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Sunday, January 29, 2012

Cost.....or price?

Kevin Drum has an interesting--and in a lot of ways largely correct--post about the declining public support for higher education.  He writes, at one point, about support for "low-cost public universities."

What I'd like to do is make everyone realize that there are two issues here.  The first is the cost (C)of higher education.  This is what the colleges and universities of the U.S. spend (per unit of higher education, however you choose to define that).  The other is the price (P) of higher education, which we would generally equate with the tuition and fees paid by students in order to attend higher education.

In general, in the U.S., the cost is higher than the price:

C > P

Why? At private colleges and universities, at least some of the costs are covered by donations (often, not always, by alumni).  At public colleges and universities, historically a fairly large fraction of the costs have been covered by state appropriations.

Of late, what has happened in public higher education is that the state appropriation part has declined, often precipitously.  But unless the costs are also really declining, the only alternative is a rising price--higher tuition and fees.  How large is the decline?  According to the Chronicle of Higher Education, the decline in 2012 from the prior year is 7.6%.  According to a report issued in 2008 by an organization called "State Higher Education Executive Officers,", in 1980 tuition and fees accounted for 21% of the total budgets of public institutions of higher education.  By 2007, that had increased to 40%.  And it has continued to rise in the intervening five years; a good guess would be that tuition and fees now account for something like 45% of public higher education budgets in the U.S.

And, yes, the costs of higher education have increased, for a lot of reasons.  But what has driven tuition--the price of higher education--up so rapidly has been the declining state appropriation (as a percentage of the total cost of higher education).

So let's be clear.  The price has risen because legislatures across the country have decided that higher education is not as significant a state government priority as it was 30, 20, 10, or even 5 years ago.  A part of the debt burden now carried by many students is a consequence of the failure of state legislators to provide the same kind of support that those same states were providing when many of those legislators attended the colleges and universities they now decline to support.

If there is a way out of this, it is for voters to punish legislators who have adopted, voted for, and enacted these priorities.

I live in Indiana.

I am not holding my breath.


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