on the Fiscal Cliff: Students Bearing the
Burden” which gives me good insight into what they are seeing of highered
economics in the high schools, and it confirms every conversation I had in my
travels around the country recently.
This fall I had the opportunity to speak at a number of
national and regional professional conferences where issues of college access
and affordability were addressed.
Besides the fact that I did not hear one single bit of news that made me
feel sanguine about the continuing divergence of college price and families’
ability (and willingness) to pay, I only heard increasingly shrill negatives…
incredulity and skepticism about “runaway” college price increases.
No one needs Moodys Investor Services to get that message. Ask and
listen to any financial aid or admissions director: it really is later than
we acknowledge.
Right Pricing: Good Business and Good Policy
If I only cared
about colleges maximizing revenue I would still
advise college leaders to fix their price structure… so they can stay in
business. But it is of course more than
that, and finding ways of structuring the various models so they are affordable
(and have value, not mutually-exclusive
propositions) is an imperative for good education reasons in addition to smart
business reasons.
Here is a letter from the mother of a student just
admitted to a “top 1%” private college.
In addition to underscoring the financial stress increasing prices
create – even for colleges with liberal financial aid policies like this school
– it also is tinged with the heartbreak we set up by so successfully promoting
the highered dream. (Highlight at the
end and “anonymizing” the college added by me.)
Case Study: a family in the “skid zone”
Private College is contributing
a total of $24,000 but that includes 3K loan and 2K work study on top of the
18,900 grant. My daughter is expected to contribute 2K, and we are
expected to contribute 32K. Additionally – any scholarship she gets will
decrease her contribution – not the parent’s, so they’re using her contribution
through work study and loan as part of their contribution – not ours.
I think our expected family
contribution is around 32K according to FASFA because our income is right
around 140,000. I think my husband is actually making about 95K this
year, and I make about 42K. BUT the reason my husband’s income is so high
is because he has worked a ton of overtime. I don’t feel comfortable
getting into a situation where we have to depend on him working overtime in
order to make ends meet.
You would think that on paper,
we have enough to cover the 32,000 - but when balancing our bare bones monthly
expenses and income and we barely break even. What do people do in our
situation? What options are there? I asked Private College this,
and they say that she can get a Stafford loan for $5,500. But that was
about it unless we want to take out a loan ourselves.
I’m really so upset by this
because we would never have dreamed this opportunity for our daughter and here
it seemed like it was placed in her lap – and I would hate to have to turn it down being this close, but the tuition is more than my yearly salary -- and not just here, but college in general!
A conflict of interest?
Hundreds of millions of dollars in benefits go to faculty
and staff who work in higher education.
Many of the same people who set policy and determine budget priorities
at colleges are immune from major worries that beset most families: tuition
costs.
A common benefit private college employees enjoy is
subsidized tuition; for themselves, their partners, and their children. And this benefit has the peculiar effect of
giving the greatest benefit to those who least need it. The more affluent faculty and administrators
who do not qualify for need-based financial aid still are eligible to receive
free or reduced tuition.
I think these policies deserve serious review and
discussion. I know there were good
reasons to implement them decades ago and there may be good reasons to keep
them – or keep parts of them – today.
But I also have to believe that if college policy-makers had to face
college financing the way “civilians” do, we would have seen different price
trajectories over the past twenty years.
This fall a TIME Magazine poll highlighted disparities in
perceptions of highered price and value.
As TIME reported, “members of the general population were twice as
likely as college leaders to say that college isn’t worth the price: 80% of
U.S. adults agreed that at many colleges, the education students receive is not
worth what they pay for it. Only 41% of college leaders agreed with them.” But that 41% figure is spurious, in my
opinion, because “college leaders” are disconnected from a significant part of
the value equation: paying.
The TIME story went on underscoring public distrust and implying the wisdom of a more
proactive stance by those college leaders: “more Americans support federal
price caps or controls on tuition (73%) than college leaders (16%), largely
because the public doesn’t seem to think colleges can control them on their
own. More than 90% of Americans said colleges aren’t doing enough to improve
affordability. Only 56% of educators agreed even as roughly the same percentage
(58%) said they don’t think the cost of a college degree will ever stop
rising.”
More and more Americans like the family in the case study
above are having trouble dealing with college costs now. If the pundits are
right that the next generation will be the first cohort to be less-well-off
than their parents, we will witness college-bound families going from stretched
to priced-out in a generation even if
price increases slow. Under-capacity campuses, with eroded academic
quality, and an under-educated populace are in no one's vision of a desirable
future. Let's act soon to minimize cost barriers to higher education.
Why wait and let market forces (family choice) or regulation
(government funds) drive change? Why not
have committed, knowledgeable stakeholders – cut loose from self-interest – at
the helm? A more proactive stance by
college leaders is in the best interest of good business and good
education. Maybe if we had to stand in
the checkout line change would come more quickly.
