APRIL 30, 2012

Big Government and the Higher Education Bubble

This past weekend I participated with some middleschoolers in a 30 hour famine to raise money for starving families. As we discussed poverty and debt the leader motioned to me saying, "After you graduate from college you will have to pay off a lot of student loan debt, like Elizabeth and I." I then, somewhat sheepishly, admitted I didn't have any college debt and the leader exclaimed, "What! How?"

Today, the average Pennsylvania college graduate leaves school with a bachelors degree and $28,599 in debt. So how did I get by without a penny of debt?

I went to Grove City College, a western Pennsylvania school featured in Sunday's Pittsburgh Tribune-Review. The four-year private school, which refuses to participate in government aid programs, charges $13,598 in tuition. This compares to the average posted private school tuition of $28,500, and it's less than the in-state tuition at taxpayer-subsidized Penn State.

How do they do it? Grove City refuses to participate in the government-driven higher education bubble that rewards schools for raising their tuition by increasing the amount of federal student aid.

Some may say it is just a coincidence that higher education costs skyrocketed when the government started handing out more grants and loans, but consider this astute point from Daniel Horowitz:

Since the DOE was created, the cost of college tuition has increased over 439% adjusted for inflation! The rate of increase is almost exactly commensurate with the rate of growth of DOE subsidization.

The higher education bubble is just one more example of how big government distorts the market and turns a good thing into an overwhelming burden. Sadly, it will probably get worse before it gets better. Remember that housing bubble that threw us into the grips of the Great Recession? The higher education bubble pales in comparison:

It is no coincidence; whenever you subsidize something you get more of it. In this case, subsidizing college tuition means more universities have a reason to raise tuition.

So what have colleges done with this extra cash? They've spent it on expansive building projects and additional administrative staff while four year graduation rates decline. In contrast, Grove City undertook one major construction project in the four years I was there, while 78 percent of its students graduate in four years.

posted by ELIZABETH STELLE | 01:44 PM | 0 comment

FEBRUARY 16, 2012

Busting the Myth That State Subsidies Prevent College Tuition Rising

Universities consistently blame state budget cuts for rising tuition, but in reality, tuition has risen regardless of state subsidies. Here's my letter exposing this myth in today's Philadelphia Inquirer:

The editorial on cuts to higher education in Gov. Corbett's budget perpetuates the myth that state subsidies prevent tuition hikes ("Corbett again targets colleges," Feb. 8). Taxpayers provided nearly $3.5 billion to Penn State over the last decade, while tuition doubled to $15,250. And subsidies of $1.9 billion did not prevent tuition from doubling at Temple. In fact, tuition rose even in years when the state subsidy increased. Most interesting, though, is that despite state cuts to taxpayer subsidies, Penn State's tuition hike last year was the lowest percentage increase in a decade.

If we truly want to make higher education within reach for families, why not tie state subsidies to tuition caps?

The cost of higher education is clearly out of control, but fanning the flames by distributing large chunks of money to institutions with no strings attached does nothing to lighten the burden on students or their parents.

posted by ELIZABETH STELLE | 00:45 PM | 0 comment

FEBRUARY 10, 2012

It's Not About Tuition, It's About Mo' Money

Over at PA Independent, Stacy Brown has an important story on the ongoing fight over Gov. Corbett's budget proposal.  There, Duquesne University professor Antony Davies, a member of CF's Council of Scholars, makes an important and almost-never-confessed (particularly by those on the "inside" of higher ed) acknowledged statement:  Colleges hike tuition no matter what governors do.  "Cuts like Corbett announced have no bearing on tuition," Prof. Davies says.

As my colleague Elizabeth blogged the other day, the data bear Prof. Davies' point out.  So does last year's experience:  After its now-departed president Graham Spanier hyperbolically proclaimed that President Lincoln was crying about Gov. Corbett's cuts from beyond the grave because they would produce skyrocketing tuition and irreparable harm, Penn State approved...its smallest tuition hike in years.

The more temperate, but similarly inaccurate, claims you're hearing from the higher ed establishment right now (including from at least one member of Gov. Corbett's new advisory panel) are not based in reality, and they're not about students or their families.  If that were truly the concern, these wealthy institutions would have found ways eons ago to keep tuition down—or even decrease it (which is, but should not be, a foreign concept in our innovation-heavy, iPhone world).  This is about preserving the status quo, because cutting college costs would require real change and real courage from those on campus—and because beating legislators up until they cough up more of other people's cash is easier than raising dollars the old-fashioned way, namely by asking people to give you their hard-earned money voluntarily.  (Take it from one who does the latter regularly!)  No, this is about one thing and one thing only.  To quote one of the high points of American culture in the 1990s, it's about "mo' money."  As the movie poster said, why settle for less?

