Seeing past the sticker price

Step right up for some higher education about the real cost of college

Stanford University's Martin Anderson proclaims an end to the sharp annual rise in the cost of college and university.

"The terrible crisis has gone away," says the economics professor.

His assertion will raise an eyebrow among parents of college students. Many are struggling to pay tuition and living costs. At the top private schools, these can exceed $30,000 a year.

Nor do all experts on college costs fully agree with Mr. Anderson.

"There has been a slight moderation in tuition increases," says Lawrence Gladieux, policy analysis director at The College Board, a New York body that takes an annual look at college costs.

Anderson, however, was looking at the average net cost of college - after financial aid is deducted from the "sticker price," the listed costs of tuition. There is no quarrel among the experts that college tuition soared in the 1980s and early 1990s. Between 1976 and 1996, the average annual tuition at public universities increased from $642 to $3,151. At private universities, it rose from $2,881 to $15,581.

And at public two-year colleges, the least expensive of the 3,700 not-for-profit higher education institutions in the United States, tuition rose from $245 to $1,245.

Those increases were far faster than inflation and much greater than the rise in family incomes.

Reflecting the alarm of parents, hard-pressed to provide their children the education necessary to achieve at least a middle-class living standard, Congress appointed a National Commission on the Cost of Higher Education.

The 11-member group reported in January 1998. To Anderson, one of the 11 members, the commission's basic conclusion was that the earlier dramatic increases in real college costs had "flattened out and gone away."

At four-year private schools, the commission's measure of affordability - that is the total price minus grants and scholarships - only increased by 4 percent between 1993 and 1996. Total price minus grants plus loans declined slightly, by 7 percent. A similar story applied to public four-year institutions.

Since then, this pattern appears to have been maintained.

Tuition and fees at four-year private institutions were up 4.6 percent last year to $15,380 on average; at their public four-year counterparts, up 3.4 percent to $3,356; and at two-year public institutions, up 4.7 percent to $1,627. These are the smallest price rises in 12 years, the College Board says.

"The increases in college costs have abated," says Gregory Fusco, director of a project on college costs at the National Association of College and University Business Officers.

Nonetheless, he's concerned that many parents and students believe college is unaffordable, despite the grants and loans available to qualified students.

Mr. Gladieux charges that the commission's research on net college costs was "shaky" because of insufficient information from colleges and universities on grants, loans, and other offsetting aid.

Anderson admits that college-cost data provided by the US Department of Education is "indecipherable." The commission, he says, spent $100,000 to massage the data to come up with its relatively cheerful conclusion on costs.

"It's impossible to tell what is really going on," he says. "Colleges don't put out the numbers. Universities are tricky places."

One recommendation of the commission was that colleges be more "transparent" in their statistics on costs and student aid.

The cost picture is complex, given the nation's variety of higher education institutions.

At Stanford, says Anderson, 10 or 15 percent of undergraduates pay almost nothing toward the $33,000 annual costs. Another 30 to 40 percent get some financial aid. The rest pay "full freight."

"There is world-class price discrimination," he says.

Student aid is increasing. It was up 4 percent to $64 billion last academic year. But more of that aid takes the form of loans that must be repaid after graduation, rather than grants. Loans are 58 percent of the total aid.

A new Census Bureau report notes that 5.6 million full-time college students, or 6 in 10, received some form of financial aid in the 1993-94 school year. The average amount was $4,486.

Gladieux is concerned that private colleges increasingly use student aid to attract bright middle-class students rather than help poorer students. Such action shines the academic image of the schools. They are seen as highly selective in picking students, a reputation that attracts even more candidates. So colleges are increasingly granting scholarships on the basis of merit rather than financial need.

Moreover, federal government programs, such as Hope scholarships, are aimed at the middle class. State scholarships often strive to keep the best and brightest students in the state.

"The problem for those at the lower end of the income scale has worsened," Gladieux figures.

Yet William Troutt, chairman of the cost commission, finds that colleges and universities are becoming increasingly sensitive to the issue of accessibility - that is, whether those with moderate income can afford college.

Now the president of Rhodes College in Memphis, Tenn., Mr. Troutt urges colleges to make it easier for students and their parents to see how their tuition dollars are used and to provide more numbers on college costs.

David Warren, president of the National Association of Independent Colleges and Universities, based in Washington, sees a "dramatic upturn" in the attention schools give toward controlling costs. Typical first steps, he says, have been hiring and wage freezes, elimination of the weakest education programs, and energy conservation.

Schools also cut costs by reformulating programs, joining in consortiums with nearby colleges, and outsourcing various functions. For instance, outside firms often are hired to manage bookstores, food services, campus security, building-and-grounds maintenance, back-office duties, and computerization.

Two or more colleges will share library facilities, each specializing in certain areas when acquiring books. They will cross-register courses. Colleges will join together in the purchase of health insurance or computers or expensive laboratory equipment.

Mr. Warren foresees the next stage of cost-saving measures as dealing with the "architecture" of instruction. Faculty will shrink by 25 percent in the next decade as schools adapt video, computers, satellite television, and other new technologies to the educational process, he predicts.

More education will occur at a distance, rather than on campus. But this will depend on the individual character of institutions. Residential colleges will remain committed to the advantages of students mingling closely. Commuter colleges may make more use of distance technologies.

"There is no template here," he says.

(c) Copyright 2000. The Christian Science Publishing Society

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