On The Public Good And Orders-Of-Magnitude Conundrum In US Higher Education

Public colleges and universities, once supported at far greater levels by their states, often have been called an essential public good. Indeed, they were established for just that purpose, to provide a higher education that was geographically accessible, practical, and affordable. As these institutions grew, they became inextricably linked with their communities, attracting people, businesses, opportunities, and resources. Once deemed affordable options to more expensive and more selective private universities, many had become highly competitive academically and offered different and greater opportunities to students than their private counterparts. Despite growth in mission, scope, and scale, public universities remained far more affordable for residents of the state, and in many cases for students from other states as well.

In each of the last few generations, however, we have seen a dramatic shift in both costs and state support for public higher education. This topic invariably comes up each year around the holiday dinner table at which several generations of my family are present. Very round numbers make the point. All in, today’s costs can approach $100K per year to attend an elite private college or university, forty years ago they were about $10K per year, and thirty years before that, my father reminds us, he paid thirty-nine dollars per semester at the University of California Berkeley, arguably one of the top public research universities – then and now – in the nation. Even with room and board, books and supplies, he likely paid less than $1K per year.

Admittedly, I am rounding, generalizing, and glossing over several real and important points that both differentiate costs across types of institution and obscure the financial assistance nearly every college and university endeavors to provide. But it makes the point clearly and simply: $100K was once $10K was once $1K. Two orders-of-magnitude in three generations.

Are these the “real costs” paid by students and their families? Three generations ago, the answer was yes. Today, the answer is sometimes, but increasingly no. What students and their families pay reflects reductions in total (published) costs that reflects financial assistance from the institution (both need and merit based aid), scholarships, and loans. The result is something euphemistically referred to as a discount rate, the effective or average discount from the published cost of attendance. Discount rates are published each year for private colleges and universities. Public universities, however, do not share this information in general. Why? Perhaps at one time this was to protect details about their finances, how they are using public funds, or even the degree to which they are being supported by their state, all in order to stay competitive with other universities and states competing for the same students. It’s also complicated by the fact that public universities have two different published tuitions, one for in-state and the other for out-of-state students. The financial aid strategies, available scholarships, and state requirements for percentage of students that must come from with the state may differ. And, therefore, the effective discount rate for these two different populations of students may be quite different.

The notion of a discount rate (and even the term itself) has been widely criticized. This is not, after all, a price markdown or a fire sale. And even in its efforts to provide transparency into “real cost,” it can obscure and even confuse students and families (and alumni and donors). It can also suggest some element of “gamesmanship” at work, and the possibility of differential practices that are not well or easily understood by the broader public. The best of intentions, perhaps, but enrollment management is a complex, competitive, and ever-changing environment.

Still, there would seem to be little justification in today’s climate for any obfuscation or failure to report true costs to students and families. This is especially true as some public universities now have out-of-state tuitions that are approaching those of private institutions. Both public and private universities are increasingly reliant on scholarships to reduce cost to students and families, are seeing an ever-increasing role for philanthropy to provide those scholarships and cover their own operating costs. And both public and private universities have articulated, promoted, advertised, and celebrated their goals and institutional commitments to affordability.

So how did this ‘two orders-of-magnitude in three generations’ happen? There are two competing and contributing forces.

First, states have dramatically pulled back from funding (never fully, but once very significantly) the cost of public higher education. Was my father really paying less than one hundred dollars a year at UC Berkeley in the 1950s? Yes, and the reason was that the State of California was underwriting a large portion of that education. What once was “nearly all” tuition costs (except perhaps some fees), became 70%, then 50%, then less than 30%. At some public universities, state support has dropped below 10%. Quietly, and slowly, states stopped supporting public higher education, shifting the financial burden to students and families, threatening to move the cost of a higher education further and further out of reach for more and more families. But universities stepped in and stepped up, seeking greater efficiencies, and raising philanthropic funds to offset costs. Scholarships grew in number and size. The gap between published and real cost of attendance grew. In other words, public universities redoubled their efforts and their commitments to access and affordability.

And second, the costs of delivering a higher education at colleges and universities have increased substantially. But not for the reasons most assume or assert (e.g., administrative bloat, operational inefficiencies). Energy costs soared, benefits costs increased, and deferred maintenance on aging campus facilities required greater and greater year-over-year investments. Add to that myriad new oversight and compliance costs, growth in mental health and other services, much more sophisticated and robust (with commensurate staffing) advising operations and career centers, and what had become expected amenities never envisioned as part of a university education but now part of the evermore competitive landscape, e.g., fitness and recreation facilities, dining and residence hall options.

In other words, the states got out of the business of supporting higher education at the same time the cost of delivering that education was increasing. All of this has contributed to perceptions and assertions about the diminished value/importance/relevance of higher education today, fueled criticisms from both the public and private sectors, and led to the emergence of new types of institutions and alternative degree pathways. There is merit to the latter, of course, as it seems inevitable that options evolve to meet changing needs, provide greater flexibility, and reach broader audiences at different points in their lives than traditional colleges and universities can provide, even as they struggle mightily and with the best of intentions to do. The fact is, new modalities are necessary, not to supplant or replace but to augment and extend what campus-based colleges and universities are able to deliver.

Place-based, traditional higher education institutions are not going away. Nor should they. Our nation’s colleges and universities will continue to adapt and evolve, with emphasis on accessibility and affordability, while continuing to provide academic degree programs, student experiences, and research environments that are recognized as the best in the world.

A good argument can be made that it’s time for public universities to report their effective discount rates, too, even if it means acknowledging differences in these rates for in-state vs. out-of-state students. Just like their private counterparts and competitors, public colleges and universities should promote and celebrate their ability to make their education more accessible and more affordable. They should provide the kind of transparent information students and families deserve (and need) to make one of the biggest investments they will make. And they should hold themselves publicly accountable for continuing to drive down the effective cost of education for future generations, just as our private universities are doing by reporting this information annually. Public accountability is a key element of being a public good. Whether public or private, colleges and universities must continue to strive to be, and communicate that they are, a public good.

For our nation’s higher educational institutions, being a public good – being both regarded and respected as such, being both supported and counted upon as such – has never been a more important nor more urgently needed. This is especially true in today’s political and social climate. We cannot afford another order-of-magnitude increase in cost, drop in the number of those choosing (or able) to pursue a degree, or decrease in the social, cultural, or technological relevance of higher education for the next generation. Our great colleges and universities must remain just that. Great. And best in the world.

Being a public good may not be enough, they should strive to become a public great.