Tuition Turmoil: A Roundtable Discussion: Higher Education Leaders Talk about the Struggle with Skyrocketing Tuition Costs and Changes to Federal Aid Programs

By Goral, Tim | University Business, May 2005 | Go to article overview

Tuition Turmoil: A Roundtable Discussion: Higher Education Leaders Talk about the Struggle with Skyrocketing Tuition Costs and Changes to Federal Aid Programs


Goral, Tim, University Business


Pick up any newspaper and you'll see headlines that scream about skyrocketing tuition costs and cuts to aid programs. University Business Editor Tim Goral recently spoke with a panel of tuition experts to find out what these changes hold in store for for higher education.

University Business: Despite the media focus on rising tuition costs, many in higher education would argue that the cost of a college education is still a great deal. How do you justify that cost to your constituent groups?

Kurz: Regardless of the sticker price of an institution, whether public or private, the fact is that no one pays the true full cost of education. When you look at what it costs to provide the services and the Level of the faculty at any institution, it is higher than what students are paying, even if they are paying the full sticker price.

Wright: The real cost of education is much higher than the sticker price at almost all institutions because there are so many additional costs--everything from technology changes to heating and Lighting--be sides just the instructional costs.

Breneman: And tuition, as high as it may appear, is only a fraction of the total resources that are brought to bear on a student's education.

Schapiro: At Williams, we spend $80,000 per student, and if you're part of the half or so of our students who the pay sticker price, that's about $40,000. So one way to think of it is that it's not the worst deal in the world if you are paying $40,000 for something that costs twice as much.

Scannell: We spend a lot of time with almost every client talking about creating proof statements on the return on investment. The problem is, this is an industry that has real difficulty differentiating itself, and if you pick up 10 random view books, you'll see phrases Like "great hands-on experience," "safe campus," "close relationships with faculty." You see what should be differentiating themes, but everyone is using them so they don't differentiate anything. Institutions need to go to the next step and have data that demonstrates and supports what they are saying.

Breneman: Yes, the private rate of return financially to a college degree remains quite high--in the 10 or 11 percent range--calculated even with the higher cost, so as an investment this still remains a good payoff.

Scannell: There is very good data available on the lifetime earnings of someone with a four-year degree, versus someone with an associate degree, versus a high school education. That's a foundational argument, but it is incumbent on each institution to take it a step further and talk about why their particular brand of higher education is worth the price they are charging. I think this business of making the case that you're worth the price you're charging is one that higher education in general doesn't do a very good job with.

Schapiro: One of the things that has been fueling the increased demand for higher education institutions is the increased re turn on those degrees. It's such a good investment now. The rates of return are far in excess of those in basically any capital market.

Nemerowicz: It is a great deal when you look at the statistics of income for college educated versus non-college educated people. But that's a distant deal. It doesn't matter how good the deal is if you can't afford to take it. Our concern is the accessibility to the deal.

UB: Recent changes to the tax tables that define family contributions to tuition mean that many students will no longer qualify for Pell grants, and President Bush has proposed eliminating the Perkins loan program. What effect, if any, will this have on tuition costs?

Nemerowicz: It's awful and it will hurt our students. Large portions of our students are on Pet[, but any cut in outside support for their attending especially a private liberal arts college will mean many can't come. We can't make up that in tuition, because many of the students who qualify for Pell now don't have other resources, and couldn't pay higher tuition even if we raised it. …

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