What Causes College Tuition Hikes?
Abstract: College is a very large investment for a student’s future. This has always been the case. Recently, however, the cost of higher education has been increasing at a steady rate, creating a large “tuition bubble”. There are numerous factors at work below the surface which are driving this increase in the cost of tuition which have to do with, among other things, cuts in funding as well as increased spending on more or less essential student services and administrative staff for said services. In the face of these rising costs, though, many of those paying tuition feel they are being taken advantage of by colleges that are forcing students to bear the brunt of their expenses and make up for losses in revenue. This paper will explore the aforementioned factors spurring rising tuitions in an attempt to elucidate the view that colleges are acting out of necessity and are not necessarily at fault for the increasing cost of higher education.
Introduction
College is an investment which most people feel is worthwhile for their future; but just how much of an investment should it be? In the past, higher education costs have been more or less affordable, with some sources citing prices as low as $120 to $150 per year around a century ago--about $3000 per year when adjusted for inflation (Thelin, 586). In recent years, however, more and more students have found higher education to be increasingly out of reach financially due to a significant rise in tuition costs; which leaves many students bogged down with mountains of debt as they come out of school and attempt to enter the professional world. It is a fact that the average college student is very aware of, and that has become a very large factor in deciding what college to go to, as well as deciding whether or not to attend college at all. According to Mark Engler in the New Internationalist, “Between 1980 and 2010, college costs went up three times faster than the Consumer Price Index. They even increased twice as fast as the cost of medical care.” (Engler). Further, “According to the U.S. Department of Education, the average annual tuition, fees and room and board at a public college or university in 1964-65 — the first year for which there’s data — was $6,592, in 2011 dollars. By 2010-2011, that had increased to $13,297 -- a 101.7 percent increase. The increase for private schools was even more dramatic. Average tuition, fees and room and board in 1964-65 was $13,233 a year; in 2010-2011, it was $31,395, an 137.2 percent increase. That’s after accounting for inflation.” (Matthews, “‘The Tuition is Too Damn High’ Part I”). This increase has led to greater public attention on what factors are causing higher-education costs to rise, as well as what can be done to rein them in. For instance, in the 2016 presidential race, the topics of student loan debt and lower costs for higher education were widely discussed. Senator Bernie Sanders of Vermont even went so far as proposing tuition free public college education as a means of helping the many students who find themselves struggling to afford their education now, along with making high tuition costs a thing of the past. But before that happens, one must understand why exactly the cost of higher education is rising.
With tuition rising at the rate it is--or three times the rate of the Consumer Price Index--it is hard for the average person not to doubt the integrity of the colleges themselves. Monica Jacobe, a scholar who explored the rising costs of tuition and the sentiments of those affected by it, explained, "The rhetoric of middle--class opportunity, still standing in the face of the current economic crisis, also surely informs the resentment many parents feel about not being able to afford the college education they believe their children need, even are entitled to have. But these parents often don't blame the economy or lawmakers or fate; they blame the college or university and everyone they see as agents of its bureaucracy--from top administrators down to the lowliest adjunct.” (Jacobe, 1). While on the surface this blame may not seem ill-placed, upon looking deeper into the factors which lie behind the rising costs it becomes clear that there is much more going on beneath the surface than colleges trying to increase revenue at the expense of students. One such factor is a drop in state funding for postsecondary or higher education. The Delta Cost Project, “a nationally recognized effort for monitoring and identifying revenue and spending trends in public and private higher education” (Desrochers), has found data that suggests colleges have been raising their tuition to combat cuts in their appropriations from the state. These cuts have had major consequences for public universities that rely on the state for funding in order to cover the cost of a wide array of student services and amenities which has been growing over the last twenty years or so, and have caused colleges to take other precautions to make up for the lost finances--including raising tuition. However, while state cuts are a large contributing factor for public colleges, tuition has also been increasing relatively as fast for private institutions of higher education, which do not fall under state subsidization. Such colleges instead accumulate most of their funds from private donors, which they do not have complete say in the use of, as well as from student tuition. Therefore, in order to afford to provide student services and amenities which are competitive with public schools, private colleges have to raise tuition as well in order to cover their costs. As such, amenities and student services also serve as a major contributing factor in tuition hikes for both public and private colleges, since they provide schools a way of attracting prospective students in order to gain their tuition payments. These amenities include student activities, counseling services, and athletics, among other things, geared towards attracting students with the ideas of comfort, campus culture, and extracurricular enrichment. For instance, according to Murray Sperber in his book, Beer and Circus: How Big-time College Sports Is Crippling Undergraduate Education, “Many universities, because of their emphasis on research and graduate programs, and because of their inability to provide quality undergraduate education to most of their students, spend increasing amounts of money on their athletic departments, and use big-time college sports—commercial entertainment around which many undergraduates organize their hyperactive social lives—to keep their students happy and distracted and the tuition dollars rolling in” (Sperber, 12). Further, in order to provide said array of student services and amenities like athletics and counseling, colleges have created an “administrative bloat”, or, “excessive spending beyond what is necessary to support the core academic functions of a university”, which also serves to raise the costs faced by schools, and directly translates into higher costs per student, and in turn higher tuition (Hiltonsmith). As such, this paper will discuss the factors contributing to increased tuition as a means of establishing that colleges themselves are not necessarily at fault for the rising costs.
