Cost Efficiency

College costs are out of control

January 29, 2017

SOURCE: The Virginian-Pilot

Read original post here.

MANY PEOPLE have asked me why I support the efforts of Partners for Affordable Excellence@EDU, which has been an important force behind current legislative efforts to curb cost increases and improve access at Virginia’s public institutions of higher education. Here’s why.

I am one of four sons of a Lutheran pastor, and my wife, Donna, is the daughter of a letter carrier. Neither one of us could have afforded to attend Illinois State University (where we met) except for its low costs.

When we were undergraduates, if a student worked full-time during the summer and held a part-time job while on campus, that student could come very close to paying the full cost of attendance. I emerged with some debt, but not very much, and Donna had no debt at all. Today, this scenario is virtually impossible for anyone coming from our backgrounds.

We have four grandsons, all young Virginians. Ten years ago, I was confident that with a little bit of help, these thriving young people could afford to attend one of our superb Virginia public institutions. Today, I am less confident. If current trends continue, they will need to earn substantial academic scholarships or go deep into debt to earn bachelor’s degrees.

Since the 2001-2002 academic year, the Consumer Price Index has increased 35.2 percent and the Higher Education Price Index (which captures the higher cost items that colleges and universities must purchase) has increased 52.9 percent. However, the Chronicle of Higher Education tells us that William and Mary’s in-state tuition and fees increased 344.2 percent during the same period. At Virginia Tech, the percentage increase was 248.5 percent. Northern Virginia Community College, 349.1 percent. Old Dominion University, incidentally, was among the lowest at 149.8 percent.

Does the commonwealth bear some blame? Absolutely. After adjusting for price inflation, the College Board tells us that Virginia’s financial contribution per student declined 25 percent between FY 2008 and FY 2015. The General Assembly absolutely needs to step up to the plate. But, the reality is that legislators’ decisions explain only about one-half of the total tuition and fee increases we have seen in Virginia since 1991, per a recent House Appropriations Committee report.

Institutions are increasing tuition and fees for other reasons as well, including the pursuit of rankings, administrative bloat, and providing luxurious living arrangements, food and other amenities to students.

Further, several reputable recent studies have discovered that the federal government deserves some blame as well. Institutions siphon off up to 60 percent of additional injections of student financial aid and use it for other, cost-increasing purposes. Since federal financial aid formulas are based upon institutional costs, if an institution such as Virginia Commonwealth University increases its costs, then the feds oblige VCU by sending it additional financial aid via its students. Thus, the federal government ratifies tuition and fee increases.

There is another worrisome impact of the current tuition and fee system. Recently published data in the New York Times revealed that 8.5 percent of the student body at the University of Virginia now comes from the top 1 percent of the country in terms of family income; only 15 percent comes from the bottom 60 percent. At William and Mary, the comparable percentages are 6.5 percent and 12.1 percent. Even Christopher Newport’s student body now includes only 18.1 percent from the bottom 60 percent of the family income distribution.

It is not good that it took only 228 hours for a Virginian earning the median wage rate to pay for average public tuition and fees in 2001-2002, but now it takes 438 hours to do the same.

I acknowledge that others may not share my views, but I believe that such sharp income distinctions are a recipe for societal disruption. It also should not escape readers that Virginia’s current approach to public institution tuition, fees and financial aid carries with it an inescapable racial tinge as well.

If current trends continue, then we could be headed for a caste-like society in which the ladder of opportunity that was open to Donna and me (and over the years, many not so well-heeled Virginians) will disappear.

I am not a wild-eyed populist, but instead a citizen who believes we have been walking down the wrong pricing path in public higher education. It is time to change direction.

About The Author

James Koch

James Koch

James V. Koch is a Board of Visitors’ Professor of Economics and President Emeritus at Old Dominion University. He led both the University of Montana as President from 1986 until 1990, and Old Dominion University as President from 1990 through 2001 and was named one of the 100 most effective college presidents in the United States. He serves as President of Partners 4 Affordable Excellence @EDU. Read his full bio for more.

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