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Who Should Pay the Bill for a Private Education?
by Dorothy Blaney, President, Cedar Crest College (PA)
Published in The Chronicle Review, April 2, 2004
With tuition increasing on average 14 percent at public higher-education
institutions and 6 percent at private ones, everyone is talking about
college prices, including people in Congress. Senate Democrats have proposed
legislation that would punish states that reduce spending on higher education.
Taking a quite different approach, another proposal, by a Republican congressman,
would have blocked colleges that raised their tuition too high from participating
in certain federal student-aid programs. Although the bill was recently
withdrawn, it encouraged significant debate about college prices.
Maybe the climate is finally right to consider two simple and compelling
changes in how we support colleges, changes that could save hundreds of
millions of dollars annually and also increase access and quality for
students. First, a greater proportion of state money for higher education
should go directly to students, allowing them to choose where they want
to enroll. Right now, only a relatively small percentage of public funds
goes to individuals directly, rather than to institutions.
Second, tuition at state institutions should be indexed to income, similar
to our graduated income tax, so that wealthy families would cover more
of the cost directly. While I am aware of the argument that all people,
regardless of income, should have equal access to public facilities, we
are at a point where a means test would be justified.
The ideas behind such changes have been around for several decades, but
they have never been seriously pursued, let alone legislatively enacted.
Part of the reason is that many state legislators, like those in my state
of Pennsylvania, are graduates of public institutions and, therefore,
sympathetic to them. In addition, those legislators have often been unwilling
to support proposals that might cut the money going to public institutions
for fear of losing votes from faculty members and administrators.
Another fundamental problem is that taxpayers don't know the facts about
the growing similarities between public and private institutions. In the
last 50 years, the distinctions between their missions have been blurred.
It is not the case anymore that public institutions have a special mission
to serve lower-income and minority students, or that private institutions
have a special mission to serve the rich or would-be ministers. Across
the country, both public and private institutions have ethnically and
economically diverse student bodies and compete for the same people as
students.
In Pennsylvania, for example, 6 percent of the students who attended
private institutions in 1999 had family incomes of less than $18,000,
compared with 7 percent of those who attended universities in the state
system and 4 percent who attended other state-related institutions. (The
designation "state-related" is somewhat particular to Pennsylvania.
It includes the land-grant institution Pennsylvania State University,
which receives less state money in exchange for greater autonomy, as well
as several private institutions that have received significant state support
in exchange for reducing tuition.) In fall 2001, more minority students
attended private institutions (26,252) than attended community colleges
(22,884), state-system universities (7,555), or other state-related institutions
(18,894).
The major remaining difference between public and private institutions
is their governance systems. Public institutions have direct oversight
by the state, while private colleges retain independent governing boards.
Both, however, are accredited by the same associations and held to the
same standards. Private institutions are also chartered by the state and
mandated to meet state and federal requirements before they can be eligible
for any public money for themselves or their students.
In addition, both public and private institutions serve the broad interests
of society and their states' needs for new knowledge and skills. In the
subject areas critical to economic development and innovation -- math,
science, and engineering -- private institutions in Pennsylvania, like
Lafayette College, Lehigh University, and the University of Pennsylvania,
awarded 52 percent of all bachelor's degrees in the state in 2001. For
women, 58 percent graduated from private institutions like Cedar Crest
College and Bryn Mawr College, rather than state institutions. In addition,
the majority of minority students in Pennsylvania -- 60 percent -- received
bachelor's degrees in math, science, and engineering from places like
Swarthmore College and Ursinus College, not public universities. That
may be because of the priority such institutions place on individual attention,
achievement, and undergraduate research, and the additional resources
that their trustees and alumni provide in those areas.
Yet private institutions are picking up much more of the tab to educate
students than public institutions. They receive far smaller state subsidies
for instruction than their public counterparts, even though the cost of
educating an undergraduate student in a particular subject area is roughly
the same at Pennsylvania State University, a public institution, as it
is at Cedar Crest College, a private one.
That cost is not to be confused with the price, which is passed on directly
to students as tuition. The difference between public and private institutions
is in who pays which parts of the cost and how many tax-levied dollars
are used. In 2001, at any of the private colleges in Pennsylvania, the
average state instructional subsidy per student was only $248, compared
with $4,960 at state-owned institutions, and $4,430 at state-related ones.
What that means is that the 41 percent of the undergraduates in the state
who attend private colleges did so with only 15 percent of the public
money appropriated for instructional subsidies. If the same students had
attended public institutions, Pennsylvania taxpayers would have had to
pay an additional $342-million or more.
In other words, private institutions cost their states a lot less than
public ones to educate each student. Thus, significant amounts of state
money could be saved if, in the future, more investment were made in the
Pennsylvania Higher Education Assistance Agency (Pennsylvania's student-grant
program), currently capped at $3,300 per student with maximum need. If
the cap were raised and less money were provided in direct subsidies to
public institutions, it would give more students the financial aid they
need to go to the college of their choice, and the state would save substantially.
More of those students would very likely spend their financial-aid dollars
to attend science, math, and engineering programs at private colleges
and universities. Even though the average tuition at all public institutions
is $4,115 compared with $18,596 at all private institutions, the majority
of students -- women and members of minority groups included -- have chosen
to get their degrees at the latter.
Another key policy change that government leaders should consider is
reducing or eliminating subsidies that currently permit students from
families with high incomes to enjoy state subsidies that cover most of
the cost of attending public institutions. Over the last 20 years, nationally,
there has been a pronounced movement of middle- and upper-income students
to public colleges and universities. In fact, a New York Times article,
"Colleges Beyond Reach" (August 23, 1997), cited an estimate
by Michael S. McPherson and Morton Owen Schapiro that 38 percent of freshmen
from families that earn more than $200,000 a year enrolled in public universities
in 1994, compared with 31 percent in 1980. The dollars of taxpayers at
all income levels are subsidizing the educations of such wealthy children.
Why not have a sliding scale for state tuition rates based on ability
to pay? Despite the argument that public institutions, established by
public tax money based on a graduated income tax, should be open to all
people on an equal basis, isn't it time to consider an adjustment that
could generate substantial savings in state expenditures -- and still
maintain access for low-income students? With major financial pressures
-- including the current deficit and escalating costs related to national
defense, homeland security, health care, Social Security, and underperforming
schools -- isn't this finally the moment to rethink how we support higher
education to take advantage of the partnership and cost-saving opportunities
that private institutions offer? We need a new paradigm and, with the
current legislative proposals related to tuition increases, it seems as
if Congress is, at least, open to something different. Maybe state legislators
will finally be, too.
We must meet the expanding educational needs of a world power, with fewer
resources to spend on higher education. As the example of Pennsylvania
illustrates, we could do this by recognizing the strength of private colleges,
the contributions they make, the economic benefit of allowing students
to make choices in a more open marketplace, and the cost of subsidizing
high-income students in public colleges and universities. Both Republicans
and Democrats should be able to understand and support that approach.
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