What are Colleges Doing to Keep Rising Tuition Costs Down?

What are colleges doing to keep rising tuition costs down?

I’m curious. I see a lot of discussions on personal finance blogs about paying off student loans, and keeping student loan debt to a minimum by saving, working, and being smart about school expenses. I see a lot of discussion on political blogs about the student loan crisis, the cost of student loans to the greater economy, and student loan foregiveness.

What I don’t see, even if I look around, is what the colleges are doing about student loans.

A huge portion of students (over 70%) take out student loans to help pay for college. I’m sure that some of them take them out for frivolous reasons. Most students, though, take out student loans to meet tuition and other necessary costs of going to college. They do this because education costs have risen (and continue to rise) far faster than the rate of inflation.

If rising tuition drives rising student debt levels, what can be done about rising tuition? 

The clear answer is that schools may have some tough realities to face. Their expenses and their demands may not be dropping, but most students’ resources haven’t kept pace. People may still see the need for higher education, but there seem to be a lot more people asking questions about its worth.

My little family is 12 years away from facing college tuition. We’re already pretty sure that barring a lottery win, Little Bit won’t be attending my alma mater, whose sticker price is currently over $66K a year. Even if she attends a local state school, though, we worry about how we’ll pay for it if costs keep rising. 

Reasons Tuition Has Risen

I did a little investigating, and I found any number of explanations of why tuition has been rising faster than inflation.

  • States have dropped their level of support for higher education, and colleges have passed along the difference.
  • Schools receive fewer donations and many of their endowments have fallen. The schools have raised tuition to make up the difference
  • Schools have increased their administrative spending and staff levels. High-level administrators have seen drastic pay increases.
  • More people from a wider range of backgrounds attend college. Many of them need more support, both financial and academic, which has to be paid for by others.
  • Students demand a greater range of non-essential amenities. Schools must supply them to compete for better, richer students.
  • Many schools have added new academic programs without cutting them.
  • Schools have raised tuition to meet the greater amount of money available to them as federal loan programs and grants have expanded.
  • Schools have made pricing opaque. Many students don’t pay the sticker price. Since the pricing varies by student’s ability and willingness to pay, there’s less incentive for schools to control prices across the board.

If you want more explanation, the Washington Post did a terrific series called The Tuition is Too Damn High in 2013 that breaks down most of these theories. The short version is that while not all of these applies to every school, they all apply to multiple schools. Most schools are affected by more than one.

The question is, how many of these are structural and how many are based on choices? Do colleges need to have so many services to support students? Maybe, but maybe college for everyone is too expensive an idea to sustain. Should colleges drop smaller programs, like classical studies, to make way for more high demand programs? Is it in the college’s best interest to build climbing walls?

Should Colleges Make a Greater Effort on Tuition Control?

I’m sure that if you asked a college spokesman, they would tell you that that their school makes every effort to keep tuition costs down.

But if you Google “What are colleges doing to control tuition costs?” or similar searches, you rarely find college-led initiatives. You find suggestions for individual students to use, like completing college in 3 years instead of 4 (or 5, or 6).

The one college-oriented article I read? Two tiny private liberal arts schools cut their tuition substantially. They claimed they were going from “High tuition,high discount” to “low tuition, low discount.”

Pricing clarity is a good start, but it seems like schools should be doing more to keep those sticker prices down. If for no other reason than high alumni debt loads will cause even lower alumni donations. 

Looked at that way, even the schools themselves mortgage their future with high tuition and dependence on loans. Long term, many of them will need a new strategy going forward. Maybe not the big dogs like Harvard and Duke and the state flagship schools, but certainly the South West State Universities and Obscure Historical Figure Colleges.

And, just sayin’, they probably don’t want the politicians to decide the best way to keep those tuition costs down.

So Where Are Their Ideas to Keep Rising Tuition Costs Down?

It’s quite possible that colleges are discussing tuition control, but they don’t seem to be generating a lot of discussion of ideas to keep rising tuition down, Most schools seem to be reacting, not planning structural changes to drive prices down. The schools seem to be using short-term thinking…snip a few professorships and hire adjuncts instead to raise tuition by 6.3% instead of 6.4% this year.

