Cover Story: A Higher and Higher Education

Why has college tuition increased so steadily for so long? Try computers, competition and state cuts

May 17, 2006 at 2:06 pm
Jupiterimages/ Ron Chapple

A Higher (And Higher) Education

Four Dater High School seniors are talking to each other and a reporter, estimating how much debt they might have when they finish college.

They have thousands of dollars in scholarships, some even covering the entire cost of tuition. They'd like to graduate debt-free, but no one is confident that will happen.

"It would be nice," says Chanelle Bonds, who will study nursing at Bowling Green State University (BGSU).

Instead she estimates she'll finish with $8,000 to pay back. The same goes for De'Airra Foster, who's majoring in social work at the University of Cincinnati.

Dennisha Bouldin is less sure. It could be $5,000 or as much as $25,000 when she finishes her degree in early childhood education at UC.

Derris Cameron worries most about not being able to find a job when he graduates from BGSU with a degree in either science education or biology. There he'd be, stuck without a real job while the bills for his student loans come due, which he thinks could total $6,000.

"That scares the living crap out of me," Cameron says.

He'd be lucky to leave college with only $6,000 in debt, compared to American college students as a whole. That was the median debt in 2003-04 for earning a two-year degree at a public college, according to the College Board.

That same year the median public bachelor's degree recipient left with $15,500 in debt. A private non-profit school grad left with $19,400 in debt.

In the past 20 years, the price of in-state, full-time college tuition has increased by 383 percent at Miami University, 415 percent at Xavier, 437 percent at the Art Academy of Cincinnati and 449 percent at UC.

In contrast, the rate of inflation was only 82 percent, meaning that items that cost $1 in 1985 cost $1.82 today.

The numbers are staggering. But what's behind them? Surely university presidents, regents and trustees would rather not hike tuition rates and instead keep the cost of a college education affordable to as many people as possible.

That's not the right question.

"It's so multifaceted," says Sue Patrick, communications director for the Kentucky Council on Postsecondary Education. "It's just so complex."

Comparing the rate of inflation (or consumer price index) to the cost of providing an education is not really apples-to-apples. To start, staff is the biggest expense for universities. Salaries for professors and other highly trained staff increase faster than inflation, according to Rick Petrick, vice chancellor for finance for the Ohio Board of Regents.

"Because everybody in the world is competing for high-educated people," he says.

Is it the states' fault?
In general, state funding for higher education has not kept pace with the cost of providing it. Public universities often point this out when they increase tuition prices.

For example, if Ohio had funded UC to match the cost of inflation beginning five years ago, UC would have received $35 million more than it did, according to Greg Hand, UC's director of public relations. Its 2004-05 budget was $844 million.

Between 2000 and 2004 Ohio's spending per full-time equivalent (FTE) student declined 11 percent for all colleges, according to an Ohio Board of Regents report released in January. Kentucky experienced similar dips in FTE funding.

Ohio hasn't traditionally been a nationwide leader in per capita higher education funding, ranking 45th in dollars per full-time equivalent student in 2005. Kentucky was also once on the lower end of that scale but today is ranked 16th, according to the State Higher Education Executive Officers.

One Ohio representative says the problem is that Ohio had the highest enrollment spike when it could least afford new students: during a recession.

"I just think that's the whole basis of the struggle," says State Rep. Shawn N. Webster (R-Hamilton), chair of the House Subcommittee on Higher Education.

State funding is cyclical. Nationwide, dollars per FTE student peaked at $7,124 in 2001 but have since dipped to $5,825 in 2005, according to the State Higher Education Executive Officers.

State Rep. Catherine Barrett (D-Cincinnati), a member of the Ohio House Education Committee, doesn't exactly lament the tuition increases in Ohio.

"If you pay a lot for your car, you're going to take better care of it," she says.

Barrett says Ohio lawmakers have spent a lot of time and energy on K-12 education and two-year colleges to make sure students are better prepared for college. She says state legislators have been influenced by what they see as low graduation rates at public universities.

"They're trying to get the students to go to a two-year college and be more qualified," Barrett said. "It costs the colleges a lot of money to have students enrolled who then withdraw."

In Kentucky, higher education was once a take-it-or-leave-it opportunity with little help for students once they enrolled, according to State Rep. Frank Rasche (R-Paducah), chair of the House Education Committee.

He also believes there's room for improvement when it comes to college counseling.

"We're still getting a tremendous, tremendous number of people who are the first of their families to enter post-secondary education," says State Rep. John Draud (R-Edgewood).

Colleges do need to improve their graduation rates, but those figures are a bit distorted because certain adult learners often take a course or two to refresh their qualifications but never intend to finish a four-year degree, according to Jennifer Blatz, executive director at the Ohio College Access Network. Others change colleges a few times during their academic career.

"Ohio's mobility rate is extremely high," Blatz says. "They're going from college to college to college."