Part One: Losses in Funding
Recently, state appropriations for public higher education have been dropping--“Fourteen states cut funding by 30 percent or more [in the wake of the 2008 recession]” (Blumenstyk, 50)--which, in turn, is causing schools to make up for the money lost in any fashion that they can. One of the main ways they are finding suitable is raising the costs of tuition. In examining aspects of this factor, James Harvey asserts, “Cuts in state appropriations appear to be related to tuition increases in public institutions in the early 1990s. During the period in which states were cutting appropriations to higher education, tuitions in public colleges and universities increased more rapidly than they had in previous or subsequent years” (Harvey, 303). While to say that as state funding fell tuition rose could seem slightly coincidental rather than concrete, Goldie Blumenstyk further supports the connection in saying, “Looking at this shift in state support another way, in twenty-four states in 2012, the share of revenue for public colleges coming from students through tuition and fees exceeded the share coming from the state. As recently as 2000, that had been the case in only three states” (Blumenstyk, 49). Both Harvey and Blumenstyk find the connection that states’ cuts are correlated with rising tuition in an effort to make up for the lost funding, although they are not the only ones. Experts working for the American Institutes for Research on the Delta Cost Project have also found that public institutions have risen their tuition costs to make up for lost revenue, primarily coming from the state. “Demos estimated that during this period, between 78 and 79 percent of the tuition hikes at public universities -- which averaged $3,628 per student at research universities and $2,463 per student at non research colleges -- was due to declining state appropriations, between 5 and 6 percent was due to increased administrative spending, and another 6 percent was due to construction costs” (Woodhouse). Colleges themselves are not at fault for this loss of state funding. They do, however, have to make up for it in order to continue to function and provide quality educations as well as keep students content.
Unlike public schools, private schools do not receive any appropriations from the state and therefore need to find a source of funding elsewhere; namely “via gifts from its wealthy alumni, federal grants, and hospital fees if [they have] one” (Blumenstyk, 44). Although public institutions also receive donations, it is not nearly the same percentage of revenue as private colleges; and so a decrease in private donations or funding for private institutions has essentially the same effects on those schools which depend on them as state funding cuts do for public schools. And this loss of private donations is real for many private schools aside from a handful. “Ultimately, when it comes to higher-education philanthropy, it is mostly a story of the rich getting richer. In 2013 colleges received more than 33.8 billion in donations--a record. But generally the big money goes to the biggest and most established institutions, typically a handful of elite liberal arts colleges and universities with major research programs and hospitals. Indeed, in 2013, ten institutions, all of them private research universities, accounted for about 17 percent of the reported total donated to higher education, according to the Council on Aid to Education” (Blumenstyk, 47). To exacerbate a loss of donor funding, “Higher education donors are also picky about how their money is spent. All but about 10 percent is given with the stipulation that it be used for a particular purpose” (Blumenstyk, 48). To the dismay of students, recently schools have been utilizing a shift in costs correlated with the cuts in both state funding for public, and donor funding for private. Dylan Matthews has found data from the Delta Cost Project that suggests “As with their public counterparts, these [private] schools are primarily seeing cost shifts rather than spending increases, but their shifts are from donors to students, rather than from taxpayers to students.” (Matthews, “‘The Tuition Is Too Damn High’ Part III”). Both public and private schools are losing revenue from what used to be their main sources of funding. To combat the lost revenue, tuition increases have become the new source of funding, however with the rise in tuition has come a rise in the colleges’ spending.