My humble suggestion: Schools would do well to look to other parts of the nonprofit sectors, where organizations have been dealing with many of the same trends (rising costs, rising administrative needs, diverse populations served, reduced government and donor funding) for a long time, without the ability to charge more for services.

It’s past time for a more public discussion. Schools have accepted the education price spiral for a long time, and they’ll probably need to make serious adjustments to make their way out of it. They would do far better to address the issue of untenable tuition head on than let others address it for them.

What do you think colleges can or should do to keep their rising tuition costs down? Am I being too harsh in saying “a lot more than they are doing now?” Are there really good discussions and ideas coming out of the universities to take more care to be affordable and financially responsible to their students? Is it too much to ask colleges and univiersities to address the student debt crisis by changing?

 

*Part of Financially Savvy Saturdays on brokeGIRLrich, Disease Called Debt and Financially Fit & Fabulous*

16 thoughts on “What are Colleges Doing to Keep Rising Tuition Costs Down?

  1. More than 10 years ago, when I returned to school for my master degree, I noticed something odd. My professor, who was also my advisor, used handwritten yellow notes to teach from. How many years did he use the same notes? And what about his expensive book that was on the syllabus? It was then in its 7th edition. Every few years he added or redid a chapter and then students couldn’t even buy the book used. He commuted to NY from CT 2 days a week to teach and received grants over the summer to write papers.

    In my current job I work with some of the brightest computer and engineering PhDs from all over the world. Many of them are the most elitist, insulated people I have over known. When they reached tenure they never needed to have a career worry again.

    Does the teaching model have something to do with rising costs? You bet your bippy. (I know you’ll get that)
    Mrs Groovy recently posted…I’m Grateful for My Brand-Spanking New LiftMasterMy Profile

    • Verrrry Interesting!

      I do think that the cost of the elite academics you are discussing has largely been paid for by the move to adjuncts for most of the actual teaching, who get paid miserable wages with no benefits despite having PhDs. I have several PhD friends who end up teaching at 2 or 3 schools and barely get by. I don’t mind that the folks doing important research at universities are well compensated: the grants usually cover their pay pretty well. The obscure paper-writers who get high compensation and few teaching responsibilities are more problematic.

      And yes, the textbook biz is a real racket, particularly edition changes designed solely to reduce the used market.

  2. I have a lot of thoughts about funding in higher ed, although little clarity. I have really enjoyed a recent podcast series on the issue: Revisionist History by Malcolm Gladwell.

    One thing many colleges and universities have done to cut costs is to gradually phase out full-time tenure-track professor positions in favor of instructor or adjunct positions. When you stop offering full-time positions, you don’t have to offer many of the benefits that go along with it. You may attract a teaching team that is not there for the long-haul (why would they be if they’re not even full-time!?) and thus continuity and perhaps even potential improvement of academic programs can suffer. What you may get then, with instructors or adjuncts, is a teaching corps that is there just for their select classes without a commitment to the students outside of their limited office hours (can you blame them, though?). They may have a horrendous teaching load with a few hundred students, no hopes of learning all of their names, and a scant possibility that all the student work will be graded in a timely and thorough fashion. (However, I find these instructors and adjuncts to be more effective teachers, even with the odds stacked against them, than some of their Ivory-Tower-upturned-nose-tenure-track counterparts).

    Student Services always seem to be among the first victims of budget cuts. This can run the gamut from free tutoring to career counseling, academic advising to cohort learning communities. As an example, when the office of Financial Aid’s budget is cut, the staff can be halved and open hours dwindled. Lines get longer and student needing their counsel will be discouraged. I find that for first generation college students in particular, these student services are of the utmost importance. Navigating complicated bureaucratic systems without the help of a student services office can be difficult, especially without background knowledge or experienced feedback from family and peers who have walked in your shoes before.

    As far as solutions for how colleges can make the experience cheaper? Eek.

    Right now, it seems the impetus is on the students themselves to lower the costs of their own education through the choice of cheaper schools or options (community college, state schools), working while in school (either in the community at large or through a federal work study job), seeking scholarships, etc.