"It's now typical for students to attend more than one institution before graduation," says Dewayne Matthews, senior research director at the Lumina Foundation, an independent foundation in Indianapolis trying to expand access and success in higher education.

Some students attend three, four or more schools, and some colleges haven't realized this is happening on their campuses.

That said, different colleges have different missions. The more competitive the college's selection process is, the more likely students are to graduate on time, Matthews says. An open-enrollment college such as Cleveland State University will not have the same graduation rate as a more selective institution such as Miami University. Colleges average a 50 percent four-year graduate rate, Matthews says.

Kentucky has funded universities well in the past few years, just not well enough to keep up with expenses. Kentucky doesn't have the kind of educated work force — and therefore, support for higher education — that places such as Seattle and Washington D.C. do, Draud says. Only 12.4 percent of the state's residents 25 years and older have degrees, ranking the state 49th in the United States, according to a 2004 report by the Institute for Higher Education Policy.

Ohio doesn't fare much better, coming in 42nd at 15.8 percent. Colorado ranks first with 23.3 percent.

The harsh reality these days is that state budgets increase only when the economy booms, because "people don't want to pay any taxes," Draud says.

Ohio has a $52 billion biennial budget that could do more for higher education, according to Ohio Sen. Teresa Fedor (D-Toledo), a ranking minority member on the Senate Education Committee.

Fedor would have liked the $500 million from the last budget that was used for charter schools to have been used, for example, for $1,000 grants to every Ohio college student. Instead it went to charter schools, more than 70 percent of which are rated in Ohio's two lowest school rankings, she says.

The states can't take all of the blame, Matthews says.

"(Lagging state funding) may be a partial explanation," he says. "The problem with that is it doesn't explain the increase in private higher education."

If state funding didn't exist, the price of most public tuition would double overnight, mirroring prices at many private schools.

Bricks, mortar and more
At public and private schools, the competition between colleges for students has raised expectations of exactly what a campus should have. A recreation and/or fitness center? Check. Modern residence halls? Check. Internet access and modern computer labs? Check.

And those are just the basics.

"There is an amenities war going on, particularly in institutions that attract traditional students," Matthews says. "In the end, the money has got to come from somewhere."

Universities such as UC are lucky to have generous alumni willing to give toward buildings named after them. The Art Academy of Cincinnati offered naming rights for everything from classrooms to bathrooms to drinking fountains in its $13 million Over-the-Rhine campus. Others, such as the younger Northern Kentucky University (NKU), turned to $1 million corporate donations from Toyota, Fidelity and Ashland, among others.

But a lot of new money is coming from student fees, as well.

"What is clearly happening is that fee revenues are increasing and are probably increasing even faster than tuition rates," Matthews says.

UC's $233 million MainStreet project is the university's largest capital project in 10 years, according to Hand. It includes the renovated Tangeman University Center, the new Student Life Center and the Recreation Center.

About 93 percent is being paid for though a $100 quarterly "Campus Life Fee." Student opinion guided the project and determined the fee. The project's other 7 percent is coming from retail sales and rentals from the facilities.

Quick: Name a Tristate university that hasn't spent or won't spend millions of its own or state money on new buildings, renovations or additions.

Xavier University? The $18 million Charles P. Gallagher Student Center it built in 2002.

Miami University? It's building a new $32 million ice arena.

Northern Kentucky University? It's breaking ground May 20 on the $60 million Bank of Kentucky Center, a facility for basketball games and other events.

Thomas More College? In 2002 it built the $7.2 million Murphy Residence Hall.

Ohio colleges might have more building ahead. Many university buildings were built in the late 1950s and 1960s and will need renovations or replacement in upcoming years, according to Jamie Abel, assistant director of communications for the Ohio Board of Regents.

Miami University, for one, is working on a $500 million, 50-project, two-decade plan. In the past 12 months NKU has been green-lighted by the state for $200 million in buildings.

States pay for a majority of most public university building projects, but some expensive projects have nothing to do with bricks.

Last year UC unveiled a new financial system used for purchasing. It was getting to the point that staff had to open a DOS program to do transactions and only half of the necessary work could be done, according to Hand.

That system cost $25 million. This year UC is spending another $25 million on a new human resources system. UC knows how many paychecks it writes, but one of Cincinnati's largest employers doesn't know how many employees it has, according to Hand.

"These are exactly the kinds of expensive investments that the state of Ohio will not provide any money for," Hand says.

The president of the Art Academy of Cincinnati expected that staff salaries were a big part of its budget. But Gregory Smith didn't expect utilities to be so expensive. Today it spends more than 10 times the $31,000 it spent 20 years ago because it moved into a new, larger Over-the-Rhine campus.

Xavier expects to spend an additional $500,000 in utilities this year, same as last year's increase, according to Thomas J. Cunningham, Xavier's associate vice president for financial administration.

UC expects a similar $8 million increase this year, and that's after the university completed extensive renovations, according to Hand.

