Think College Is out of Reach? Think Again.
From recent events, one could assume that rising tuition costs are shutting college doors for thousands of Americans:
* This summer, President Clinton signed into law a bill creating a commission to study college costs. The National Commission on the Cost of Higher Education, which will be comprised of seven experts in higher education and business, is to provide a final report to the president and Congress before the end of the year.
* Days after this legislation reached the president, the Council for Aid to Education, a subsidiary of the Rand Corp., released a study called "Breaking the Social Contract: The Fiscal Crisis in Higher Education." It said what many have suspected - that college costs are increasing so rapidly that higher education soon will be closed to half of those who want to take advantage of it. The report was released around the time Mr. Clinton proclaimed that a college diploma should be as common as a high school diploma.
* Not long ago, The Public Agenda, a public policy think tank, released a study examining public attitudes toward higher education. Researchers found that Americans agree nearly universally on two points: First, that a college diploma is a "gateway" to "life in the American mainstream." Second, that the gateway should be open to any "qualified and motivated" student. Americans believe, in effect, in a social contract regarding higher education, a covenant our nation is "breaking," according to the study's authors.
News media's spin
High-profile news stories have popularized the idea that college has become "too expensive." Typically, these stories focus on tuition increases at a single institution or some select institutions that, as Time magazine says, have to "spend heavily to recruit and keep the best faculty and meet the growing demand by students for more course choices, more diversity, more access to professors, and ... more amenities...." The implication is that because colleges are spending lavishly, tuition prices have risen astronomically - and access is compromised for all but the elite.
These reports and stories consistently ignore one important fact: As a nation, we're sending a larger share of our college-age population to college than ever before, even as our proportion of national spending on higher education remains steady.
From 1961-62 to 1991-92, the college enrollment rate of Americans between the ages of 18 and 24 more than doubled, from 24 percent to 53 percent (see chart). With more than half the traditional college-age population enrolled in college, it is difficult to assert with a straight face that college is limited to "the elite."
While it is true that the share of gross domestic product (GDP) devoted to higher education expenditures increased from 1.7 percent in 1961 to 2.7 percent in 1970 (a result of the coming of age of the baby boomers), the share of GDP devoted to higher education has been stable ever since. One could reasonably conclude that our national spending on higher education is consistent, predictable, and manageable.
However, it's one thing to talk about overall college costs as a share of GDP and quite another to talk about college tuition - the share of total college costs paid by students and their families. According to the US Department of Education, this share is relatively small (about 29 percent). Yet, tuition is the piece of overall college cost most familiar to families, and it, as we all know, has increased faster than other prices in the economy.
In other words, while the nation's higher-education bill has remained relatively stable, the part of the bill passed on to families has grown - dramatically. Between 1965-94, tuition and fees grew by 70 percent or more, depending on the type of institution, according to the US Department of Education's National Center for Education Statistics. That is staggering. Considered another way, the average annual tuition bill took about 10 percent of median family income in 1994 compared with 6 percent in 1976.
Yet, as a share of the nation's GDP, higher education consumes no more national resources today than it did five years ago and only marginally more than it did in 1969-70. How can this be? Some pundits say families are paying more so professors can earn more doing less. As Time magazine put it, "Gone are the days of shabby gentility."
But if Time wants to blame faculty for higher tuition bills, it is barking up the wrong tree. True, faculty salaries have risen steadily since 1981, but only after tumbling the previous decade. Measured in constant dollars, average salaries of professors at all ranks in all colleges and universities are lower now than they were in 1972. Assistant professors earn, on average, salaries lower than the median family income in the United States; associate professors earn salaries only slightly higher.
Government's paying less
There are other answers to the riddle. One is this: Families are paying more to send their children to college because government is paying less. The share of higher education revenues provided by the government has fallen dramatically since 1959-60 at both public and private institutions. The share of college revenues provided by tuition (what families pay) has increased as a direct result.
A second reason has to do with supply and demand. Annual increases in real tuition and fees coincide with increases in the proportion of people going to college. In other words, tuition and fees have responded to the pressure of increased demand for college.
What a degree is worth
Why would the demand for college rise in the face of tuition hikes? Because tuition has increased at a time when the "premium" for completing college also has gone up. According to the US Census Bureau, the earnings premium among male workers for completing college was 19 percent in 1980 - meaning that a male worker with a college degree earned 19 percent more, on average, than a male worker without a degree. By 1993, the earnings premium increased to 57 percent. Among female workers during the same time period, the earnings premium for completing a college degree increased from 52 percent to 99 percent.
Thus, while tuition increases have grown substantially between 1980 and 1994, the US Department of Education itself admits that simultaneous increases in earnings premiums "may have outweighed any negative effect of rising tuition."
Despite evidence that the labor market rewards those who go to college and has, on average, adjusted "rewards" to offset tuition increases, there are still concerns that "most" Americans can no longer afford college. Average annual tuition (excluding other expenses) in 1992 was $3,517 - a steep cost for many. But the data on average undergraduate tuition hide some finer distinctions. The accompanying chart shows the distribution of tuition and fee charges for full-time, full-year undergraduate students attending four-year institutions during the 1992-93 academic year. In that year, nearly one-half of undergraduates attending four-year colleges faced tuition and fee charges of less than $3,000. Seventy-three percent paid less than $8,000.
Full-time, full-year tuition at a four-year college is still within reach of most families: For nearly half of those enrolled in college, annual tuition is less than a year's payment on a moderate-priced car.
Don't forget aid
But even these data don't show another distinction - the difference between advertised tuition (the sticker price), and "net tuition," (the actual amount students pay once institutional student financial aid has been considered). According to the US Department of Education, most full-time undergraduate students receive some sort of financial aid. Often, this takes the form of a "discount" offered by the institution. Accounting for other sources of revenue that pay for an individual's college education - institutional aid, government subsidies, gifts, and endowment earnings - students pay only 29 cents on the dollar for higher education. The other 71 cents is, in effect, a subsidy given to them.
We should question our assumption that college is too expensive for most Americans. It might be a good time to ask ourselves these questions: How much should a person pay for his or her own college education? What share is fair? Should equally qualified students have equal opportunity to attend the best colleges despite different abilities to pay? And finally, what is our "social contract" as it relates to higher education?
* Suzanne Tregarthen is assistant dean for Institutional Research and Planning at The Colorado College in Colorado Springs, Colo.