    I’m a big advocate for community colleges; more students should be getting their start in these systems. As a nation, I think we need to rethink sending underprepared or not-ready-for-primetime-adult-life 18 year olds away from home to 4-year schools. Furthermore, this may be an unpopular opinion for a higher ed professional, but I’d like to see more investment and enrollment in technical programs. Whether on an academic or technical track, these 2-year colleges are cheaper to run than their 4-year equivalents and the savings is passed on to the student in the form of cheaper tuition and fees.
    Miss Thrifty recently posted…Cardboard BoatMy Profile

    • Almost everything I saw when I tried to research what colleges were doing were recommendations for what students should do: try to graduate in less time, use community college, go to public colleges, negotiate, etc. Very little was on what the schools were doing. (other than hiring adjuncts. The adjunct system is really tough on those who do the teaching, but it does save money.)

      I do understand what you are saying about the student services being necessary for the success of certain students. But that’s one reason i was asking if maybe it has set an unrealistic expectation that four year colleges have an obligation to everyone who wants to pursue a four year degree which has created the system where most have to mortgage their future to get it. I read the other day that to pay for college with an average summer job, someone would have to work 121 hours a week.

      Contrast that to my father in law’s experience. He was a first generation student in the 50s. He was expected to sink or swim mostly on his own (he later earned a PhD in plant physiology and genetics, so he swam) but could pay for college with his own earnings.

  3. Interesting topic! I have one in college at a state school and one looking at colleges right now. One thing I see is a lot of money being spent on the “extras” for kids in terms of dorms, plush facilities, etc. They try to “out do” other schools and focus on what students are interested in. I also have an interesting take on the faculty side. I was a K-12 public school teacher and administrator for 23 years before making the leap to higher ed (after earning my doctorate). I taught at a private college that spent a ridiculous amount of money on things like colored hand soap and colored rock salt to melt ice (and colored golf carts, etc. too…) It was much more like a country club than a college – but they also handed me CHALK to teach with…(No kidding at all…) They had a few smartboards (this was 4 years ago when many schools had them installed in almost all classes) and a few projectors. My pay was mid 50K with all that experience and with a doctorate (it wasn’t like I was new to teaching…) But I was actually fine with the pay because of the awesome schedule. I then chose to move to a state school – where spending was much more similar to public schools (yes, we counted paper clips and brought in our own supplies) – again – pay in the mid 50K range (but still a great schedule). There is definitely a move to eliminate tenure track lines which puts adjuncts (who are often excellent) in their place. I was an adjunct last fall (by choice) and made $2400 for one section. 14 classes at 3 hours each, plus planning, grading, etc. and I even had to buy a parking pass…. I did it because I loved teaching the class but certainly not for the money. (Although it did add some time to my retirement system credit to.)
    Vicki@Make Smarter Decisions recently posted…Negative Equity Can Be RefinancedMy Profile

    • Schools definitely don’t seem to be spending more on academics (at least, not more than inflation would suggest naturally occurring.) The fact that they have to spend some on technology support makes sense…when i went to school in the late 80’s there was one computer lab. I think I went there 5 times to do assignments for my calculus class. Few students had personal computers, but the majority did not, and the internet was not widely known.

      Where I saw my rising tuition going to was newer nicer buildings (dorms, classrooms and a new student center), but the amenities were very basic. It was a big deal senior year when they put phone lines in every dorm room, but the year after I visited and noticed cable in all the rooms and the upgraded cafeteria experience that the new student center provided. The school also started providing laptops to all entering freshmen. Was that necessary? Maybe. Most of those upgrades would have prepared the school for technology needs. (even the cable TV.) But at the time, it seemed a lot cushier for the students for those of us who had lived in dorms without AC and hall phones.

  4. It’s definitely not too much to ask for colleges to step up and address this problem! These are questions I often find myself asking. These amenities that are being added to colleges, if they are so appealing and luring to bring in a certain demographic, maybe, these should be funded other source than allowing those who can’t other wise afford college borrow absurd amounts of debt. Why pay for something you don’t necessarily care about and shoulder that burden of debt for a few overpriced dorms with swimming pools?
    Latoya @ Femme Frugality recently posted…How to Shop for College Textbooks and Save MoneyMy Profile

    • I think the country club will have to eventually go away for most colleges, and the amenities will age to where students are living with 30 or 40 year old dorms and classrooms again with dated looks and amenities.

