Since the mid-1980s, the costs of higher education in America have steadily shifted from the taxpayer to the student and family. As state funding has dwindled, colleges and universities have sought to fill these gaps through a variety of avenues, including philanthropy and research support, but the area of highest growth has been tuition. The share of institutional budgets provided by tuition increased from 22% in 1985 to 36% in 2005. As state budgets slip further into structural deficit, there is no reason to think this trend will reverse itself.
These costs are rapidly outstripping the ability to pay. Residential students are now looking at an annual cost of roughly $20,000 per year for a public institution, and nearly $40,000 per year for a private institution. While median family income between 1982 and 2006 rose by 147%, college tuition and fees soared by 439%. Even with financial aid, the concern is that these trends will discourage many low and middle income young people from considering college a realistic option, thereby lowering our national educational level, reducing future economic growth, and undermining the promise of equal educational opportunity. Is this the natural evolution of the educational marketplace, or is the business model of higher education broken?
Proponents of the resolution argue that, while technically solvent, institutions are increasingly failing to meet the public purposes of access, opportunity, affordability, completion, and international competitiveness. The divergent growth trends of tuition vs. median family income cannot be sustained. Proponents also argue that the quality of higher education has diminished as institutions face budgetary pressures. Enrollments have been slashed, course offerings have been cut, adjunct and part-time faculty are on the rise, and student support services have been reduced or outright eliminated. This not only damages the quality of education, it is a fiscally unsustainable model in the long term. Institutions are also competing more and more for private dollars, which often leads them to focus on measures of status and prestige in order to lure donors, rather than improving the quality of education.
Opponents of the resolution point to the current enrollment levelsthe highest in our nation's historyas the simplest evidence that the business model is working. Unlike those who view college affordability through the lens of consumption, in which current income is very important, opponents tend to see the cost of higher education as an investment. As long as a college education continues to pay dividends in the workplace, rising tuition levels will continue to be accepted. Another argument is that the previous low-tuition model was an inefficient way to subsidize higher education. High tuition rates coupled with strong financial aid allows subsidy dollars to be allocated more efficiently than by providing across-the-board subsidies regardless of income. Finally, an area often cited as proof that traditional higher education is broken has been the rise of for-profit, online institutions. However, evidence suggests that these institutions are strongest in the adult market and with populations who otherwise would not attend college, so the impact on traditional higher education has been minimal.
When examining the sustainability of the business model, it is critical to remember the distinction between higher education and private business. Higher education educates our citizenry, invests in the nation's human capital, encourages civic and community leadership, and fosters economic growth. If the business model is to succeed, institutions must not simply survivethey must be able to meet these vital social responsibilities.