Part Two: The Cost of Student Services
As such, in the face of such changes and the increased dependence of schools on the funding of students there are some people who believe that public higher education institutions which are raising tuition in response to state cuts stand to gain from privatization of college funding, and so are taking advantage of the situation. Bob Meister argues such a point by stating, “They would not have privatized so eagerly if they did not see tuition as a faster and surer form of enrollment-generated revenue growth than taxpayer funding. From their perspective, privatization is not a defensive strategy for revenue replacement but rather an opportunity for aggressive revenue growth they could not afford to miss” (Meister, 128). This, however, is a narrow view which overlooks many of the reasons for rising tuition. In reality, the increases to the cost of tuition in response to state cuts, as well as in general, are more need based than not; and are therefore necessary as opposed to purely advantageous. The reason for this being that, following an enrollment slump in the 1980’s, “during which even careful observers of the industry dicted that many institutions would close,” many schools shifted their focus to adding amenities that would attract prospective students and help them to stay afloat financially (Carlson, 275). This process has progressed over the years into a sort of amenities race which has only gotten worse as schools have found themselves no longer in an enrollment slump, but rather in a funding slump which they are endeavoring to use tuition dollars to alleviate. In this vein, schools have shifted much of their spending to amenities and services and now spend significantly larger sums of money per full-time-equivalent student than they had in the past. “For example, at private baccalaureate colleges, average spending on student services increased more than 21 percent per full-time-equivalent student, while spending on instruction went up only 5.5 percent, and on operations and maintenance by 9 percent.” (Carlson, 272). Carlson also explains that this amenities race is not something colleges are doing solely to enhance their image, but that in actuality “the growth in student services is certainly a sign of an intensifying competition among colleges. And even if the amenities, activities, and support cost many thousands of dollars per student, especially at elite institutions, they represent a college cost that students and their parents have asked for--either explicitly or through their decisions in enrollment” (Carlson, 272). Therefore, colleges feel pressured by the heightened expectations of the pool of new, prospective students to add new services to enhance the comfort and happiness of their students as opposed to focussing only on educational quality enhancements. These expectations stem not only from the emphasis on student services which began in the 1980s, but also from a growing trend of students who feel they are in need of both academic and mental counseling. For example, “On many college campuses, the growth [in student services] may reflect a greater emphasis on career counseling and academic advising by professional staff, as well as students’ expectations about access to campus mental health services.” (Desrochers, 12). Further, student mental health services in particular are not being added just for show, or as luxuries, but because they are actually felt to be necessary. According to a study by Kara Zivin et al., which looked into student mental health on college campuses, “Over half of students suffered from at least one mental health problem at baseline or follow-up. Among students with at least one mental health problem at baseline, 60% had at least one mental health problem two years later. Among students with a mental health problem at both time points, fewer than half received treatment between those time points.” (Zivin et al., 1). Carlson echoes this trend in saying that even since the end of the 1980s, “‘the likelihood of college students’ suffering depression has doubled, suicidal ideation has tripled, and sexual assault has quadrupled,’ Ms. Nelson says. ‘I can add to that the alcohol abuse, sleep deprivation, anxiety disorders--any number of things that we may not have seen 10 to 20 years ago, at least in quantity.’”(Carlson, 274-275). This trend shows that not only are student mental health problems a very real situation, but that many students do not receive the necessary treatment; which is definitely a sign that spending on student counseling services is very well founded and more or less a need for colleges.
As mentioned above, increased spending on new amenities and services is a way for institutions to increase enrollment. Although, what many people do not realize is that the costs of providing such amenities demands even more money when also considering the increased hiring necessary in administration to regulate and supervise them. This increased spending on both amenities and administration contributes to the administration bloat which many people claim to be at fault for rising tuition. “Donna Desrochers, [a researcher for the Delta Cost Project], points out that the data lines up with a report by the group on administrator hiring, released in February. It said that new administrator hires--particularly in student services--were what drove a 28 percent expansion of the higher-education workforce from 2000 to 2012.” (Carlson, 272-273). This increase in administrative hires, like the services themselves, are not really debatable expenses. According to Robert Hiltonsmith, “A lot of these people are necessary. For every second assistant dean that people complain about, there's also an additional counselor or an additional financial aid person or an additional IT person. And all of these things are necessary to support the growing university” (Woodhouse). On top of this spending on new hires based on student expectations or needs, colleges are also forced to add staff in accordance with certain laws, such as Title IX, Title IV, the Clery Act, among other other laws [Fig. 1] (Carlson, 273-274). All of these costs inherent in the increase of student services and staff directly translate into the increased cost of tuition. In order for those amenities to be provided, more money has to be paid towards establishing them as well as keeping them funded. Overall, though, the services being offered and the costs which they incur are not without solid reasoning; and are not what colleges necessarily want, but moreso what they are inclined to believe that they need in order to provide students a quality educational situation in which to succeed.
Conclusion
In light of all of the factors previously discussed, it becomes significantly more clear that, despite what some people may believe, the increases in costs for higher education have not come out of colleges wanting to take advantage of students in order to increase revenue; but rather as a means of making up for lost funding which is necessary for operational costs, as well as providing services which many current and prospective students find to be necessary and beneficial to their health, education, and professional futures. These students have expectations of such services being provided in today’s college culture, and so college administrations have been thrown into an amenities race in order to attract students to their school over the many others possibilities. Without the increased tuitions that schools are charging, many smaller schools would flounder next to larger, well established schools with massive endowments and grants to keep them afloat indefinitely. Although high tuitions are a sad truth, based on the factors examined above and their underlying reasons they seem to be a necessary evil. Unfortunately, despite this, the higher costs of education are still a large factor in students deciding which school to go to, or whether to attend school at all in the face of student debt and prior financial hardship. As it stands, though, it costs a great deal of money for a large scale educational institution to function, and when there are lesser federal or private funding programs to subsidize their costs, the task of keeping said institutions running has to fall to someone else. Although right now that someone else is students, hopefully in the future those costs will be picked up somewhere else and the cost of tuition can be lowered.
Appendix
Fig.1
-Title IX of the Education Amendments Act of 1972 is a federal law that states: "No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance
-Title IV is a term that refers to federal financial aid funds. Federal regulations state that any federal funds disbursed to a student's account in excess of allowable charges must be delivered to the student (or parent in case of an undergraduate PLUS loan).
-The Jeanne Clery Act, a consumer protection law passed in 1990, requires all colleges and universities who receive federal funding to share information about crime on campus and their efforts to improve campus safety as well as inform the public of crime in or around campus. This information is made publicly accessible through the university's annual security report.
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