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One of the biggest anxieties in American culture is the fear that the country is lacking a qualified workforce that will be economically competitive in the twenty-first century. While politicians have primarily focused their efforts on fixing America’s elementary and secondary institutions, college might be the next frontier of state-driven education reform. Less than thirty percent of Americans have a Bachelor’s degree and reformers note that part of the reason is the growing cost of college attendance. Over the last fifty years, tuition costs have exploded at public and private institutions, as have housing and textbook charges. While the number of Americans attending college is rising, graduation rates remain poor and student debt to service the cost of college is also increasing. Fears about the growing cost of college and its impact on American social mobility and the nation’s economy have made college-oriented education reform a part of the 2016 presidential elections. Candidates such as former Secretary of State Hillary Clinton, Florida Senator Marco Rubio, and New Jersey Governor Chris Christie have detailed plans to either slow tuition increases, reduce student debt, and/or make college education more of a national entitlement. Political analysts argue that a candidate with a suitable program to make college more affordable could galvanize the youth vote in 2016, something that politicians have learned can sway elections in the Obama years.
This topic brief will explain some of the anxieties about the rising cost of college, provide some reasons that college costs are growing, before finally exploring some of the reform proposals that have been submitted to resolve the problem.
Readers are also encouraged to use the links below and in the related R&D to bolster their files about this topic.
The Growing Cost of College Attendance
There is clear evidence that the cost of college attendance is rising in the United States and that this has been a long-term phenomenon. The Huffington Post reports on August 29 that tuition costs have risen by 538% since 1985. To put this in context, healthcare spending – something that is breaking the federal budget – rose 286% over that same time period. In addition, the consumer price index (CPI), an estimate of inflation in the American economy, rose 121%. What this means is that college tuition costs are out of proportion to other major costs in the U.S. economy so that now the average expense for a full-time undergraduate student in 2012-2013 that attended a public institution once tuition, fees, room, and board are factored in was $15,022. Those students who chose to attend a private institution paid $39,173 and those attending a private for-profit college had to pay $23,158. The Huffington Post adds that costs of attendance increased 39% between 2001-2003 and 2012-2013 at public universities versus private institutions, where costs grew by 27%. Out-of-state students are bearing more costs as well, with U.S. News and World Report on July 29 reporting that these students are paying 226% more than students who attended during the 1994-1995 academic year.
Along with tuition, other costs for attending universities are increasing. The Los Angeles Times reports on August 16 that housing rates have risen by an average of 2.5%-3% at different universities throughout the United States. Furthermore, textbook costs have become a hardship for some students. Market Watch notes on August 6 that textbook costs since January 1977 have increased 1,041%. The National Association for College Stores estimated that during the 2014-2015 school year that students had to spend an average of $563 on course materials, although this was down from an average of $701 in the 2007-2008 school year. The College Board, an organization that many extempers are probably familiar with because of its administration of Advanced Placement (AP) exams and the SAT, estimates that the average cost of books and supplies at a four-year public college averaged $1,200 in recent years.
The growing cost of the many facets of college attendance has a long-term economic impact as students are taking on more debt to pay for their studies. The Huffington Post article previously cited reveals that the average parent contribution for a college student has fallen by 35% between 2010-2012. With parents contributing less, many students are forced to take out private or publicly subsidized loans to continue their education. The Christian Science Monitor argues on August 10 that increased student debts are becoming a weight on the economy as education debt is estimated to be more than $1.2 trillion. This is a higher value of debt than Americans share for credit cards, auto loans, and home equity lines of credit. Those who argue against rising costs explain that if graduates are continually paying back debts – debts that federal law prohibits them from discharging in bankruptcy – that it will restrict their ability to add more money into the economy by buying homes, founding start-ups, or buying other consumer goods. In addition, these recent college graduates are becoming older and more politically conscious, thereby making the rising costs of college a more pressing political issue for both major parties.
The Reasons for Growing College Costs
So why are the costs of college growing faster than the rate of inflation? Experts point to a few issues. The first is that college costs are growing while wages have stagnated. Vox explains on August 28 that reduced wage growth in the economy has made college more costly, especially for working class and middle class families. It reveals that the Chronicle of Higher Education did a recent study and found that students working twenty hours a week for minimum wage would have to work more than a year to pay the following year’s tuition. In addition, stagnant wage growth has impaired the ability of parents to make substantial contributions for their children’s post-secondary education, with Politico noting on August 2 that a recent Gallup poll found that parents are fretting about the costs of a university education.
Another reason for the growth in college costs is tied to reduced state expenditures on their respective university systems. The Politico article cited above explains that higher education funding remains below pre-Great Recession levels, with the average state spending 23% less per student. With less state assistance to university systems, the cost borne for the maintenance, administration, and other operations of a college are borne more by students. Critics point out that some of these growing costs are not linked to spending on faculty either, with The Huffington Post explaining that faculty salaries across the country are not much above 1970 levels. Instead, administrative costs have risen, with costs in that area growing by 61%. Administrative costs include office expenses, administrative salaries, and research facility upkeep, but skeptics explain that bloated administrative positions are making college more costly than it should be. Colleges defend themselves by explaining that they need to pay for more administration to attract and retain students and keep up with state and federal education mandates. College presidents argue that they need more funding from state officials to minimize tuition increases.
