Within only a couple months of taking office, President Obama announced his goal to increase the national college graduation rate which is woefully low (40.4 percent, according to statistics from the College Board) compared to those of other nations including Japan (53.7 percent), Russia (55.5 percent), and Canada (55.8 percent).  One of the main initiatives associated with President Obama’s plan to boost college graduation rates included a proposal to provide $12 billion in funding to US community colleges over a ten year period.  Per the President’s plan, however, these funds would be for use in improving programs, courses, and facilities; not, in other words, to assist students in paying for their degrees at these schools.  Obama also told community colleges that he would like to see them play a more active role in creating jobs while simultaneously graduating five million more students than current rates by the year 2020. 

Two years after tasking community colleges with such an ambitious goal, the unemployment rate lingers around nine percent nationwide, down slightly from when President Obama took office but still painfully high for many college graduates.  Whenever the economy tanks, college enrollments tend to rise as people return to school in hopes of earning a degree that will help them stand out in a highly competitive job market.  With state funding dwindling and colleges and universities forced to make hard economic decisions, many students are finding it difficult to even get into a classroom thanks to faculty layoffs, program cuts, and other actions taken by many schools in an attempt to balance their budgets.  Without question, so many cuts are leading to fewer scholarship opportunities across the board. Combining scholarship cuts with tuition and fee increases, the dollar amount of educational loans has grown dramatically even as other forms of consumer debt have remained static or even decreased.  According to an article in Texas’ Star-Telegram, “Total student debt was $550 billion at the end of the second quarter [of 2011]…up 25 percent from $440 billion in the third quarter of 2008…”  The Project on Student Debt reports that some two-thirds of students graduate from college with educational loans and the average amount of these loans is up substantially.

All of these factors are compelling many to question whether the cost of college is worth the value of a degree.  On the one hand, some claim that college degrees are overrated, not nearly as imperative as students are led to believe.  Richard K. Vedder, Ohio University professor of economics and founder of the Center for College Affordability and Productivity, notes that “eight of the ten job categories that will add the most employees during the next decade – including home-health aide, customer service representative, and store clerk – can be performed by someone without a college degree.”  Vedder recommends that rather than encouraging high schools across the country to prepare every student for college, they work to prepare every student for the workplace instead.

For me, the more compelling evidence is found on the side of the argument reinforcing the importance of higher education in America.  Aside from the fact that if we devalue college educations in this country, we are sure to continue to outsource our highest paying jobs to other nations, the value for the individual consumer is also consistent.  According to the Lumina Foundation’s September 2010 report titled, “A Stronger Nation through Higher Education,” “It appears that increasing attainment can actually drive economic growth – and therefore job creation.”  The US Department of Education’s National Center for Education Statistics notes that in 2009, students with only a high school diploma or equivalent could expect to make a median salary of around $33,000 while those with a bachelor’s degree could expect upwards of $51,000.  It is important, however, that colleges and universities examine their fixed cost models and evaluate alternative delivery methods capable of decreasing the costs from the current levels that are increasingly unaffordable.

As the debate continues, it is important to qualify my assertion that college is worth its cost by saying that it is equally as important that students make informed and educated decisions about which college or university they attend.  Comparing institutions can assist potential students in determining which schools offer the best values, most well-rounded programs, most successful advising services, etc.  In the long term, an individual with a college education is more likely to earn more over the course of his or her lifetime than someone with only a high school diploma or equivalent.  The nation as a whole benefits from having a highly educated citizenry.  If we discourage our young people from attending college, we will undo generations of hard work toward demonstrating that education is important while simultaneously falling behind our international competitors. 

Graphic from Measuring Up 2006, a publication of The National Center for Public Policy and Higher Education, showing the increasing costs of various consumer goods and services in relation to the Consumer Price Index.

As a recipient of financial aid in the 1970′s when I attended Duke and Tulane, I can relate to the continual and ongoing debate about the affordability of college.  I was fortunate to have parents who believed in the benefits of higher education and who told me to “go to the best school that you can get into and we’ll figure out how to pay whatever the financial aid office says that we have to pay.”  Thanks, Mom and Dad.

Fast forward a few decades and it’s difficult to pick up a newspaper or magazine without reading about the issues surrounding the affordability of higher education.  The subject is complex, solutions are complex, and many people have opinions on the issue.  Robert Bliwise writes an article in the July-August issue of Duke Magazine that articulates the view from his vantage point as a professor of public policy.  There are a few highlights that I’ll mention and will certainly resurface in a few ongoing pieces about the financial aid debate.