(As a reminder, PA Independent began as a project of CF but has been a completely separate entity since January 1, 2011.)

posted by CHARLES MITCHELL | 10:14 AM | 0 comment

FEBRUARY 7, 2012

Budget Cuts Do Not Equal Tuition Hikes

Last year we highlighted waste in public higher education, such as Indiana University of Pennsylvania's golf simulator with 52 different golf courses and Penn State's decision to construct new buildings so they can offer fewer early morning classes. Yet here we are again witnessing an avalanche of criticism over Gov. Corbett's cuts to higher education. The 20 to 30 percent cuts are significant, but reasonable, considering universities' inability to control costs.

Consider the example of Penn State. Special interests screamed bloody murder about the cut to Penn State's taxpayer subsidy last year, proclaiming tuition would skyrocket, but the actual increase ended up being the smallest in years.

Contrary to popular belief, tuition at public universities has ballooned despite taxpayer support. Taxpayers provided nearly $3.5 billion to Penn State over the last decade while tuition doubled to $15,250.

It's understandable to think state subsidies would keep tuition at bay, but it doesn't. Universities hike tuition when state subsidies are scarce and when state appropriations increase. The real driver of tuition hikes is soaring administration costs, not declining state subsidies.

Gov. Corbett recognizes shoving more money at public universities won't stop incessant tuition hikes. His call for a candid conversation on state government's role in higher education is sorely needed.

posted by ELIZABETH STELLE | 06:11 PM | 0 comment

NOVEMBER 23, 2011

The Right Questions for Penn State

Stacy Brown of the Pennsylvania Independent—which, in the interests of full disclosure, CF launched but no longer controls in any way—is asking the right questions this morning in his story on the Penn State University Board of Trustees.  Let me give you three reasons why.

1. A close look at the board must be part of any reasonable path forward for Penn State.  Every single board member who was paying attention could and should have known about the investigation of Jerry Sandusky months ago, even if the administration never said a word, because the Patriot-News here in Harrisburg (no small potatoes there) broke the story in the spring.  If the board did not ask questions and get answers after that, that's a huge deal.  At the end of the day, they—no one else—are responsible for ensuring that Pennsylvania taxpayers' generous investment in Penn State is used well.
   
   
2. Even at this stage, when the charges against Mr. Sandusky remain unproven in a court of law, it is crystal clear that as president and head football coach, Graham Spanier and Joe Paterno did not face meaningful accountability until it was way too late.  Holding the president accountable (and, through him, other senior leaders) is any board's main responsibility.  But that's practically impossible at Penn State given the way the board is constituted.  First of all, it has 32 members.  Have you ever seen a group of 32 accomplish anything?  Secondly, those 32 are themselves accountable to a variety of constituencies.  Some are appointed by the Governor, some are elected by alumni, some are "elected by organized agricultural societies within the Commonwealth," and so on.  That's an unworkable system and other states, such as Virginia, have better ones.
   
   
3. There are already indications that we won't see true reform at Penn State.  The critical one is getting far too little play and it is this:  After initially making the longtime provost, Rodney Erickson, the interim president and promising a national search for a new leader, the board has ditched the search and given Dr. Erickson the job, period.  A far better approach would be the one the University of Colorado took in 2005 following a football-and-sex scandal that cost the president's job, appointing a respected outsider, former U.S. Senator Hank Brown, to oversee a clean sweep.  He did such an effective job that when he retired, the Wall Street Journal called him "the best college president you've never heard of" and (somewhat jokingly) asked him to take the helm of Harvard.  I don't know what Dr. Erickson knew and I don't pretend to, but the CU approach is a much better way to inspire confidence from a shaken state than the same kind of insularity that seems to have created the crisis in the first place.

One final piece of disclosure:  I used to be a full-time employee of, and remain affiliated with, an organization that has many opinions on university governance and that Hank Brown helped to found.

posted by CHARLES MITCHELL | 10:27 AM | 0 comment

NOVEMBER 17, 2011

End Transparency Exemption for Penn State

Penn State officials will soon be under a different kind of investigation—an investigation by taxpayers. In the aftermath of the child sexual abuse scandal, Rep. Eugene DePasquale is introducing a bill requiring full transparency from the state-related university.

Under the current Right-to-Know law, all state-related universities—Penn State, Temple, the University of Pittsburgh and Lincoln—are exempt from standard right-to-know requests. In other words, these universities receive taxpayer funds—over $500 million last year—but are under no obligation to reveal to taxpayers precisely how they spent these funds. The current law requires the universities to post their 990 tax forms, the salaries of officers and directors, and the highest 25 salaries annually, but these general documents provide little insight into universities' enormous spending.  Nor do they give access to information that state agencies and local governments must provide to citizens.

The calls for transparency are not without reason: Obviously, the handling of the Sandusky scandal calls into question the judgment of the university leaders, but this isn't the first case of suspected foul play. Dr. Michael Mann, a meteorology professor at the university, has been accused of manipulating and destroying research to prove his theory on climate change. The university's resulting investigation proved a wash.

