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 It was a difficult decision, prompted by the financial fallout
of the COVID-19 pandemic, and there were dissenting views among senior
university officials. CU Regent Heidi Ganahl, for example, called the tuition
hike “a step in the wrong direction right now, especially during a pandemic,”
according to Colorado Public Radio.
To be sure, the national trend across the higher education
sector has been keeping tuition increases lower than usual in the wake of
COVID-19. Last fall, for example, College Board reported “historically low
increases in average published tuition and fees … among the lowest we've seen
since 1990-91.”
Clearly, universities and colleges are worried about sticker shock, and how it
could scare off potential students in tough economic times. But with respect,
this is just a band-aid solution for a much deeper, long-standing problem.
For more than a decade, colleges and universities have been scaring away
students in droves, thanks to a broken pricing system in the higher education
sector. Until it’s fixed, I doubt things will improve much for students,
families, educators or university administrators.
It wasn’t always this way. For roughly 40 years, from 1970 to 2010, students and
families in the U.S. saw a college education as a great investment in their
future prosperity. Even after 1980, when tuition and fees started to climb,
college enrollment continued to increase. According to the federal government’s
National Center for Education Statistics, enrollment jumped from 12 million in
1980 to 21 million in 2010.
But as the nation came out of the Great Recession of 2007-2009, things suddenly
changed. From 2010 to 2019, overall enrollment fell from 21 million to 19.6
million – a decline of more than 6.5%.
And yet, average published prices for tuition and fees continued to climb. The
increase over that same decade was $11,140 to $13,360 in inflation-adjusted
dollars – a jump of 20%. Importantly, these numbers don’t include other
expenses, such as room and board. How did it make sense for
universities and colleges to keep increasing prices while enrollment was
falling? Well, as sticker prices increased, universities and colleges quietly
offered more discounts on tuition and fees during the admissions process to
entice students to commit.
For example: According to the National Association of College and University
Business Officers (NACUBO), more than four out of every five undergraduate
students attending private non-profit colleges now receive major discounts from
the sticker price in the form of institutional aid.
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The average tuition discount is now 48.1%, compared
to 38.6% back in the 2011-2012 academic year, “continuing a long
upward march in discount rates that only accelerated during the
COVID-19 pandemic,” NACUBO announced in May 2021.
But even with these bigger discounts, NACUBO says about 80% of the
colleges and universities surveyed still expect falling enrollments
to continue as the nation emerges from the pandemic.
This could make the post-COVID outlook for higher education in the
2020s considerably worse than the post-Great Recession 2010s. Even
before the pandemic, many U.S. households faced stagnant or falling
incomes. The pandemic has only accelerated that trend, meaning even
more students and families are likely to question whether they can
afford to invest in a college education.
In this environment, does it really make sense to keep increasing
sticker prices, even if those increases are quietly offset by
discounts as students move through the admissions process? How many
students and families will make it past the sticker shock to apply
for a college that, on the surface, looks completely beyond their
financial reach? Under this system, I fear that too
many willing students and too many willing universities will never
find each other, based on bad information about the actual price of
obtaining a college degree.
That isn’t just terrible news for students and universities. It
could be terrible for all of us, because if we want a faster
recovery from the COVID-19 recession and stronger economic growth
over the long haul, our country needs as many highly skilled and
highly educated workers as we can find. Colleges and universities
aren’t the only option, of course, but they play a critical role in
developing our workforce and helping individuals climb the economic
ladder.
There are no magic wands in economics or public policy. But it’s
hard to argue against simpler, more transparent pricing for colleges
and universities.
It may be one of the ways to build a stronger, more skilled, and
more prosperous workforce coming out of the COVID-19 pandemic. And
at the same time, it could also help the higher education sector
bounce back from the pandemic and a decade-long trend of falling
enrollment.
Simon Lomax is a researcher and adviser to
free-enterprise groups and business coalitions in energy, health
care, education, housing and other economic sectors. He is a former
Bloomberg News reporter and a former congressional fellow with the
American Political Science Association. The views expressed are his
own. |
