Pulling Up the Higher-Ed Ladder: Myth and Reality in the Crisis of College Affordability

Source: Robert Hiltonsmith, Dēmos, May 2015

From the summary:
In today’s competitive economy, nothing is more important than getting a college education. Yet college tuition costs in the U.S. have been increasing at a breakneck pace, making college unaffordable for millions of Americans. In the last decade alone, the average tuition at public 4-year universities has risen by nearly $3,000. There is a broad consensus that out-of-control tuition is a serious problem for the nation, making it much more difficult for young people, particularly those from low-income families and communities of color, to complete a college degree. However, there is no such agreement on why tuition is increasing. Experts have blamed rising tuition on everything from administrative bloat, to increased availability of grants and loans, to campus construction booms. Demos and others, in contrast, have focused on declining state funding as the culprit, as we demonstrate in our Great Cost Shift series. Although academics and media alike have tried to put the question to rest, public confusion on this issue is one reason why effective solutions remain illusory in almost every state.

This brief attempts to pinpoint the cause(s) of spiraling tuition by taking a deep dive into public university revenue and spending data from the National Center for Education Statistics’ Delta Cost Project Database. In the brief, we split public 4-year universities into two categories: research institutions—schools that have a high level of research activity and award a significant number of doctorates—and master’s and bachelor’s universities—schools that primarily award master’s and/or bachelor’s degrees. Research institutions consistently enrolled about 60 percent of all undergraduates at public 4-year institutions in the decade covered by the brief, while master’s and bachelor’s universities accounted for the remaining 40 percent. We find that declining state appropriations for higher education is indeed the primary driver of rising tuition, responsible for 79 percent of tuition hikes at public research universities between 2001 and 201112 and 78 percent of tuition hikes at public master’s and bachelor’s universities over the same decade. Increased spending on administration accounts for another 6 percent and 5 percent, respectively, at the two categories of institutions, and increased grant and loan aid has had a negligible effect, at most. Finally, the purported construction boom’s impact on tuition has been minimal as well, as we estimate spending on construction has accounted for 6 percent of tuition increases at both research and master’s/bachelor’s universities.