The Chronicle of Higher Education, April 6, 2007, Friday

Copyright 2007 The Chronicle of Higher Education

All Rights Reserved

The Chronicle of Higher Education

April 6, 2007 Friday

SECTION: THE CHRONICLE REVIEW; Pg. 6 Vol. 53 No. 31

HEADLINE: How Governments Can Improve Access to College

BYLINE: RONALD G. EHRENBERG

BODY:

In recent weeks, Congress has begun to debate several policies to help bridge the divide in student access to higher education, and late last month U.S. Secretary of Education Margaret Spellings heard other proposals at her National Higher Education Summit. In the weeks and months to come, we will be seeing still more. Whether those fixes involve tuition or student aid, or focus on the pipeline from elementary and secondary schools, all must confront some fundamental concerns. First, the United States no longer leads the world in college-completion rates; improving those rates is important to the nation's economic well-being. Second, the inequalities in access for students from different income groups have narrowed only slightly during the last 25 to 30 years, and inequalities in college-completion rates have narrowed even less. Finally, the population groups that are growing the most rapidly have historically been underrepresented in higher education.

Turning first to private higher education, in the past, financial barriers have kept many students from low-income backgrounds from enrolling in our nation's most expensive and most selective private colleges and universities. While there are a few encouraging signs of change, we are still far from bridging the income divide in access to those institutions.

Throughout most of the 20th century, tuition at private colleges rose, on average, by more than two to 3.5 percentage points a year above the rate of inflation. As I discussed in my book Tuition Rising: Why College Costs So Much (Harvard University Press, 2000), several factors have been responsible for that pattern. They include the unwillingness of private colleges to raise student-to-faculty ratios because low student-faculty ratios are thought necessary for high-quality undergraduate education, and the quest by institutions to be the very best that they can in all their activities, which has led to an "arms race" of spending. There has also been a widening distribution of incomes in the United States, which has increased pressure on students and their families to "buy the best," thereby intensifying competition for admission at selective private institutions and reducing institutional incentives to limit tuition increases. On top of those factors have been the U.S. News & World Report college rankings, which penalize institutions for holding spending down; external demands from federal, state, and local governments, alumni, environmental movements, and the like, which raise institutional costs; and the difficulty of enacting cost reductions because of the system of shared governance among faculty members, administrators, and trustees. More recently, to that list should be added the belief of some students and parents that high tuition reflects high quality, leading some institutions to raise tuition to signal their worth.

Although data from the College Board suggest that during the past 30 years, tuition has continued to rise, on average, by three percentage points more than the rate of inflation each year, such increases typically overstate the rise in costs faced by students. "Tuition discounting" -- using institutional grants to compensate for higher sticker prices -- is prevalent. The 2005 Tuition Discounting Survey from the National Association of College and University Business Officers suggests that the typical private college gave back almost 40 percent of its tuition revenue in the form of grant aid to its full-time freshmen. Increasingly, however, that aid is "merit based," as institutions seek to position themselves as "selective" in the rankings. Very few institutions provide only need-based financial aid.

At the same time, federal and state student-aid programs that help finance attendance at both private and public institutions have increasingly been directed toward students from middle-income families rather than limited to students from lower-income families. At the federal level, the major growth in financial support has come in the form of increases in subsidized loans and tax credits that primarily benefit the middle class (although the Bush administration and some Democrats in Congress now propose to increase the maximum Pell Grants next year, which will help lower-income students). At the state level, following the introduction of the HOPE Scholarship program in Georgia in 1993, more than a dozen other states have introduced broad merit-aid programs to encourage students to attend public -- and in many states also private -- in-state institutions. Those who qualify for the state merit programs dispro-portionately come from white and middle- or upper-income families; there is only limited evidence that they enhance college enrollments of students from disadvantaged backgrounds.

Where students go to college may be equally as important as whether they go to college. While the evidence on whether it pays students to attend a selective private college is ambiguous, it is quite strong that, other factors held constant, on average the higher the level of educational expenditures per student at an institution, the higher the earnings for graduates. That is why the information that our nation's most selective private colleges (which have the highest expenditures per student) enroll relatively few students from lower-income families (as measured by the share of their students who receive Pell Grants) has received great attention.

The richest private institutions, like Harvard University, have responded by eliminating all loans and no longer requiring parental contributions in their student-aid packages for those from low-income families, strengthening their recruitment efforts, and increasing their support services to ensure that, if admitted, those students will persist through to graduation. Other, less well-endowed private colleges have recently announced that they intend to eliminate (for example, Hamilton College) or reduce (for example, George Washington University) their use of merit aid, or eliminate student loans from aid packages (for example, Davidson College). Those are welcome announcements, but it is too early to tell whether they are harbingers of a new trend.

Roughly two-thirds of all four-year college students and four-fifths of all college students (including community-college students) attend public higher-education institutions. So in a real sense, concern about accessibility should be focused heavily on the public sector.

College Board data indicate that over the last 30 years, the average yearly percentage increases in tuition at public four-year institutions have exceeded those at private colleges. For example, during the decade ending in the fall of 2007, the average tuition at public institutions rose by about four percentage points more than the rate of inflation each year. However, because the public colleges started out with much lower tuition levels than the private colleges did, the absolute dollar increases in tuition have continued to be larger each year at the private institutions than at the public ones. For example, the College Board reports that the average dollar change in tuition at public four-year institutions in 2006-7 was $344, while the comparable dollar change at private four-year institutions was $1,238. The attention paid to higher percentage rates of tuition at the publics has obscured the fact that the absolute dollar differences in the cost of attendance between the private and the public institutions continue to rise.

