Pennsylvania War on Tuition- David Adewumi

daa182@psu.edu (814)769-3900
March 21, 2010

Proposal for
10.i.10 Initiative
I. SUMMARY........................................................................................................................................ 3

II. NEEDS/PROBLEMS .......................................................................................................................... 3

III. GOALS/ OBJECTIVES...................................................................................................................... 4

IV. Citations.....................................................................................................................................5
I. Summary

II. Needs/Problems
Students are not graduating because of insurmountable financial costs and stress. Cited
by 60% of students as their reason for dropping out, the combined stress of work and
classes is the number one reason students do not complete their higher education.
College costs have risen more than 400% in the past 15 years(1). At Penn State University,
in-state tuition has increased by nearly 200% since 1991 while out-of-state has increased
by over 100%. On an annualized basis, tuition has increased by 6.2% for in-state and 4.5%
for out-of-state tuition while inflation has averaged near 2% over the same timeframe.
Only 40% of higher education students receive a degree within six years for a four-year
institution according to the U.S Department of Education. At Penn State University-
University Park, approximately 19,000 students do not receive any financial aid
representing nearly half of the student body. According to the National Center for Public
Policy and Education, 70% of students do not receive any type of scholarship or financial
aid(2). Students are left to work and/or take out massive loans to get through college.

Tuition is becoming a larger proportion of income for Penn State University. The economy
has put pressure on the university and state and as a result, appropriations are will be cut
by the largest amount in over 20 years. Included in these cuts is a 6% cut to
Education/General portion of the appropriations- the portion that directly benefits
students. Since 1991 state appropriations have grown by an average rate of 1.5% per
year while tuition has risen by more than three times that rate. Many universities across
the nation are facing similar situations where they must find new income to support their
budget, but it can be seen that raising tuition and the financial cost of higher education
is having a net negative impact on the students as a whole. In the United States, 60% of
students pay for college themselves with no help from friends and family(3). Families
have less spending power towards education than they did 15 years ago as the median
income has risen 150% compared to educational costs rising 400%(4). Penn State
Students who have the opportunity to receive a higher education shouldn’t have to pass
on their aspirations due to financial distress. The loans that students are taking out will
most likely take half a lifetime to repay.

In the Public Agenda Report by the Bill and Melinda Gates foundation, almost 80% of
students said they wanted the cost of college to be reduced by 25%(5). With the
collaboration of student and administration, we can find ways to aid the student body
with issues most important to them.
III. Goals/ Objectives
The 10.i.10 initiative proposes to decrease the cost of tuition by $10,000 by 2020.
Below is an outline of the objectives necessary to reach this goal.

 Mobilize 10,000 students to pressure state legislature to increase school

appropriations

State appropriations would be the primary source of funding. Since appropriations are set
to decrease by approximately 10% this year, students must go directly state legislature to
bring to light the impact of their actions. It would be better for everyone to make the
appropriations larger instead of attempting to divide them differently. A fixed amount of
state appropriations could be directed towards funding the reduction of lost tuition
income to the university. Students could draft letters, write emails and make phone calls on
behalf of the entire student body. The benefits for the university and the numerous
graduates who reside in Pennsylvania greatly outweigh the costs of increasing the
appropriation 10% for the first year and a smaller percentage each successive year.

 Create a $100,000,000 General Tuition fund to support tuition cuts

The general tuition would be funded by a combination of state appropriations, charitable

donations and budget adjustments. A possible source of funding could be from the Penn
State Endowment. The endowment spends between $45-$60 million per year on
operations. On occasion the endowment has spent more money in one year than in
actual donations. The average expense ratio (proportion of assets spent managing those
assets) in the mutual fund industry is below 3%. By analyzing the cost structure of the
endowment we could help make the endowment as a whole more efficient and return
excess spending to students. Reducing the proportion of assets spent to maintain the entire
portfolio by 2% raises between $15-$20 million per year. This would be a fantastic start in
funding tuition cuts. The average annual growth rate of the endowment is 7.9%. As the
endowment continues to grow the $15-$20 million will be a smaller proportion of their
operations. This benefits not only students but also the entire institution as a whole as the
endowment is managed more efficiently.

 Construct internal student auditing board to review and make public suggestions
on university budget

An internal student auditing committee would be integral in establishing a transparent

avenue of communication between the administration and students on the school
budget. This committee would better serve the university and students as opinions and
concerns are voiced on a regular basis. By allowing an avenue for regularly scheduled
communication, we can all benefit from increased transparency and informational flow.

Current freshman would see their tuition bill lowered for in-state and out-state. Below is a
schedule of how tuition can be reduced and the yearly funding needed to reach our
goal. A cut of 7%-7.5% to both in-state and out-of-state tuition would benefit current
freshman, as their total tuition cost would be reduced by over $500. The amount that
students save increases as we gradually approach our goal of $10,000. The rate at which
tuition is reduced is less than half the rate it raised from 1991 through 2009. An average of
approximately $40,000,000 would be required per year- less than 10% of the current
budget. These reductions would be gradual providing an incentive for all students.
IV. Citations
Bill and Melinda Gates Foundation. ""With Their Whole Lives Ahead of Them"". Public
Agenda. March 21,2010 www.publicagenda.org

(1) Bill and Melinda Gates Foundation. ""With Their Whole Lives Ahead of Them"". Public
Agenda. March 21,2010 <www.publicagenda.org> page 9

(2) Bill and Melinda Gates Foundation. ""With Their Whole Lives Ahead of Them"". Public
Agenda. March 21,2010 <www.publicagenda.org> page 8

(3) Bill and Melinda Gates Foundation. ""With Their Whole Lives Ahead of Them"". Public
Agenda. March 21,2010 <www.publicagenda.org> page 9

(4) Bill and Melinda Gates Foundation. ""With Their Whole Lives Ahead of Them"". Public
Agenda. March 21,2010 <www.publicagenda.org> page 9

(5) Bill and Melinda Gates Foundation. ""With Their Whole Lives Ahead of Them"". Public
Agenda. March 21,2010 <www.publicagenda.org> page 20