Bliwise begins with a description of a book published twenty years ago by Charles Clotfelter (Duke ’69) called Buying the Best.  Clotfelter, a public policy professor at Duke, examined the way selective colleges and universities competed for the best students and awarded aid.  Students weren’t price sensitive about an elite education in those days and financial aid was growing faster than any other area of campus spending.  In the article, Clotfelter discusses the issues between need-based aid and merit aid.  Clotfelter defends need-based aid as “a guarantor of the brand,” and states that the value of the institution would be diminished if only the affluent could attend.  I agree, personally and professionally.  Bliwise quotes Duke’s undergraduate admissions director, Christoph Guttentag, as stating that there’s now a competition between the “haves and the have-mores” in demonstrating the social contract balancing the affluent and the needy.  Bliwise provides a list of thirty-six “elite” schools that have created more generous financial-aid packages for families with incomes ranging from $40,000-$100,000 per year.

While the efforts of the “have-mores” are laudable, they don’t go far enough.  One of the biggest reasons we have a problem is that colleges increased their tuitions at a rate much higher than the increase in the average family’s income over the past twenty-five years.  I believe that my tuition and room and board at Duke was approximately $4,000 in 1972-1973.  $4,000 was thirty-two percent of the average family income in America that year which, according to the U.S. Census Bureau was $12,625.  Duke’s tuition, room and board in 2006-2007 was $43,155 which was fifty-five percent of the average family income of $77,315 according to the U.S. Census Bureau.  Using more recent data from the Spellings Commission’s final report, families making a combined income of less than $34,000 could expect to pay forty-one percent of their total family income for a public four-year institution after grant aid in 1992; by 2003, that same group could expect to pay forty-seven percent of their family income after grant aid for the same school.  Had tuitions increased at the same inflation rate as family incomes, perhaps more families would consider higher education or higher education options beyond community colleges as affordable.  I wonder if my parents would provide the same encouragement to me today that they did three decades ago.

Federal aid programs have not kept up with the increases in tuition and increasingly, student aid packages have higher percentages of loans versus grants.  Debt loads of undergraduate students influence their choice of post-baccalaureate careers and also determine whether or not they decide to attend graduate schools.  Bliwise cites a study from the Project on Student Debt, an offshoot of the Institute for College Access and Success, which shows that “debt levels for graduating seniors from private universities increased from $11,356 to $22,125 over the past decade.”  It’s not unusual to hear of students who exit professional graduate schools with debt exceeding $100,000.  Prospective students from lower income families are not considering the higher cost institutions because the tuitions are so high compared to their income levels.  Minorities, particularly Hispanics, are reluctant to borrow to fund their education and their numbers continue to increase as a percentage of the students graduating from our high schools today and into the future.
 
No wonder then that Richard Kahlenberg, editor of America’s Untapped Resource: Low-Income Students in Higher Education, is cited in the article as “not[ing] that a visitor is 25-times more likely to run into a rich student than a poor student on the nation’s elite campuses.”  Bliwise ends his article with an interview with Tom Mortenson, a senior scholar with the Pell Institute for the Study of Opportunity in Higher Education (and a speaker at the ACE Annual Meeting in 2008).  Mortenson says that “families will be looking for strong signals that they can absorb college costs” and “they’re not likely to feel assured until higher education forges a fuller and more forceful social contract.”

The discussion that Robert Bliwise provides is oriented toward the manner in which Duke and other elite institutions have handled some of the biggest issues in financial aid.  However, there are more than 3,000 colleges and universities that are not considered elite.  Some have patterned their tuition increases to run parallel (as a percent) with the elites.  They cannot afford to provide the “free college” guarantee for certain income levels.  Public institutions are under pressure from increasing costs and reduced funding from their legislatures.  Regardless of the pressures, it’s clear that continued increases in tuition beyond the Consumer Price Index leads to reduced access at a time when America’s competitive place in the world depends on increasing numbers of college graduates.  I don’t think that the federal government can be counted on to fund the difference between affordable tuition and today’s average tuition at a private college or university given the projected budget deficit that our next President and administration will inherit.  We’ll see how the marketplace of higher education adjusts over the next few years.