The document discusses proposals to limit rising college tuition costs. It proposes mandating that tuition increases be limited to the rate of inflation or colleges would lose eligibility for federal aid. Specifically, it proposes: 1) Putting a limit on annual tuition increases so they do not exceed the average inflation rate of the past 3 years. 2) If colleges increase tuition beyond this limit, they would be disqualified from receiving all federal funds for the next 5 years, with exemptions for increases under $600 or for colleges with tuition under $6,000. 3) This proposal aims to make college more affordable by curbing tuition growth and shifting power back from colleges to students/consumers. It could impact

1. Making College Affordable
597C Platform Skills
April 6, 2010
Sung Youn Kwon
suk225@psu.edu

2. Purpose
Making College Affordable
Tuition rise beyond Tuition rise within
inflation inflation
1. Mandate a limit on tuition raise
2. Mandate 1 as a required qualification for federal aids
At the Level of Federal Government

3. Content
I. Background
II. Cause and Effect
III. Recent Policies
IV. Proposal
V. Strategy for Implementation

4. “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

5. Cumulative Percentage Increases
from 1990-1 to 2006-7
140%
120%
100%
Tuition and Fees
80%
Consumer Prices
60%
40% Median Household
Income
20%
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.

6. Student Aid and Loans
from 1998-9 to 2008-9
90,000
80,000
70,000
60,000
Federal Loan
50,000
40,000 Federal Grant
30,000 Nonfederal Loan
20,000
10,000
-
98-9 00-01 02-03 04-05 06-07 08-09
Sources: College Board, Trends in Student Aid 2009

7. Why?

8. What is the Major Cause?
Decline of State
Appropriation

9. 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 2007
Constructions
 Buildings, library, convention center, gym….
- “Gym is a top priority for parents and prospective students”
Sources: The New York Times, April 21, 2009, Freakonomics

10. 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

11. “Virtuous circle” – Martin Trow (1984)
Higher
Compensation High Distinguished
compensation Faculty
Higher Reputation
Higher Financial
Resources
More Higher
Money Ranking
Higher More
Student Selectivity
Students

12. 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

13. 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)

14. College Affordability
 “By 2020, United States once again will have the
highest proportion of higher education graduates
in the world.”
(Obama, 2009)

15. Who Should Pay?

16. 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

17. Proposal
Put a limit on Tuition Increase
In 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)

18. 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 the
lowest quartile of public college, less limit : can not apply for federal aid &
than $600 in annual increase fund program for 5 years

19. Howard P.Mckeon’s Proposal
Howard 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”

20. Howard P.Mckeon’s Proposal
Factors 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?

21. Strategy for Implementation
President Obama’s
Determination
People’s Colleges & Universities’
Awareness & Support Agreement

22. 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

23. Thank you !