When it comes to textbook costs, a select few publishers enjoy a monopoly on the market. The Business Insider explains on August 24 that professors deciding to assign specific editions of textbooks forces students to pay higher costs. Furthermore, five publishers dominate the textbook market. Although some professors are being encouraged to adopt online texts or “open” textbooks that cost less, such changes will probably take a long time to really make a difference. In addition, some university mandates about texts in the classroom may hamstring professors that wish to avoid assigning students expensive texts.
However, there are a few voices that insist that college costs are not increasing. Inside Higher Education explains on August 25 that tuition discounts affected 89% of first-time, full-time freshman last year, thereby helping to increase the number of students attending colleges and reducing costs. While this can make the cost of college somewhat more affordable, discounts eat into university budgets and some argue that such discounts are not sustainable. Beyond this, The Des Moines Register reveals on August 22 that the net price of college, which factors in students receiving need-based aid, grants, and scholarship, is actually declining or has been relatively flat. Those pointing to this figure note that concerns about the rising cost of college are misguided and unhelpfully alarmist.
Solutions for Limiting College Costs
As noted in the preview to this topic brief, the perceived importance of a college education and the lackluster number of Americans that currently possess a Bachelor’s degree – less than 30% of the population – has American policymakers worried about the nation’s economic competitiveness over the coming decades. Politicians are also finding a receptive audience, especially among younger voters, when talking about ways to reduce existing student loan debts. However, their solutions for fixing the problem largely break along party lines, with Democrats favoring more federal spending and Republicans favoring more free market solutions.
A popular idea that is circulating at the local and state level across the country is for states to provide free community college tuition for high school graduates. The Seattle Times explains on August 29 that Tennessee is often heralded as a model, with the state agreeing to pay for the tuition costs of students if they maintain a 2.0 grade point average (GPA) during their studies. Community colleges often enable students to acquire valuable credit hours for general education classes, usually at a lower cost per credit hour than a four-year university, and this can help students who acquire these hours to then complete a four-year degree. Tennessee’s model has been mimicked elsewhere, with Oregon recently making community-college tuition costs low or free for most high school graduates. Even local school districts such as the Kalamazoo Public School District in Michigan have gotten in on the act, with Kalamzoo paying 100% of the tuition costs of graduates from its district, assuming that the student has been in the district since kindergarten (other students have costs paid based on how many years they spent in the district).
Such plans to pay for two-year and four-year college education have received some bipartisan support. President Obama proposed an idea last year to make Tennessee’s model a federal plan. He proposed to pay for this plan, which would have cost $320 billion, through higher taxes on wealthy Ameriacns but Politico points out that the plan had flaws, with critics noting that it was too expensive, that it privileged community college over other university options, and that community colleges have poor retention rates. That said, former Florida Governor and Republican presidential candidate Jeb Bush has supported a Tennessee-style solution to help students pursue higher education. The Hill reports on August 24, though, that Bush favors states acting on their own instead of having the federal government mandate what states have to do.
Democratic frontrunner Hillary Clinton has already issued a plan to help students cope with rising tuition costs. Clinton’s plan calls for making new grants available to states if they provide for free community college and work to make four-year colleges more affordable to where students do not need loans. Fortune explains on August 23 that Clinton’s plan also calls for increasing Pell Grant funding in order to cover additional college costs and that she wants to increase funding for on-campus child care centers from $15 million per year to $250 million per year. Fortune argues that finding ways to help cover child care costs, commuting costs, and other burdens that older, “non-traditional” students face is important because these students are becoming an increasing share of the population of many universities.
On the Republican side, Florida Senator Marco Rubio has floated the idea of allowing private investors to help fund a student’s education. The Christian Science Monitor explains that under this plan an investor would receive a cut of a graduate’s future earnings as a result of helping to pay for their college costs. New Jersey Governor Chris Christie also favors a free market solution, with The Wall Street Journal noting on August 12 that Christie wants tax credits to go to people that donate money to student debt reduction organizations, which could then give grants to students for community service.
Although both parties might appear to be far apart on whether the federal government should play an active role in funding student tuition for higher education, there are some possible avenues of reform in the next few years and this could significantly change the way American universities operate. The Wall Street Journal writes that members of Congress on both sides of the aisle favor accrediting students with federal loans if they seek vocational education. There are also suggestions that the government penalize schools for not graduating larger shares of students. Skeptics worry, though, that if the federal government sets a graduation target that it will lead to grade inflation and erode the quality of a Bachelor’s degree. There are other concerns that an increased federal presence in college education will lead to control over curriculum and mandates of standardized testing to measure performance, something that elementary, primary, and secondary schools have been grappling with for decades.
Another policy that has been floated by both parties is for students to know what they are getting into when they decide to accept loans for college. According to NBC News on August 30, 50% of American college students cannot identify within $5,000 how much their first year of college will cost. More alarmingly, only 38% of freshmen can estimate how much federal debt they have taken on to pay for school and 30% of students thought they had no federal debt to pay when they actually did. Encouraging more fiscal responsibility among students could quickly become a priority of state and federal lawmakers, who may seek to make it a mandatory element of a K-12 education. Also, the federal government might take steps to simplify the federal financial aid process as USA Today says that parents and students both struggle trying to determine the actual cost of attendance when going to college. For students living in poverty and that seek to become first-time college graduates, the financial aid process can become even more confusing and daunting.
Overall, the federal role in college education is likely to expand. With state budgets hampered by an anemic economic recovery, Washington will probably have to lead the way if it wants to encourage states to offer tuition-free college education. Extempers should closely follow how candidates line up on the college accessibility and cost issue in 2016 because their policies could sway the youth vote, which might make the difference in a handful of battleground states.