University Business - April 2012 - (Page 56)

Ticket to College EN D N OT E By Michael A. MacDowell students the same subsidy regardless of their ability to pay. Taxpayer dollars may be used to subsidize wealthy families that could pay for a majority, if not all, of their children’s tuition. a key factor in driving college costs is the time it takes to graduate. current financial aid systems give little or no incentive for colleges for on-time graduation. Less than 40 percent of incoming freshmen who matriculated to U.s. colleges last september will graduate in four years. Poor advising, inefficient class scheduling, and a lack of incentives to finish on time have elongated the time it takes to graduate. This phenomenon has been most pronounced at large, state institutions. You wouldn’t buy an airline ticket that assures you a less than 40 percent chance of getting to your destination on time, would you? The president’s plan for higher education does contain incentives for states and institutions that graduate more students on time, particularly those with lower family incomes. his plan addresses some of these issues. colleges, particularly private ones, are granting aid to students who are unable to pay— which, in essence, discounts tuition. These efforts are somewhat stymied by policies that distribute scarce dollars to families regardless of need and to institutions that don’t graduate students on time. Until these issues are addressed, tuition will continue to rise. funds available for college should be given directly to students, not to colleges or universities, and be based on need. federal and state support, whether it’s through direct grants or low-interest loans, should also be partially based on the on-time graduation rates of institutions. Only then will higher education be accessible and affordable for all. Michael A. MacDowell is president of Misericordia University in Dallas, Pa. He serves on the Pennsylvania Higher Education Advisory Panel, which studies higher ed accessibility and affordability. universitybusiness.com Making higher education accessible and affordable for all T here are few insTances more annoying than finding that the person seated next to you on an airplane paid half the fare you did for the same ticket. airlines have sophisticated programs for optimizing ticket income. They can fill the planes and extract the highest possible price from each person. The policy is reasonable because every empty seat is lost revenue. so, airlines do what they can to sell every seat, even if tickets are priced disproportionately. some of the same thinking has gone into President Obama’s plan for college tuition. he wants to fill classroom seats for the right reason: give more people the benefit of a college education. his plan would increase funding for Perkins federal loans, but would take money from colleges that fail to inhibit future price increases regardless of past track records in controlling costs. The plan will, rightfully, focus on outcomes, such as degree-completion time, and try to force tuition prices to lower levels. however, it’s all based on a college pricing system that’s more complex than that captured in the president’s proposal. colleges have fixed costs. as airlines must pay for planes, fuel, and a myriad of employees, colleges must pay faculty and staff, and maintain and add facilities. Like airlines, colleges have various income sources—tuition, room and board, fees, and donations. stateowned institutions have taxpayer subsidies. Unlike airlines, colleges try to allocate classroom seats on the basis of price as well as a student’s academic proclivity and ability to pay. no airline would sell tickets based on a family’s income, but that’s exactly what colleges do with tuition. families otherwise unable to pay for college can get federal and state student aid and also financial aid from the college. Private colleges offer aid that far exceeds the total of federal and state aid combined. Last year, Pennsylvania’s private colleges offered more than $1.4 billion in aid. No airline would sell tickets based on a family’s income, but that’s what colleges do with tuition. college aid differs for each student, depending on financial circumstances and academic ability. One student receiving the same curricular, co-curricular, and extracurricular benefits of college may pay less than another who, because of higher family income, doesn’t receive the same amount of aid. all private colleges and some public ones use gifts and endowments to help cover the cost of aid. however, for most schools, the majority of financial aid comes from the reallocation of funds from families with greater financial resources to those with fewer. This places colleges in an awkward position. The cost of a college education certainly has risen faster than the consumer price index, but much of the increase reflects the growing need to take some tuition revenue from those who can pay more and give it to those who cannot. This practice has been particularly hard on private colleges. Tuition is higher because they receive little or no direct taxpayer subsidies. also, state-owned universities give 56 | April 2012 http://www.universitybusiness.com

Table of Contents for the Digital Edition of University Business - April 2012

University Business - April 2012
Editor’s Note
College Index
Ad Index
Behind the News
Financial Aid
Viewpoint
Independent Outlook
Models of Efficiency
Guns on Campus
Campus Finance
Internet Technology
End Note
Contents

University Business - April 2012

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