Making college affordable
We must reform the financing of higher education to address confusing funding policies
Attending college is less an option and more a necessity in today’s world, with most high school students going on to attend. But many who graduate with college degrees will have incurred crushing debt. Indeed, the August edition of Consumer Reports puts the average debt per college graduate at $37,000. We Americans need to find ways to make college education affordable again if we are to maintain a highly skilled workforce drawn from a diverse population.
During this election season, presidential candidates proposed free public college tuition. The idea of free tuition is not new. In the United States, until the 1970s, California and some other states were able to provide their residents with a virtually free or affordable public college education. Moreover, several countries have a free tuition policy for public institutions. The obstacles are not insurmountable. If governments and taxpayers would step up to cover most of the operational cost for state colleges and universities, the affordability problem would be largely solved.
College tuition levels and affordability at public institutions are usually related to states’ appropriations for institutions and state grants for students based on their academic merits or needs. For the past few decades, state appropriations have not kept up with the rapidly rising institutional operation cost. State governments have driven public universities to be more self-sufficient or entrepreneurial, but this has generally led to a diversionary focus on fund-generating activities or rapidly increasing tuition to fill the funding gap.
Until state and federal governments address fundamental issues of college cost and debt, we should pay special attention to current policies that attempt to suppress the rates of tuition increases. All 50 states have policies or mechanisms intended for that purpose. It is important for the public, legislators and policymakers to understand whether and how state tuition policies are working, which current policies should be removed, and whether new policies are needed, because they affect educational opportunities, the amount of college debt, and other aspects of our lives.
Tuition-setting or tuition-regulation processes are complex and abstruse. In recent research, Jangwan Ko, an associate professor at SungKyunKwan University in Korea, and I examined tuition increases by the type of tuition control policies and by where the authority to set tuition resides. We found that two policy mechanisms in particular are ineffective or troublesome: allocating the primary tuition-setting authority to individual public institutions, and regulating institutions with a tuition cap policy. Above all, tuitions are more likely to increase when individual institutions have tuition-setting authority rather than the state or state agencies having primary tuition-setting authority. States wishing to control tuition increases at public institutions should reconsider where to vest this authority.
Tuition caps (maximum allowable rates of annual increase) are generally set by state legislatures. We expected these caps to result in smaller tuition increases at institutions with this policy than at institutions without. However, we found this not to be the case. Paradoxically, a cap policy appears to drive tuition increases higher. In most states, cap rates have been set higher than anticipated increases in the Consumer Price Index or the Higher Education Price Index, and these caps seem to be too high. Some institutions rapidly raise tuition to the limit; others may exceed the cap if the financial gain is perceived to be greater than the penalty.
We did, however, find that two state policies are effective in controlling tuition: linking tuition to student financial aid and providing incentives to limit tuition increases. Linking tuition with aid is a common method for securing college access for low-income students. The states’ linking practices include the formalization of relationships between tuition level and financial aid — for example, low tuition-low aid and high tuition-high aid. Incentives — rewards or penalties (e.g., state funding adjustments dependent on institutional performance) — can help states resolve or prevent goal conflicts between universities and government.
It is time to call for reform in the financing of higher education to systematically address the bewildering array of funding policies. Governments and public institutions of higher education must act to make tuition affordable while maintaining the quality of education and the nation’s research leadership. In the meantime, to reduce dependency on tuition increases, the federal government should consider directly subsidizing the states in need and their public colleges and universities.
In the near future, today’s students in higher education will be the backbone of our country. Unbridled tuition increases not only strain students and families, but they also squander potential talent that our nation needs to remain strong.