In addition to the factors influencing tuition increases in private higher education, tuition increases in public higher education during the last 30 years have been driven largely by the failure of state support per student to grow much in real terms during the period. Indeed, real state support per student was about the same at the end of the period fiscal-year 1980 through 2006 as at the start. Pressure on states to reduce state taxes and to raise expenditures in other areas (most noticeably elementary and secondary education, Medicaid, and the criminal-justice system), as well as the tremendous expansion in the number of students attending public higher-education institutions (a 50-percent increase between 1974 and 2004), all have limited the ability of state governments to increase per-student financing of higher education. With one revenue stream (state appropriation per student) constant in real terms and the other revenue stream (tuition) increasing in dollar terms each year by far less than the increase in tuition at private institutions, it should come as no surprise that expenditures per student in public higher education have fallen relative to expenditures per student in private higher education.

That has led to a substantial decline in the salaries of faculty members at public colleges relative to the salaries of their private-college counterparts, which has made it increasingly difficult for the public institutions to attract and retain top faculty members. It has also led to a growth in the share of part-time or full-time non-tenure-track faculty members at public institutions. That has also occurred in private higher education, but at a somewhat slower rate. Sadly, as economists know, there is no such thing as a free lunch. Research shows that, when other factors are held constant, lower levels of expenditure per student and increased use of "contingent faculty" are both associated with lower graduation rates.

Educational expenditures per student vary widely across types of public higher-education institutions; on average they are larger at flagship institutions whose highest offering is the doctorate than at master's-level institutions, and larger at master's-level institutions than at community colleges. Conversely, on average, the proportion of students who are Pell Grant recipients is larger at community colleges than at the master's-level institutions and larger at the master's-level institutions than at the doctorate-granting institutions. So students from lower-income families are more likely to attend the public institutions with lower than those with higher financing. Given that, as mentioned, expenditures per student have some impact upon the earnings gain that students receive from attending college, the gain students will receive from attending public higher education, on average, will be inversely correlated with their family income levels. Many states and their flagship institutions understand that inequity, and a number of our nation's major public universities have established programs to increase the access and graduation rate of students from lower-income families and other underrepresented groups. Those include, for example, AccessUVa in Virginia, the Carolina Covenant at the University of North Carolina at Chapel Hill, and the Longhorn Opportunity Scholarship Program at the University of Texas at Austin.

The financial constraints faced by state governments are unlikely to go away in the years ahead, and as a result pressures are mounting to allow the privatization of public higher education -- among other things, privatization means permitting public colleges more freedom to substantially raise tuition to obtain the resources they need to maintain their quality and better compete with private colleges. Such freedom is most likely to produce desired outcomes at the public flagships: Demand for admission to them is sufficiently high that they can substantially raise tuition without losing enrollments, while their considerable rates of annual giving and income from their endowments will allow them to provide financial aid to guarantee lower-income students access. The public comprehensive and community colleges are less likely to have the resources to do that, and it is reasonable to fear that privatizing them will very likely price some students, primarily those from lower-income families, out of college.

Given this picture, how can the United States meet its social objective and bridge the divide in access to higher education? Among public colleges, the percentage of first-time freshman students who enroll at community colleges has been increasing over time; in the fall of 2004, approximately 38 percent of such students attended community colleges. While not all community college-students aspire to a bachelor's degree, facilitating the transition of students from community colleges to four-year colleges is important -- especially if a goal is to increase college-completion rates for currently underserved populations.

Florida helps to achieve that with a common course-numbering system across community and four-year colleges, which permits students to easily transfer credits. Both the Senate and the House of Delegates in Virginia have passed legislation that would allow community-college graduates in certain fields to continue to pay lower community-college tuition levels if they transferred to the University of Virginia or another four-year institution in the state; the two bodies are now trying to reach agreement on how the program would operate. The lower tuition would reduce the financial barriers for needy students at the state's flagship institutions. Finally, the Jack Kent Cooke Foundation has begun working with a number of our nation's most selective private and public colleges to help them develop programs to expand their enrollment of graduates of community colleges.

A number of states also have programs that offer scholarships or loan-forgiveness programs to public- and private-college students who remain in the state after graduation and work in fields that the state judges to be socially important -- for example, nursing, teaching, and social work. In the public sector, to the extent that tuition rises rapidly and students more and more take on large loan burdens to finance college, such programs are likely to play an increasingly important role in attracting high-quality students into majors that lead to relatively low-paying jobs. In the private sector, with even higher levels of tuition and student-loan burdens, the programs often are not generous enough to attract students to socially important work. Just as our nation's most-selective private law schools have developed programs for graduates who work for a number of years in public-interest law, private higher-education institutions might consider developing similar programs at the undergraduate level for students who enter other socially important, but low-paying, occupations.

Finally, if increasing the enrollment and persistence of students from lower-income families is a serious public-policy goal, federal and state financing of higher-education institutions must reflect it. For example, New York State's Bundy Aid program provides grants to private colleges in the state for each state resident they graduate. The program provides an incentive for private colleges to enroll transfer students from the state's community colleges, and many aggressively recruit to do so. State and federal programs could follow that model of incentives and provide money to public and private colleges for each Pell Grant recipient they graduate.

As we evaluate proposals being offered in Congress, the states, and the think tanks, we must weigh them in light of the factors that have created the higher-education system we have today, and the goals for where we hope to be tomorrow.

Ronald G. Ehrenberg is director of the Cornell Higher Education Research Institute.