Over the last couple of weeks, the question as to what rate of interest college students will pay on their loans leaped to the front pages of our vanishing newspapers.
Both parties have agreed that the rates should stay where they are, instead of doubling at the end of June, which is what will happen if the Congress does nothing. So now a big fight is shaping up over where the money will come from to make up for the loss of the revenue the rate hike would have produced.
This is an important political issue, because it is a big pocketbook issue at a time when the size of pockets really matters. But it is absurd that the issue of college costs should have come down to this.
The cost of college has been increasing much faster than the increases in inflation for years. During the same period, the number of days of instruction offered by the typical college has been declining, as has the proportion of total tuition charges accounted for by instructional costs.
What, exactly, is going on here? These facts strongly suggest that the cost of going to college is not steadily increasing because the cost of instruction is increasing. So what accounts for the increased costs? There are several possible culprits. Foremost among them is the fierce competition for students among the institutions. More and more, that competition is driven by accounts provided by students currently at the institutions of the quality of the amenities those institutions provide: the quality and variety of the food, how up-scale the on-campus housing is, the range and quality of the sports and recreational facilities, and so on. This information is made available through public web sites and rating agencies like U.S. News and World Report. The institutions clearly feel that they have no choice but to invest heavily in what I think of the “country club” amenities of college in order to be a player in the enrollment game.
Then there is the “psychiatric clinic.” With the advent of the Americans with Disabilities Act, many grade school students have become accustomed to the availability of a wide range of free counseling services. When they arrive on the college campus, their expectations are undiminished. The result is that postsecondary institutions are spending far more on such services than they used to. Perhaps we should think of this as another offering of the “country club.”
We should not forget the “research game.” When I was in college, many of the biggest firms in the nation had research and development labs far larger than any university research programs. No more. These firms are slim and trim now, and most look to the universities for research and development. But the federal government views research and development as a natural cost for the universities and they look at themselves as aiding that research, but only to a degree. So the students are expected to bear a large share of the research and development costs themselves, and those costs have been skyrocketing.
And then we have collapsing state budgets. Legislatures in recent years have been taking the view that grade schools ought to be a public investment, because everyone benefits when young people are educated, but, at the same time, squeezed by ever-higher health care bills, they have been also taking the view that higher education mostly benefits the individual, and so the individual should pay for it. So the states have been paying less and less of the bill while giving the institutions permission to charge the students more and more for less and less instruction. All this while many other advanced industrial countries charge little or nothing for higher education and are therefore surpassing the United States in the proportion of their work force with a college education, a key measure of work force quality.
Meanwhile, students are leaving college and graduate schools with staggering debts. This is making it less likely that capable students will enter low-paying professions, like teaching and public service and more likely that they will not be able to purchase homes, buy cars or purchase a college education for their own children, because they will be paying off their college loans. So this enormous debt will act like a giant anchor on the economy for years to come and condemn many people to a standard of living well below that of their parents.
What is the Congress doing about this? Year after year, it is increasing the amount of taxpayer funds going to pay these increased costs of higher education, because most of the students are from the middle class and the middle class votes. The system, it turns out is happy to take those dollars and increase the price which apparently just produces more dollars from the Congress, while, year after year the system provides less and less instruction, and education of dubious quality.
This is not because the people who run the higher education system are venal or stupid. They are simply responding to the incentives they face, as any of us would. If students make application decisions based on the amenities that institutions provide, then the institutions have no choice but to provide the amenities.
Maybe Congress should take a deep breath and think about changing the incentives that the institutions face. Maybe the federal government should say that the amount of grant and loan aid will be conditioned on the proportion of total cost that is accounted for by instruction. Maybe it should say that it will pay for non-instructional costs, but only up to a certain proportion of the instructional costs. Or set dollar limits for the amount that it is willing to pay for certain categories of non-instructional costs.
The point I am making is that the public interest lies in the learning that takes place in these institutions, not in the level of amenities provided. My guess is that if most students knew how much money they will owe to pay for the amenities they get, they would rebel. But, if some individuals discover what it costs to live in what amount to five star hotels while in college, and still want to pay for it, no problem, but they should arrange to pay for that themselves, not with government grants or subsidized loans.
Maybe it is time, too, for the federal government to pay the full cost, not part of the cost, of the research programs it funds. I can see no compelling reason for the students to pay for it.
Maybe the federal government can figure out how to stop the states from disinvesting in higher education by providing graduated matches for increasing their investments in this vital area.
It is time to get serious about changing, in a fundamental way, how we fund our higher education institutions, so that we can put our money where it really counts, into high quality education for our students. Leave the country club to others.
The opinions expressed in Top Performers are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.