The Cost of College

It is hard to have a day go by where there is not at least one article in the major media about the high cost of college. With the recession and its impact on state and local budgets, tuitions are being increased at many public colleges and universities and some institutions are reducing the number of students attending in order to cut costs for next year. Unfortunately, these actions are not increasing the access and affordability of higher education in the United States.

While access and affordability of higher education have been stated goals of the Spellings Commission, the National Center for Public Policy and Higher Education (NCPPHE) in its annual Measuring Up reports, President Obama, and others, the recommendations for improving affordability are few and far between. The Spellings Commission stated that colleges need to think more like entrepreneurs and examine partnerships and distance learning as options to improve access and cost. Many in traditional higher education panned the Spellings Commission’s recommendations although little was said that had not already been identified by many of the other public policy organizations like NCPPHE, State Higher Education Executive Officers (SHEEO), Western Interstate Commission for Higher Education (WICHE), and The National Center for Higher Education Management Systems (NCHEMS). This past January, I wrote an article for this blog about a survey of college presidents entitled The Iron Triangle: College Presidents Talk About Costs, Access, and Quality. I was aghast that during a period of economic downturn, most of the presidents surveyed stated that the only solution to improving access was to provide them with more funding at the federal and state levels. I wonder how many entrepreneurs have succeeded by waiting for more money to pay for a product rather than designing the product to meet the ability of their customers to pay for it.

A recent whitepaper published by the Delta Cost Project on Postsecondary Education Costs, Productivity, and Accountability caught my attention the other day. Written by Dr. Nate Johnson, the paper compares approaches to measuring “cost per degree” in order to examine the question: “What does a college degree cost?” Johnson states that while considerable effort has been spent examining college costs, there has been no consensus on what standards to utilize in order to measure the cost of earning a college degree. Johnson outlines five approaches to studying the costs of a degree: catalog cost, transcript cost, full cost attribution, regression-based cost estimates, and the student’s cost of a degree. He states that his intent was not to calculate what a degree costs, but to outline the various approaches that public policy and governmental entities may choose to utilize to determine the overall cost of a degree.

Johnson’s research utilizes financial data from the State University System of Florida. I find the data interesting from my point of view as the President of a university that is committed to providing an affordable college education and as someone who believes that too many norms are entrenched in higher education without consideration of the ramifications on the cost/benefit to the student. Data from the Florida system is allocated by Lower Level (community colleges), Upper Level (bachelors degree granting), Grad I (masters’ degree granting), and Grad II (doctoral degree granting). Armed with this data, Johnson is able to provide examples where the cost per credit hour for instruction ranges from $159/credit hour for an Upper Level credit in family/consumer sciences to $509 for a credit in natural resources/conservation. Another example is where the cost per credit for Upper Level instruction in math and statistics was $1,277 one year and $754 the following year with the difference attributable to having an extra section of 32 students in a three credit class the following year.

Using catalog cost analysis, Johnson is able to demonstrate variability in institutional cost for a bachelors’ degree ranging from $22,332 to $43,817 with a weighted average of $26,485. The catalog cost analysis is particularly helpful at looking at programs that the legislature has targeted for future growth (like nursing and engineering). Johnson also claims that the catalog cost analysis is useful for comparing degrees at institutions in other states although some of the cost allocations limit the “apples to apples” comparability.

Johnson’s full cost attribution methodology is an interesting concept in that it takes into account the cost of educating those who flunk out, drop out, or transfer in determining the total cost of a degree. Johnson acknowledges that his analysis worked best when used with larger enrollment degree programs. When Johnson compared the full cost methodology to catalog cost analysis, the full cost analysis was 53 percent higher than the catalog cost analysis.

Johnson’s paper is an excellent example of the various ways that the costs of college can be examined. I find it particularly helpful from a public policy perspective as a taxpayer evaluating the dilemmas facing legislatures funding public institutions in a time period where many state budgets are under duress because of the economy. If I were a legislator, I would find this analysis helpful in determining whether or not the funding request data was presented to me in the most realistic scenario or in the scenario that was most beneficial to the requesting institution(s).

While it is too soon to tell if the current economic crisis will lead to a dramatic reformulation of higher education, there are signs that in many states, people are examining the situation in ways that were unthinkable a few years ago. Earning bachelor degrees in three years is an example that has been touted, but is difficult given the fact that only 58 percent of all full time freshmen graduate from college in six years now. Creating “low frills/no frills” colleges is another idea that has been proposed with a few examples beginning to appear. Expanding the number of online courses and programs offered is another example. Shutting down unprofitable or low enrollment programs is another.

There is a sea change coming to American higher education. While many argue that the top 50 “elite” status institutions will be the least impacted because of their ability to attract many more students than they can educate regardless of the cost of tuition, I think they will be interested observers in what happens with the other institutions, private and public alike. Public policy researchers have argued for years that we need to improve access, affordability, and quality/accountability. With students and their parents voting for lower cost options and institutions denying access to many because of decreasing public subsidies or lower endowments, the landscape of higher education will change as it has several times over the past 200+ years. Successful institutions will listen to the market.

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One Response to The Cost of College

  1. Don Kassner July 9, 2009 at 12:29 pm #

    Education should be measured by what you learn, not by what you spend.

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