      But the problems seem to go beyond that, and i wonder if the answer is fewer services and less expectation that all students should be able to succeed in a four year school with the right support. And should every four year college have to provide that level of support? Should students have to take more of a lead in providing their own support services through associations and volunteer groups rather than have them provided for them?

      Or do colleges need to discover new income streams that complement their mission, like more continuing education offerings? And what about athletics and athletic budgets? Should we be using football/basketball revenues to support non-revenue sports or to support the university at large?

      • Honestly, I think getting rid of that support has the potential to be discriminatory. You want your entire population to have access to education for society to function at its optimum, but removing the services has the potential to make education only accessible to those who were privileged enough to be prepared prior to coming to school. I think the student loan industry has a lot to do with rising prices, too.
        FF @ Femme Frugality recently posted…Debt sucks. Let’s talk about it.My Profile

        • Femme, the point about a discriminatory impact is a fair one. I do want society to be educated. I do think equal opportunity is important. I wish we did a better job with K-12 education so that all the students who finished were ready for a 4 year college, and that the resources for K-12 were more equally distributed. I hate the fact that while my child goes to a very good neighborhood public school with plenty of resources, there are kids a few miles away who don’t have the same level of tech, resource teachers, and facilities.

          But I also have problems with the idea that a four year college is the best path for every student, particularly for someone who isn’t prepared for the work. Unprepared students may take longer to graduate and are less likely to graduate. That situation is a lot more likely to lead to problematic debt. Perhaps it’s better for those who aren’t ready for a four year school to use the community college system to get the preparation, then go to a 4 year school?

          It’s not a great answer, I know. I think that the current system is untenable long term without making some hard choices. I think the schools haven’t made those choices in many cases because the student loan system allows them not to.

          I am certainly not absolving the student loan industry of responsibility. Many kids are allowed to take the loans without fully understanding them, and the servicing is ridiculous. I just think that the loan industry problems are discussed far more. So are the methods for individual students to reduce their loan amounts by choosing cheaper schools, reducing their expenses, etc. The for-profit schools that provide poor educations at inflated prices get discussed too. College costs as a whole, though, have gotten out of hand, and I think at least some of the responsibility will have to come there.

  5. I agree with all the folks pointing out that the professors are not where the price cuts need to be made, even though that is actually what the colleges are doing. As someone who has been interested in becoming a college professor since I was in college, I’ve followed the move to more and more adjuncts pretty carefully and am appalled by the amounts spent on pointless administrators and extracurricular (usually sports) spending, while drastically reducing the number of tenured positions and benefits for professors. Adjuncts used to pretty much all be students or recent graduates gaining a little experience – now it’s become a career for most PhDs.
    Mel @ brokeGIRLrich recently posted…Financially Savvy Saturdays #153My Profile

    • The adjunct system is tough on the teachers. It’s one thing for a retiree who wants to stay busy to pick up a class or two to stay busy. It’s another for someone who’s spent the last 5-10 years teaching after getting a PhD and still struggles to get by because they essentially have a bunch of part time jobs with no benefits. They’d be better off teaching K-12, where at least they get health insurance and a pension. (Reminds me of Animal House, “Seven Years of College, Down the drain!”)

      Sports is an issue, for sure. I love college sports, but if the school spends more on them than they get from them, they need to take a second look. Sports should be subsidizing the rest of the school, not the other way around. And I just got an email from my alma mater about the building campaign they are doing “to improve the residential college experience”. While some of the things may be necessary (solar panels and updating HVAC systems), it looks like a lot of fluff. (bouldering wall and demonstrations kitchen!?!)

  6. I love this post. I’m grateful to read it. One item on here that I remember being shocked by is that colleges are now hiring VERY expensive ad agencies to create their marketing materials. Every school feels they need a new website, logo, and tagline created by a top agency. By “top agency,” I mean folks who create ads for all the top sneaker and car companies. Somehow, branding became more important than fair pricing or an adequate number of full-time faculty members.

    I’ve seen a lot of colleges outsource their student housing, too. Since it’s private, they cost more, and the college gets a cut, but they don’t manage it. Students pay more for housing then. And, sometimes, students (and their parents) feel like freshmen need to live in luxury condos. It’s been bad for a lot of communities in terms of their planning.

