Arne Duncan: Barking up the Wrong Tree

No one should be surprised by Secretary of Education Arne Duncan's call for reducing higher education costs. It's a trendy issue at the moment, not least because of the attention brought to student loan burdens by Occupy Wall Street. But telling that to higher ed administrators, especially financial aid officers, isn't the right audience. At my institution, at least, the cost to students has been rising not because the cost of providing education is rising but because the cost burden has shifted dramatically from taxpayers to students.

Utah Valley University's commitment to transparency allows a close look at what's really going on at one, presumably representative, state university. We publish an annual Factbook that includes budget data for the past 20 years. That data doesn't paint a pretty picture.

UVU's inflation-adjusted costs per FTE have stayed flat since 1990.
State appropriations haven't, so neither has tuition.

Adjusted for inflation, UVU's tuition and fees for full-time, resident students increased at an annual rate of 7.4% from 1990 to 2010. Students today must pay out of pocket or borrow more than twice as much in order to get the substantial economic benefits that come from a college degree.

But before we blame the university for the increase in "cost" we should be clear what we mean. When public officials say that universities need to reduce costs because of the rising cost of education, they're conflating the cost of providing education with the amount of those costs students are paying themselves. Those are not, in either public or private universities, remotely the same. Public schools get state appropriations, and both often have revenue from endowments, donors, and grants. How much students at public universities pay depends in part on how much states appropriate.

And there we see the real problem with the rising cost to students of a higher education. At UVU, total expenditures per full-time-equivalent student have in fact declined 3.8% since 1990. It's budgetary growth has almost exactly kept pace with the four-fold increase in the number of students it serves.

The same cannot be said, however, for UVU's state appropriations. State appropriations per FTE were $2,668 in 1990. Twenty years later, the state provides $1,000 less per FTE in 1990 dollars. If state appropriations had kept pace with inflation over the past two decades, UVU would receive $4,392 per FTE. Overall, state appropriations have fallen 37.5% since 1990, an average of 2.33% annually. That's money that still has to be spent, which means that it is passed on to students. In fact, between 1990 and 2010 UVU only passed on 70% of its lost appropriations to students.

It looks, then, like education professionals aren't the ones to whom Sec. Duncan should be talking. If there is a need to cut education costs to students--and to the federal government that provides them aid--he needs to speak to state legislators and governors.

Note: All of the data used in this post is available through UVU's Institutional Research and Information web site (http://uvu.edu/iri). The raw data and calculations can be found at https://docs.google.com/spreadsheet/ccc?key=0ApJ0BXDo4nSKdHFadGZaaHZJQ0hfUFZkSUluYTdGRXc. While the data is publicly available, the opinions expressed here are, of course, my own and not those of UVU.