Education Sector research director Andrew Gillens says ‘there’s a disconnect between the cost of providing an education and what the college charges.’
When the College Savings Foundation considered topics for its third annual summit, one issue stood out as clearly as the dollar amounts involved. That led to an easy decision on the subject matter Wednesday for a panel at Washington, D.C.: “The College Cost Conundrum: Why Is College So High?”
Peter Mazareas, chair of the CSF Summit Task Force, said the driving force was “the continued growth in tuition rates above the inflation rate, and just the continued escalation of costs. Compounded with a trillion dollars in student loan debt and a high level of default on student loans, we thought those factors made this a real public policy issue that affects everybody,” he said.
Art Hauptman, a higher education policy consultant, said the major challenges are closing the gap between the costs of attendance and resources; narrowing the differences in participation and attainment among rich/poor students and majority/minority students; and reducing the reliance on debt to pay for higher education. He said the government’s relationship with institutions of higher education has led to unintended and negative consequences, like the increase in Pell Grants, leading schools to reduce their aid for lower-income students and shift it to middle-class students.
“To what extent does financial aid availability affect pricing?” Hauptman said. “To what extent do schools feel like they can increase prices due to the availability of student loans? These are subtle consequences of policy that we tend not to look at. We have a series of problems, and putting more money into Pell Grants isn’t going to solve them.”
Emerson College president Lee Pelton was part of a session titled “Perspectives from Higher Education.” Pelton said private schools are holding down their prices “pretty good,” while fellow panelist Terry Hartle, a senior vice president with the American Council on Education, said the general public consistently overestimates the price of going to school.
But Pelton mentioned several initiatives that are under way to assist families, including a “Money Matters” program for Emerson students. A number of other schools have issued four-year-degree guarantees, offering to pay for a fifth year if students don’t complete their graduation requirements on time. Gil Brown, chief budget officer at George Mason University, said GMU is maximizing routes for students to graduate and pay less, “including partnerships with community colleges and private partners.”
With the fiscal cliff looming and federal budget concerns dominating every move on Capitol Hill, all education programs could be on the table as Congress weighs reauthorization of the Higher Education Act. Representatives from the Senate and House committees on education told summit attendees that college affordability and quality are priorities and will be hot topics in the next session. Also, legislation that would make student loans easier to repay—based on employment and/or income—is being considered.
David Bergeron, the U.S. Acting Assistant Secretary of Post Secondary Education, picked up on that theme during his keynote address at lunch. “When we get done, there will be no reason for anyone to default on student loans,” Bergeron said. “By sometime next year, we will have taken a huge step toward making that a reality.”
Given the host organization’s mission of “helping American families achieve their education savings goals,” excessive discussion of student loans would defeat the purpose. The first afternoon session was a retrospective on 529 plans, the tax-sheltered, state-sponsored college savings vehicles introduced 15 years ago. Paul Curley, director of college savings research for Financial Research Corporation, said advocates are pushing for more qualified withdrawals (to include computer equipment), more opportunities to reallocate funds within your plan (currently once per year), and broader employer contributions.
The final session, “Initiatives That Meet the Challenge,” sounded an ominous note on what might happen if America continues on its present course of escalating tuition, stagnant income levels and shrinking government resources.
“We’re coming to the point where people will be unable to meet what they see as their most pressing obligation as a parent, even if they take advantage of all the vehicles given them,” said Kevin Carey, director of education policy for New America Foundation. “My fear is we end up in a spiral of discord and mutual resentment, which results in further public disinvestment so college is only available to the minority of people on the lucky side of wide economic inequality.”
Andrew Gillen, research director for Education Sector, blamed the system for rising tuition.
“We reward colleges for spending more money,” Gillen said. He said colleges will always claim to need more money; revenue drives their cost, not the other way around; and there’s a disconnect between the cost of providing an education and what the college charges. “There’s no reduction in tuition, even when costs go down,” he said.
Everyone agreed that much work is needed and no one-size-fits-all answer exists. Gauging the quality of one school versus another and determining the true cost to attend remains difficult. Without that ability, consumers don’t have enough information to make sound evaluations.
“We need to move to a point where the University of Phoenix can say ‘you learn 70 percent of what you learn at Harvard, but we only charge 10 percent of what Harvard charges,’” Gillen said.
Anthony Carnevale’s fear is that politicians won’t take any action, which is an action in itself.
“They’re going to starve the beast and that’s going to dump people out of the bottom,” said Carnevale, director of the Georgetown University Center on Education and the Workforce. “That’s already happening. They don’t have to take a vote. Doing nothing is always the best value in political terms if doing something can’t get the votes.
“When resources get scarce, the thing to do is serve fewer students and get students who will meet your outcome standards,” he said. “… It will simply affirm the social distribution of opportunity.”
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