    • Thanks Amanda!
      The marketing thing is a little weird for me, but I do understand that school reputation is important and I guess brand management is part of that. But I think it points to a sort of Fortune 500 mentality that seems to have infected higher education. Do I think colleges need to pay presidents 7 figures? Or pursue a national ad campaign designed by a top national agency? Probably not, but they think they do.

      I’m not sure how I feel about outsourcing the housing. On the one hand, it’s one less thing for schools to have to worry about (and maintain). On the other, students should live like students…which isn’t luxury condos. Unfortunately, it doesn’t cost a whole lot more to make luxury condos than it does adequate housing, and the margins are better. So it probably tends to make the convenient housing really expensive, which is bad for students. But schools that provide housing are spending a lot too to keep the dorms nice enough to stay filled, and that drives up housing too.

  7. I’m the parent of a college student and a Louisiana resident, which gives me a certain perspective. First, in Louisiana we have TOPS which offers free tuition at state universities to all students who complete a college prep curriculum with a 2.5 and get at least a 20 on the ACT–or it has for the last few years, it will be cut this year due to budget constraints. TOPS has risen with tuition and basically other state aid to universities has been cut. Still that $5000/year has been a big help.

    I see college housing and cafeterias as far nicer and more expensive than what we had 30 years ago–but since colleges really can’t “make” students live on campus they have to provide as much if not more bang for the buck as off-campus housing.

    It doesn’t seem fair to tax those who can’t get into college to pay for a degree for someone who can–and will outearn the non-grad.

    It seems that those who have the worse problem with student loans are those who attend proprietary schools for low-paying jobs (for the price of a year at a private university you can learn to be a nursing assistant and earn slightly more than minimum wage) or those who attend high-priced private universities and major in non-practical studies. What kind of job did you think that gender studies degree and your pink hair were going to get you anyway?
    RAnn recently posted…Financial Advice from a BoomerMy Profile

    • Thanks for commenting RAnn. There’s a lot to unwrap here, and you are adding a different perspective into the mix.

      I’m not sure that I think the students are getting the most bang for their buck with on or off campus housing. They may think they are, but only because so many of them are paying for those amenities with loans rather than out of pocket. So I still suspect the amenities are a good place for schools to look if they want to cut costs.

      I also don’t have an issue with public support for education, and that means tax money. There are public goods from university education that we all reap. Research and a skilled workforce are the first that come to mind. Just as I think it is fair to tax people without kids or who choose to send their kids to private schools in order to provide quality K-12 education for all, I think it is fair to tax people who don’t go to college to support public colleges. (Not necessarily 100% free to students.)

      The private for-profit schools that charge a lot of money for CNA certification and the like are definitely contributing to debt. Many of the for-profit schools prey on low income and poorly educated people looking for a way to better their prospects but without enough knowledge to figure out how best to do it. If that was the only issue driving the student loan amounts up, though, we wouldn’t have a crisis. Those schools can operate in part because everyone’s costs are high (unless you go to a well-supported in-state school. But most states don’t have anything like the TOPS program you describe.)

      Finally, while I agree that pink hair and a few too many tattoos don’t help a student’s employment prospects, I am reluctant to be too quick to criticize impractical studies. Your gender studies grad may go on into politics, journalism, social work, nonprofit fundraising, or something completely unrelated where analytical and communication skills are valued. The decision to criticize students for taking liberal arts degrees also seems very close to the argument that college grads shouldn’t enter lower paid but necessary professions, like teaching and social work, if they have loans. Not everyone has the temperament or inclination to major in business or accounting, or to become an engineer, computer programmer, or doctor. (I’ll leave off lawyer, since there’s a glut of them and sometimes their ability to pay back loans is in question as well. Also, plenty of law school students have liberal arts backgrounds.) Where do you stop with saying a field of study is worthless? Is Philosophy more valid? Art History? English?

      Again, I am glad you raised the points you did, even if I am bringing up counterpoints. Thanks for coming by.

Leave a Reply

Your email address will not be published. Required fields are marked *

*
*
Website

CommentLuv badge