"We have re-lamped and re-windowed just about every building on campus," Hand says.

Other similar-sized colleges saw $15 million in surprise utility bills, he says.

Even more important is the actual cost of teaching, the single biggest expense at many universities.

At UC, the average salary for a full professor increased from $78,100 in 1999-2000 to $91,400 in 2004-05. As part of that, "health care costs have gone up so rapidly that UC has, for several years, had to borrow against the future to pay the expense," Hand says. UC is looking at higher employee contributions, among other solutions.

Some colleges have turned to teaching assistants and larger class sizes.

"That's a way to hold down costs, and we've not done that," says NKU President James Votruba. "We've gone the other direction."

NKU maintains a 22-to-1 student/teacher ratio. NKU in-state, full-time tuition is topping $5,000 for the first time this year.

Xavier is asking employees to share health insurance costs and is phasing out its paid retiree health insurance.

"Higher education is still a labor-intensive enterprise," Matthews says.

So colleges generally haven't taken advantage of new technology when it comes to delivering education.

Some colleges are trying to become less labor intensive. The University of Phoenix had certain faculty write a curriculum, then other faculty teach it to students around the country. So far this is not a common practice in higher education, Matthews says.

A sellers' market
Increasing enrollment is one of the more overlooked aspects of college costs.

If colleges were losing money by hiking tuition, they would cut it. Despite tuition hikes, college enrollment in Ohio has increased in the past five years by 55,000 full- and part-time students, to a total of more than 650,000, according to Petrick. In Kentucky, FTE enrollment increased from 118,381 in 2000 to 149,473 in 2005.

Matthews expects enrollments to continue to increase for a decade or so longer.

A college graduate can still expect to earn about $1 million more in a lifetime than a person with only a high-school diploma, Petrick says.

"People who major in the appropriate majors will do well," he says.

As long as students feel as if they're getting that benefit, they'll keep enrolling.

Although financial aid hasn't kept pace with these tuition increases, Pell Grants, federal loans, state aid and college-based aid at least give students the opportunity to offset much of the new costs. The trend, however, is shifting from need-based aid toward merit-based aid.

For example, U.S. Senate Majority Leader Bill Frist (R-Tenn.) successfully pushed a grant program for students who attend "rigorous" high schools and major in science, engineering or math, according to according to Patricia Smith, policy scholar in residence at the American Association of State Colleges and Universities.

She says the Pell Grant program is not as popular as it used to be.

"You're talking about tens of billions of dollars of (student) loans compared to $12 billion in Pell Grants," Smith says.

Cameron, the Dater High senior, has a 3.5 GPA, but he wishes he would have taken his grades more seriously his freshman year, when he earned a 3.0. He and the other Dater seniors encourage students to start thinking about college early in high school — or even earlier.

Also, Cameron says, grades alone aren't enough to get solid financial aid. Students should think about developing leadership skills.

Despite the high health care, energy and technology costs, there is an undercurrent of skepticism concerning high tuition prices.

Congress seems to be looking for a way to punish the states for their lack of funding without punishing students, Smith says. So far federal leaders only want more data collection, which is irking private universities not used to providing such information.

In Ohio, the legislature set an across-the-board tuition increase limit of 6 percent or $500 — whichever is less — for the 2006-07 school year.

Kentucky's tuition limits are set by the Council for Postsecondary Education on a college-by-college basis. Schools that have special circumstances, such as high demand for certain programs, might get approval from the council for higher rate hikes.

Kentucky colleges are still much less expensive than Ohio colleges, Draud says. In 2003-04, Kentucky college tuition was 25 percent below the national average, according to the council.

"However, (tuition here) has been growing quite a lot in the last three years or so," Draud says.

This fall tuition is increasing for full-time resident students by 9.6 percent at NKU, 12 percent at the University of Kentucky and 13 percent at the University of Louisville. Although none of the increases exceed several hundred dollars, there have been similar increases for the past couple years.

Webster voices some of the skepticism that naturally goes along with parents and students going through sticker shock.

"I suspect that those (colleges) who have controlled costs might not have to raise tuition as much," he says.

Webster supports Ohio's tuition caps.

"The time we tried to lift caps it didn't seem to work because the institutions kind of went hog wild," he says.

There were double digit tuition increases pretty much all around. That's hard to justify, he says.

A lot of attention is paid to the cost of tuition, but that's not the same as the cost of providing a college education. Between 2000 and 2004 that cost increased by 4 percent at Ohio's colleges. Meanwhile, the state support per FTE student declined by 11 percent. Kentucky has experienced a similar dip.

In 2005 a private study commissioned by the Kentucky Council on Post secondary Education found that higher education was generally affordable to most students in Kentucky but that non-traditional and poorer students were under more financial pressure than other groups. This could become a more serious problem should trends continue.

Colleges, especially public colleges, are going to have to ask themselves a few questions.

"What does it mean to be a public institution?" Hand says. ©