Kristilyn Webb

November 11, 2014

Writing 2010-091
Courtney, Jennifer

Contribution Paper/Tuition Crisis

Solving the problems related to high tuition costs for higher education institutions are
complex. Each of the solutions presented in this paper to solve increasing tuition costs have
their own risks which seem to not outweigh the benefit of the solution. Some ideas for
possible solutions that have been proposed include: state control of tuition, increased class
sizes, tuition capping, and increased public funding. I submit that there are other solutions
that should be considered.
There is not a magic answer that can single handedly resolve the problem with
increasing tuition, but with collaborative efforts from each sector (the government, the public,
non-profit organizations, universities and boards of appropriations) several successful
solution can be implemented to make tuition affordable on all fronts for prospective students.
Students need to have less student debt burden. Less student loan debt would give students
the opportunity to seek and fulfill higher education goals as well as strengthen the economy.
In lessening student loan debt, that money could be spent in ways that will benefit the public
sector and improve standard of living.
There are many reasons for tuition increases, both of which hold positive as well as
negative consequences. So what are some of these reasons? Have federal regulations
effected increases? What solutions are available to lessen the impact of political causation for
rising costs?
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There has been some effort made by higher education institutions to somewhat relieve
the debt burden on students and families, although not every student or family benefits from
the relief efforts. What are these efforts and who has implemented them? Have funds to
universities been augmented by sources that are under recognized and could more money be
generated for tuition aid through them? Have these programs and changes that have been
implemented had success? Did they benefit the majority of the student body, or were only a
small nucleus of the student body beneficiaries to the implementations?

Reasons for Tuition Increases in Higher Education:

There are many reasons why tuition is raised in higher education institutions.
According to a review done by Edward St. John, three main blames for cost are: how faculty
preferences influence development policies, the quest for program rankings, and prestige
pricing (St. John 2). Although these are individual issues, they fit together in one package
since renowned members of faculty elicit higher salaries as well as drive program rankings,
setting the universities prestige as well as influencing their disciplines within the budget plan.
It is important to note that university prestige challenges pricing as well as student financial
aid. As a result, student debt increases creating a large gap between what student grants will
cover and what student loans will pay for. Using Cornell as an example, in his review, St.
John also brings forward the point that the privatization of higher education institutions is
happening to public universities because of limited state funding and decline of public
funding.
Robert B. Archibald and David H. Feldman point out that in addition to St. Johns
review of reasons, poor management within the higher education system where revenue is not
maximized also affects costs. Another matter of cost deficiencies are government regulations
that create expanded duties for higher education (Archibald 269) which causes tuition

increases. Both parties also argue that university behavior gives an upward tuition trend
consequence. Examples of university behavior are: growing administrative staffing, and
what David J, Weerts calls, institutions lack of commitment to addressing societal needs
(Weerts 134). When an institution fails to address societal needs, public and state funding
decrease and tuition is raised. When funding is cut, there is an increased rate of student
attrition, a reduction in faculty salaries, which in turn results in tightening enrollment (Weerts
133).
Aside from university behavior, there are other reasons why funding on the state level
is cut. Reason 1: the rate of tuition increase has outpaced the rate of inflation. Reason 2: this
hits us close to home here at the University of Utah because major changes in tax structure
and rates from the years 2008-2012 have caused a decline in funding (notwithstanding tuition
increases) of over 30% and has cost universities as well as public schools over a billion
dollars (Campbell 285).
Compacting the problem of tax structure changes and rate changes is the competition
for scarce funding (Weerts 136). A catch 22 cycle has been created with lack of state
appropriated funds, leading to program cuts, which leads to tightening enrollments, which
leads to increased tuition, which leads to decline of public support, which leads to lack of
state funding, which lands right back to the heart of the issue of increased tuition.
Other reasons for tuition increases include: increased availability of federal financial
aid (Sundt 146), demographic changes (Campbell 284), economic downturn (Archibald 269),
and rising costs of research (Archibald 270). Increased availability in federal financial aid
has allowed students easier access to borrowing. Universities have seen the federal funding
source as a vacuum to be filled, in which they have. A downturn in the economy leads to
decreases in state grant spending, which effects enrollment (Heller 82) thus again initiating a
catch 22. When enrollment is down and the state decreases grant spending, demography

changes in that there is a lower number of citizens who have sought higher education and
state tax revenues are negatively impacted. Heller reminds us that the same fiscal pressures
that cause states to cut back on their appropriations to public institutions, which often result
in increased tuition prices, can also affect spending in state financial aid, which in turn
affects the ability for students to receive financial aid.

