Tuesday, July 16, 2013

Valuing a Liberal Education -- part II Tuition costs

One of the big questions from the audience for Jacobsen was fast-rising tuition costs.  He addressed them as follows:


Jacobsen asked the crowd about tuition bills when they attended – old-timers cited $73.50 to $147.50 per semester.  In 1990, it was still less than $1000 per semester, at $920, while for 2012-13, it was $6,609 per semester.  The change, he averred, is due to voters and the Sacramento legislature deciding that students, not taxpayers, should foot the bill for their education.  He blamed an unintended consequence of the federal Pell Grants that started in the 1970s.  Education costs across the nation were ramping steeply; Pell Grants were initiated for lower income families at up to $3000 per year, based on average Ivy League university costs.
Voilá!  When public universities discovered that money was being left on the table, they boosted their charges that could be covered by such grants. Today forty to seventy percent of Pell Grants are used at For-Profit colleges, that graduate a mere six percent of US college graduates –Jacobsen gratuitously skipped that sordid little detail, a second unintended consequence.
The impact of this Pell Grant funding shift was to alter the charter of the university, which had been to educate the state’s youth and train future faculty members, as well as make key contributions to the economic and social well-being of the local community, the state of California, and the nation. The state legislature for years funded the university and its mission, in the process providing virtually free tuition for students as well as funded research for community topics.  The Sacramento allotment today only covers about 7% of the $2.6 billion Berkeley expense budget, down from 47% two decades ago.  Raised tuition fees for students cover half the gap.  Diminished research on community issues, seldom missed if not done, is the other casualty.
This seven-fold tuition hike in two decades is the source of much student and parent agitation; never mind that annual Stanford, Harvard, or MIT tuitions are $41,250, $37,576, and $40,732.
Faced with shrinking state government revenue, the universities began coveting students who could pay out-of-state or international student tuition, which at $17,960 per semester is three times as high as in-state student rates (nearly comparable to the great private universities).  As recently as ten years ago, only 4% of Cal students were out-of-state; today he said that number is 10%, heading to a goal of 20%, while total enrollment is capped.  This shift in tuition mix has already added 10% more revenue; getting to 20% ‘foreign students’ will yield 17% more. [1] 
The argument presented by Jacobsen, however, was considerably different – he opined that grads will be entering a global ‘marketplace’ and thus awareness and comfort with multiple cultures is an imperative need for a comprehensive education.  Building a student mix with 20% from elsewhere serves this educational need, he asserted.  Checking the Cal website later showed that two-thirds of today’s students have one or more foreign-born parents – hummn.
The tuition discussion allowed Jacobsen to address the question about whether a parent could ‘buy a slot for their student’ by paying the out-of-state tuition.  He said that they’ve studied this greatly, and concluded that it would have the effect of lowering the overall student average – in fact, he said that the out-of-state enrollees are far more qualified than in-state admissions, which means that if a parent’s child couldn’t ‘make the cut’, adding them via a high tuition charge would clearly dilute the overall average of the incoming student group.  


[1] Actually, Jacobsen fudged quite a bit on this set of statistics.  The autumn 2012 class for Berkeley was 70% CA Residents; 17% Out of State, and 13% International.  Compared to a decade ago, the increased tuition percentage with this mix is 48%, quite heady.  It also means that a steady-state run-rate would cap Cal in-state enrollment to 17,500 students vs. 24,000 a decade ago.


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