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Facing the high cost and price of higher education
An inflationary spiral threatens the operation of public and private colleges
A spiral is under way that threatens the operation of higher education as we know it.
The price (tuition) and costs (expenditures per student) of higher education are out of control. The inflationary spiral affects both private and public universites. Although major differences exist between the tuitions of private and public universities, the costs are quite comparable.
In the last 14 years the Consumer Price Index has increased 80 percent. The average price of a new car went up 54 percent. Medical care costs, which everyone knows are out-of-control, rose 182 percent. During that same period of time, college tuition rose 253 percent.
In 1980, the average annual expenditure per student was approximately 25 percent of the median household income. By 1993 it grew to 45 percent. If current trends continue, during the next decade, the cost of one year of college education will surpass the average household income.
If one extrapolates the rate of increase of college costs and that of the cost of the average home, within a decade four years of college costs will be greater than the cost of the average home in America.
The per-student costs of education cannot continue to increase year after year at more than twice the rate of inflation. Over the past decade, major changes have occurred in business and industry. Re-engineering, downsizing, rightsizing, and de-layering have occurred as a result of economic pressure.
During the past decade, employment at the 1000 largest companies (the unfortunate 1000) decreased by over 4 million. At the same time, the dynamic-growing 150,000 companies increased their workforces by over 20 million. These vivid changes were the result of economic competition.
Major changes are occurring within the health care industry. Who would have thought a decade ago that less than 25 percent of the medical doctors in America would be in private practice? Mergers and acquisitions run rampant within the healthcare industry. Economics drives these changes.
If higher education doesn’t bring its costs under control, we are going to see dramatic changes in the structure of higher education.
I admit to being prejudiced, but I believe Rose-Hulman is a very cost-effective place. I am proud:
- that our housekeeping and custodial staffs clean twice the national square-foot/per-person average;
- that our physical facilities and grounds are beautifully maintained by only five members of our staff;
- only two people run our $20 million Financial Aid program;
- of the high utilization of our classrooms and laboratories where several hours a day it is impossible to find a spare classroom;
- that our campus is used year round to the point where it is difficult to accept any more summer programs;
- of the quality of the instruction at Rose-Hulman where our faculty teaching loads would be considered excessive by most of higher education;
- we have no graduate students teaching courses;
- the median class size is below 25 students; and
- that not only has the President overextended himself, but so has most everyone else on the Rose-Hulman campus.
I believe Rose-Hulman is an exceptionally cost-effective institution. However, we cannot continue to increase our costs at twice the rate of inflation indefinitely and neither can the major research universities, the comprehensive regional universities, private liberal arts colleges or the community colleges.
There are over 450 corporate colleges in America. One of those colleges, Motorola University, has over 100,000 customers. It is only a matter of time before colleges and universities will be giving credit for educational experiences at corporate universities. Corporate colleges will soon be giving certificates of competency for employment, and certainly within a decade they will be conferring degrees. What will happen when colleges and universities no longer have a monopoly on conferring degrees? There are more than 75 colleges or universities which presently issue degrees via distance learning. The virtual university will soon be here where you can receive a degree via the Internet.
If technology can provide on demand an unprecedented array of educational resources to individuals at their homes or places of employment, and if those receiving the material can communicate with other learners and instructors who might be anywhere in the world, what is the impetus for continuing to have campuses as we know them?
Given the history of higher education and the human race, it is highly unlikely that costs will be brought under control until economic pressure forces change. I believe that changes in health care give some indication of what is going to happen to higher education. Once the change starts, it is going to happen very quickly.
It is imperative that Rose-Hulman Institute of Technology play a lead role in the changes that are going to occur in higher education. It is not only in our enlightened self-interest, but it is also in the best interest of the student.
Not all the changes that have occurred in health care benefit the patient. It is highly unlikely that all the changes that are going to occur in higher education will benefit the student.
As Rose-Hulman plays a leadership role, the interest of the student will remain paramount within the restructuring.
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