Negative and Positive Consequences of Tuition Hikes:

Some of the major negative consequences include: financial strain on families,
outpacing of financial aid, increases in student grant spending, decline in public enrollment,
privatization of higher education, tightening enrollments, decline in faculty salaries, and
students inability to afford higher education.
Increases in tuition create an incredible strain in families. Not only are parents of
students holding off on being able to retire in order to pay for their child(ren)s college (Heller
86), but many have to have their children turn to other options to pay for higher education.
One option in the past has been for the perspective student to join the military. But, with the
downturn in the economy as well as budget cuts within the Department of Defense,
enlistment opportunities are being cut to accommodate budget cuts making this an unviable
option for many seeking education benefits from the VA student loan debt. The other option
for students is to burden themselves with debt. (Archibald 290) This has negative
consequence as not all fields of study, namely in the humanities, yield high enough salaries to
counter the debt burden.
With tuition outpacing financial aid (Sundt 145), oftentimes a students college
expense is not entirely covered. Grant money is not stretching enough to pay for most higher
education expenses. This leads to a decline in public enrollment which takes from accounts

receivable portion of funds that universities receive, thus creating a need to hike tuition.
There is also the issue of decreased enrollment in regards to faculty. When enrollment is
down and funding is scarce, faculty is cut and salaries remain stagnant.
Is there a positive side to increasing tuition? Archibald and Feldman seem to think so.
Some of the positive consequences to tuition increases include: higher quality education,
better technological processes (Archibald 272), research, and prestige.
When an institution raises tuition, it enables them to attract star faculty (St. John 3)
who drive innovation and are the forefathers on the frontlines of research and program
notoriety, which generates prestige. Prestige, in turn generates high quality education and
higher numbers in enrollment. Higher enrollment generates funds to improve on
technological processes (Archibald 271) and maintain coveted faculty members (St. John 3).
So do the positive consequences outweigh the negative consequences?
In my analyzing of the data, I would say no. There are not many public universities that can
afford prestige at the cost of tuition increases. For example, it would be easier for a graduate
from an Ivy league institution to pay of student loan debt from the job availability they would
have over the prestige of the university that they attended more than it would be for a
graduate of a regular, public university to pay off loan debt for the fact that it would be not
unheard of, but less likely for them to have the same, higher-paying job opportunities.

What are some previous possible solutions to keep tuition for higher education from
increasing?
Some ideas for possible solutions have been proposed. They include: state control of
tuition, increased class sizes, tuition capping, and increasing public funding. As I have read
each of the proposed solutions, I see negative consequences that follow each.

State control of tuition setting would allow, as Heller put it, responsibility for all
sectors of public higher education to more easily balance policies in each to ensure that goals
of equality of opportunity remain at the forefront of state policy. But, a state could
potentially decrease state grant spending, thus leading to a decline in enrollment. (Heller 83)
Also, if we rely on the states economic status to fund college, many will be denied the
opportunity to higher education in economically depressed times, which are guaranteed to
happen. This will decrease employment opportunities which will also negatively impact the
economy.
A negative effect of increased class size is decline in quality of education. Archibald
and Feldman point out that adding more students to each class can diminish the benefit for
each student, leading to diminished outcomes and lower graduation rates. (Archibald 270)
So what about tuition capping? Archibald and Feldman also comment on this stating that
universities will have to limit their spending which will constrain and set limitations on
quality programs. So, that leads us to increased public funding. Well, the notion of that is
great, but if a public university is resigned to more heavily rely on public funding, it can
become a burden on the public.

Are there other solutions available for students and parents to seek out?
I have not been successful in finding specific examples in which higher education
institutions have successfully lowered tuition costs, but I have found some creative ideas,
examples and proposals on how to help students better afford higher education. There have
also been ideas suggested on state and federal levels on how to raise money and incentivize
universities to make education affordable.
Because the cost of tuition has outpaced inflation as well as the average median
income, many states have initiated and sponsored what is called a PPT, or prepaid tuition

program. These plans work to safeguard families against tuition increases while securing
education for their children. In essence, a parent would prepay for tuition at the price of
current cost. Those prices are locked in, safe guarding them from having to pay the gap
between what it cost at the time of payment versus what the tuition would be at the time of
enrollment. If the student decides that they want to attend an out of state or private
institution, the credit may be redeemed for the value in which was invested (Baird 142).
As of 2006, PPT plans were available in 20 states as well as offered tax advantages
and just under 2 million accounts were active, but low investment rated are now showing that
the investment has actuarial deficit of nearly $600.00 per account. The consequence of this is
that the state must fund the difference in the deficit (Baird 143). On the other hand, it is a
low risk alternative which enables parents to invest money on a tuition savings while
mitigating the risk of increased tuition costs.
Another idea that is somewhat newer than that of the PPT plan is the ESA, or
Educations Savings Account. The ESA, also known as an empowerment account, which is
currently popular in the state of Arizona, has minimal benefit to the mainstream student, but
offers great benefit to special needs students for the future higher education needs.
Essentially, this plan would allow parents to defer educational expenses in such a manner that
they could remove their children from the public-school system and receive the money the
state would have spent on them in an education savings account (Burke 1). This money can
then be deferred to a 529 plan for future education costs. The ESA initiative has provided a
template for a program that will allow future mainstream students to benefit from deferred
education savings. Education plans could be customized and students would then have more
education options at the pre-college level, thus forwarding funds that would have gone to
state funded schools to an ESA (since the family burdens the cost of alternative pre-college