And consider the following facts that speak volumes about the university's fiscal management:

• Penn State has reduced early morning classes because they are unpopular with students and some faculty, while the university's strategic plan suggests facilities are being underutilized.
• Penn State increased administrative staff per student by 70.8 percent between 1993 and 2007. The University of Pittsburgh increased administrative staff by 54.7 percent, according to a Goldwater Institute study.
• Taxpayers provided nearly $3.5 billion to Penn State over the last decade while tuition doubled to $15,250.
• At Penn State's main campus, 58 percent of students graduate in four years. This compares with 11-45 percent at its 19 branch campuses, where enrollment has been declining.

It's time to open the books on Penn State.

posted by ELIZABETH STELLE | 10:33 AM | 0 comment

JULY 18, 2011

Penn State's Smallest Tuition Hike in Years

The conventional wisdom ever since March 8, when Gov. Tom Corbett made his budget address, has been very simple:  The sky is falling!  How, exactly?  In the form of crippling tuition increases at our public universities.  Why?  Because the governor and his allies in Harrisburg decided it was time to tighten the budgetary belt, not raise taxes.

The cries that the sky is falling have continued to echo through this past Friday, when Penn State University's board voted to raise in-state tuition for the main campus by 4.9 percent.  The Philadelphia Inquirer, for instance, reported that the university did this while "[c]oping with a nearly 20 percent drop in state funding."  But in so doing, the Inquirer and others missed the real story, which is:  This year's tuition increase was the smallest in years.

In fact, according to numbers pulled by my intrepid colleague Nate Benefield, 4.9 percent is a little over half the average Penn State tuition increase since 2001 (8.4 percent) and the lowest during that period.  The sky didn't fall!

Of course, as we noted over and over, there are many actions Penn State and Pennsylvania's other public universities could have taken to keep tuition the same or even lower it.  But the course of action Penn State  did take makes one thing very clear:  Universities will spend exactly as much money as they think they can.  This year, their estimation of that number went down, and it's about time.

posted by CHARLES MITCHELL | 03:39 PM | 0 comment

JULY 1, 2011

Cut Waste at This Temple, and I Will Praise It in Three Days

Temple University just announced that it is raising tuition by ten percent, blaming the new state budget.  Temple is an outstanding example of an institution that should have spent the months since Gov. Tom Corbett's budget address—when it became apparent that its generous subsidy from the taxpayers of Pennsylvania would likely be cut—fixing its biggest problems rather than lobbying for more of your money.  While Temple's statement brags about reducing its budget by $36 million, that's only about half of last year's proposed $69 million increase, and there's no indication it addressed pesky facts such as the following.

• Less than a third of Temple students earn a diploma in the expected four years, and less than two thirds earn one in six.  Of course, Pennsylvania taxpayers don't get their money back when students don't get degrees on time, or don't get them at all.
• Those students who are fortunate enough to graduate from Temple do so with a boulder of debt chained to their ankles—$29,886 on average.
• Temple allows students to meet requirements with lots of courses that would raise taxpayers' eyebrows.  For instance, Temple students can take "Sport & Leisure in American Society" to learn about their country and a course offering "fresh perspectives, questions, and ideas on current issues from Google searches to the randomness of the iPod shuffle" to strengthen their math skills.  Rather than lots of niche courses like this, a few solid, simple sections of plain old American history and calculus save money.
• According to data supplied by the American Council of Trustees and Alumni, Temple increased its administrative spending by 29.1 percent between the 2003-2004 and 2008-2009 school years—to the tune of nearly $18 million.  To quote from that math course, there's a "current issue" about which Temple students might have a few "questions."

Why does this matter?  Simple.  At Temple and our other public universities, taxpayers are putting up big bucks to pay for many students who don't get the results we expect: a solid education in a reasonable amount of time. Given this, it's not just appropriate that Gov. Corbett and the General Assembly have delivered a wake-up call.  It's their obligation.  I for one salute them for doing so yesterday, and I hope that this time, Temple responds to the wake-up call with dramatic reforms at home, not dramatized lobbying in Harrisburg.

posted by CHARLES MITCHELL | 04:40 PM | 2 comments

JUNE 30, 2011

Are Tuition Hikes Forced by Cuts in State Subsidies?

Today, the Pennsylvania State System of Higher Education (PASSHE) voted to raise tuition by 7.5 percent for 2011-12.  Many have tried to place the blame solely on the reduction in state taxpayer subsidy in the budget.

But there is abundant evidence that the PASSHE did not need to raise tuition in response to cuts in its subsidy from taxpayers. From 2003-04 to 2010-11 state subsidies for PASSHE schools increased 21 percent, yet tuition escalated even faster—28 percent.

Many PASSHE schools dramatically hiked administrative spending in that time frame, including increases of 49 percent at Cal U, 38 percent at East Stroudsburg, 40 percent at IUP, 37 percent at Kutztown, and 42 percent at Millersville since 2003-04.

No, it isn't a lack of tax dollars, but overspending that is driving tuition hikes.

posted by CHARLES MITCHELL, NATHAN BENEFIELD | 05:30 PM | 0 comment