October 21, 2004

Time for a tuition freeze

Public university tuition rose an average of 10.5 percent this year, far faster than inflation. Now in the past, tuition hikes generally don't mean students are actually paying all that much more. As USA Today found earlier this year, students pay an average of just 27 percent of the nominal tuition price, thanks to tax breaks, federal grants, and the like. But how sustainable is this state of affairs? If an economic downturn strikes, or states have to put more of their resources into Medicaid and other safety net programs, public universities get the shaft, and we see a spike in tuition—a spike that usually dwarfs the effect of grants and federal subsidies. Students get screwed. &tc. That seems to be what's happening now.

So maybe it's time to ask why university prices are rising so quickly. The College Board lists the following as culprits for the increase in costs: "Shrinking endowments, big increases in health insurance costs for campus employees, and anemic higher education spending by states."

Well of course they say that.

Let me step back from the liberal line here (okay, at least the Democratic line) and say that more public funding for universities might not be the answer, or at least not the only answer. It's time to consider serious tuition freezes that keep costs down. As it stands, too many public universities are dishing out too much money for, let's face it, frivolities. Sports teams, diversity programs, posh dorms—these are all nice to have, believe me, but not when college is becoming unaffordable, and weighing down state budgets. Does every public university really need to jockey for a spot on the US News & World Report rankings? No, of course not. Drastic tuition freezes would force some schools to specialize, or focus more on academics and technical training. I can't see anything wrong with that, especially if it allows more low-income (and even more middle-class) students to afford a decent education

Illinois is trying out something of the sort (kind of), and it will be interesting to see how their universities fare.

I should note that I'm open to persuasion on this issue. Peter J. Orszag and Thomas J. Kane of Brookings have argued that lower public appropriations have led to a decline in public school quality, and suggest better financing methods are the answer. But you could also argue (and they acknowledge this point) that public universities haven't really made a long-term commitment to becoming more efficient. On the other hand, Orszag and Kane note that, while slight reductions in state spending can spur universities to cut administrative overhead and improve efficiency, drastic reductions haven't had quite the same effect. So it's not impossible, but it's tricky.
-- Brad Plumer 4:54 PM || ||