education). Of course, in order to have this plan implemented in states outside of Arizona,
legislative support would be required.
A third option that I have found is a performance based scholarship program.
Although it does not help with the upfront expense of college entry, it would benefit lower
income students in the long-run through incentivizing high marks in performance.
Performance based scholarship programs by definition are need-based aid designed to help
reduce the financial burden on a low-income student, while at the same time providing
incentives for good academic progress (Cerna 5). A major benefit of programs like this is
that they promote higher graduation rates for low-income students. These programs can be
designed and established by those that have the financial capability to be stakeholders and
can be led in partnership by government, nonprofit and grant based entities (Cerna 11).
These programs can receive endorsement from legislative bodies as well as ongoing
governmental support (Cerna 87).

What changes can be made on a governmental level?

One suggestion that has been made for government involvement in controlling public
university trending of increasing tuition by tax increases and incentive based cuts for higher
education institutions. Middle class members of society are faced with the burden of lack of
eligibility for need based financial aid. As a result, they are being forced into taking loans
and incurring debt further down the road (Brashear 16). Ultimately, if taxes are raised,
universities would be allocated the funds from those taxes and incentives would be given to
them for their allocation to certain programs that would benefit middle class students. Of
course, federal aid is still needed as well as appropriate for low-income students, but rules
must be created and set into place that will ensure that the middle class student enrolled in

public institutions are not burdened with the difference in the cost of tuition and the financial
aid available to them (Brashear 17).

Summary and Conclusion

With tuition outpacing financial aid (Sundt 145), oftentimes a students college
expense is not entirely covered by financial aid. Increases in tuition create an incredible
financial strain on families. Solving the problems related to high tuition costs for higher
education institutions are complex. There are many reasons for tuition increases, both of
which hold positive as well as negative consequences. There has been some effort on the
behalf of higher education institution to somewhat relieve the debt burden on students and
families, although not every student or family benefits from the relief efforts. State control of
tuition, increased class sizes, tuition capping, and increasing public funding, have all been
considered as possible solutions, but their negative impacts has made decision makers
hesitant for real change. Other solutions that have been proposed that possibly seem more
promising are PPT plans, ESAs, 529s, performance-based scholarship programs and tax
increases and incentive based cuts for higher education institutions.
It seems that there is not a silver bullet that can single handedly resolve the problem
with increasing tuition, but with collaborative efforts from each sector (the government, the
public, non-profit organizations, universities and boards of appropriations) several successful
solution can be implemented to make tuition affordable on all fronts for perspective students.
This would allow for less student debt burden, which could in turn give more students the
opportunity to seek and fulfill higher education goals as well as strengthen the economy by
lessening student loan debt allowing money to be spent in ways that will benefit the public
sector and improve standard of living.

Works Cited
Archibald, Robert B. and David H. Feldman. "Explaining Increases in Higher Education Costs." The
Journal of HIgher Education 79.3 (2008): 268-295. Project MUSE.Web. 4 October 2014.
<http://muse.jhu.edu>.
Baird, Katherine. "The Political Economy of Prepaid College Tuition Plans." The Review of Higher
Education 29.2 (2006): 141-166. Project Muse.
Brashear, Max. "Making University Affordable: Tax Increase and Inscentive Based Cuts." Looking
Ahead: The Cornell Roosevelt Institute Policy Journal 5 (Fall 2013): 13-16. Center for
Education Policy and Development.
Burke, Lindsey M. "Education Savings Accounts: A promising Way Forward on School Choice." Web
Memo 3382 (2011): 1-4.
Campbell, Kim and Cade Charlton amd John Maynes and Richard West. "Utah." Journal of Education
Finance 39.3 (2014): 283-286. Project MUSE.Web. 4 October 2014. <http://muse.jhu.edu>.
DeRosier, Reed. "Aboloshing FAFSA to promote Equity in College Attendance." Looking Ahead: The
Cornell Roosevelt Institue Policy Journal 5 (Fall 2013): 5-6. Center for Education and Policy
Development.
Heller, Donald E. "The Effects of Tuition and State Financial Aid on Public College Enrollment." The
Review of Higher Education 23.1 (1999): 65-89. Project MUSE.Web. 4 October 2014.
<http://muse.jhu.edu>.
St. John, Edward. "Tuition Rising: Why Colleges Cost So Much (review)." The Review of Higher
Education 27.2 (2004): 294-295. Project MUSE.Web. 4 October 2014.
<http://muse.jhu.edu>.
Sundt, Melora. "The Price of Admission: Rethinking How Americans Pay for College (review)." The
Journal of General Education 51.2 (2002): 144-148. Project MUSE.Web. 4 October 2014.
<http://muse.jhu.edu>.
Weerts, David J. "State Funding and the Engaged University: Understanding Community Engagement
and State Appropriations for Higher Education." The Review of Higher Education 38.1 (2014):
133-169. Project MUSE.Web. 4 October 2014. <http://muse.jhu.edu>.

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