Making College Affordable 597C Platform Skills April 6, 2010 Sung Youn Kwon firstname.lastname@example.org
Purpose Making College AffordableTuition rise beyond Tuition rise within inflation inflation1. Mandate a limit on tuition raise2. Mandate 1 as a required qualification for federal aids At the Level of Federal Government
ContentI. BackgroundII. Cause and EffectIII. Recent PoliciesIV. ProposalV. Strategy for Implementation
“College tuition is up sharply amid recession”In 2009, tuition rise in public college 6.5%, private 4.4%, consumer prices -2.1% Sources : http://www.collegeboard.com/press/releases/208962.html
Cumulative Percentage Increases from 1990-1 to 2006-7140%120%100% Tuition and Fees80% Consumer Prices60%40% Median Household Income20% 0% 1990-91 1995-96 2000-01 2006-7 Sources: Tuition and fees are from the Department of Education, consumer price index from the Bureau of Labor Statistics, median household incomes are from the U.S. Census Bureau.
Student Aid and Loans from 1998-9 to 2008-990,00080,00070,00060,000 Federal Loan50,00040,000 Federal Grant30,000 Nonfederal Loan20,00010,000 - 98-9 00-01 02-03 04-05 06-07 08-09 Sources: College Board, Trends in Student Aid 2009
What is the Major Cause?Decline of StateAppropriation
What is the Major Cause?Growth in Staff For recent 2 decades, support staff doubled - Student enrollment increased 40% Sources: Center for College Affordability and Productivity, 1987 to 2007Constructions Buildings, library, convention center, gym…. - “Gym is a top priority for parents and prospective students” Sources: The New York Times, April 21, 2009, Freakonomics
What is the True & Major Cause?Pursuit of High Ranking Pursuit of “slack money” Pursuit of high ranking in the US News & World Report (the “gold standard”) - Reputation 25%, Faculty resources 20% (Faculty compensation 35%) - Student selectivity 15%, Financial resourses 10% More money, Higher ranking
“Virtuous circle” – Martin Trow (1984) Higher Compensation High Distinguished compensation Faculty Higher ReputationHigher FinancialResources More Higher Money Ranking Higher More Student Selectivity Students
What is the Effect?Power Shift Market Characteristic - Oligopoly, supply leads demand - Higher competition, higher price High-tuition/High-aid Policy - High tuition does not guarantee high aid Power shifts from consumer to enterprise
College Affordability “Financial Barriers will prevent at least 4.4 million high school graduates from attending four-year public colleges over the next decade, and prevent another two million high school graduates from attending any colleges at all.” (The Congressional Advisory Committee on Student Financial Assistance, 2006)
College Affordability “By 2020, United States once again will have the highest proportion of higher education graduates in the world.” (Obama, 2009)
Who Should Pay?
Recent Policies (Federal)The Higher Education Opportunity Act 0f 2008 Pressure to high tuition by making the list public - Colleges of highest 5% & lowest 10% tuitions & fees (exemption : increase is less than $600 for 3 years) Obligation to disclose for federal funding - tuition and fees for recent 3 years - annual % , $ change for recent 3 years Incentive grants - lowest 20% of annual increase, lowest quartile (public), less than $600
ProposalPut a limit on Tuition IncreaseIn the Higher Education Opportunity Act Do not increase tuition beyond average inflation rate of recent 3 years If not, the college will be disqualified for all federal funds for following 5 years - Exemption : increase less than $600 or tuition less than $6,000 * 24% students attending in 4-year colleges with below $6,000 a year (Sources : College Board, 2009)
Comparison with Current Act Higher Education Opportunity Act Proposal No limit on tuition increase Limit on tuition increase for federal aid for federal aid• Highest 5% and lowest 10% list of tuition & fees All college information• 3 years’ tuition & fees of on tuition & fees in 10 years all participators in Title IV•Highest 5% of tuition increase list in 3 years (%) All college information• 3 years’ tuition increase of on tuition increase in 10 years (%, $) all participators in Title IV (%, $)Incentive grant to lowest 20%, + Penalty to colleges not meet thelowest quartile of public college, less limit : can not apply for federal aid &than $600 in annual increase fund program for 5 years
Howard P.Mckeon’s ProposalHoward P. (Buck) Mckeon’s Proposal Original (Mar., 2003) : colleges increasing tuition by twice (or more) the rate of inflation for two years will lose eligibility for all federal student-aid programs immediately Revised (Oct., 2003) : “alert system” of 3 steps before losing eligibility for campus-based federal aid programs Dropped (Mar., 2004) : “I’m delighted to send a strong message to colleges”
Howard P.Mckeon’s ProposalFactors of His Fail (The Chronicle, 2004) Succumbed to the lobbying from colleges and universities Failed to build political support even from some Republicans. Bush administration did not back the bill Did you know about the Mckeon’s proposal?
Strategy for Implementation President Obama’s Determination People’s Colleges & Universities’Awareness & Support Agreement
Why the Federal Government ? Total Funds Used to Finance Postsecondary Education private and nonfederal loans employer grants 6% 7%institutional grants total 17% federal aids (grants, loans & work- study, tax benefits) 65% state grants 5% Sources: College Board, Trends in Student Aid 2009