Rising college costs

October 22, 1998|By Daniel S. Greenberg

Washington -- Now that hedge-fund wizardry has been exposed as merely reckless betting with gargantuan quantities of other people's money, the scepter for financial magic must pass from the tycoons of Wall Street.

Most deserving of this honor, in a packed field, is an accomplished though under-recognized class: major-league university presidents. Their pay scales appear lofty, generally $300,000 to $400,000, plus benefits, according to the Chronicle of Higher Education. But most emphatically, their pay should not shock. High as it is by proletarian standards, the remuneration of academic presidents comes nowhere near the multi-million rewards in the top spots of industry, finance, sports and entertainment. Compared with them, the chieftains of academe are at the minimum wage, with not a stock option or product endorsement in sight.

This injustice defies understanding, for in our marketplace economy, university leaders, with the aid of trustees and academic managers, have achieved the impossible: The creation of financial perpetual motion machines that better the best of Wall Street's money-spinning schemes.

Lucrative business

It works like this: Tuition, financed by government -- guaranteed loans and grants for students -- provides a bountiful supply of money for academic treasuries. Tuition can keep going up, because the volume of available grants and loans keeps going up.

The record shows that, no matter what the price, a surfeit of applicants will seek entry to the brand-name schools, where current annual charges are now $20,000 and up, topped by Harvard, at $31,132 for fees, room and board.

Financial assistance is available to provide "need blind" admission for the super-students that universities covet, but often it includes even more loans, plus part-time jobs.

A recent study by the General Accounting Office found that between academic years 1980-1981 and 1994-1995, the average tuition for a resident undergraduate rose by 234 percent, while the cost of living went up 74 percent and median household income rose 82 percent.

This year, the cost of going to college went up 4 percent, though inflation was a negligible 1.6 percent. At the same time, the volume of federal student grants and loans is rising this year by 6 percent, to a total of $60 billion.

The availability of this money is to be applauded because without it, thousands of students would not be able to attend college. But even with loans and other assistance, families are heavily burdened by the costs of higher education. And, with the mix of federal assistance shifting from outright grants to repayable loans, many more students are coming out of college heavily in debt for beginners in the job market.

Universities insist that tuition rises to make up for reductions in state and federal assistance, to keep pace with competition for faculty and to buy expensive laboratory equipment. But the loan and tuition combination creates a brand of economics out of Alice's Wonderland. According to a study cited by the General Accounting Office, "schools with larger tuition increases may increase spending more because they have more income and because they may need to increase instructional expenditures more to maintain adequate enrollment."

Talk of frugality to hold down tuition increases is plentiful on the academic circuit. But this year's average tuition increase -- more than double the rise in the cost of living -- is simply more of the same, after years of hand wringing. The Chronicle of Higher Education reports that at Brown University, tuition and fees for freshmen have now ascended to $24,332, an increase of 4.5 percent over last year. The positive news is that the increase is the smallest in 30 years.

E. Gordon Gee, the president of Brown, has confronted the problem with candor, declaring: "We have not been as conscientious about cost containment over the past few years as we should have been, and I'm the first to admit that."

Why bother, when the customers keep coming?

Daniel S. Greenberg is a visiting scholar in the history of science, medicine and technology at Johns Hopkins University, where he is writing a book on post-Cold War science and politics.

Pub Date: 10/22/98

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