Finances
An Ohio University professor and member of the Commission on the Future of Higher Education, has been a vocal critic of how institutions of higher education are financed. He claimed that tuition increases have rapidly outpaced inflation; that productivity in higher education has fallen or remained stagnant; and that third-party tuition payments from government or private sources have insulated students from bearing the full cost of their education, allowing costs to rise more rapidly. According to Robert E. Wright, tuition costs will continue to rise rapidly without attendant increases in quality until professors are encouraged to own colleges in private partnership, like attorneys and that that won't happen until barriers to entry are decreased and government education subsidies are paid directly to students instead of to colleges and universities. A report in The Economist criticized American universities for generally losing sight of how to contain costs. Second-tier schools with Ivy League Envy had become "so obsessed with rising up the academic hierarchy" that they focus too much on research while neglecting undergraduate education, and the report chronicled an environment in which universities have been slow to embrace Internet technology and online software to streamline costs.
Another issue is the rising cost of textbooks. There are textbook exchanges for students who will accept a used text at a lower price. Lower priced alternatives offered by Flat World Knowledge are now available but have yet to make a significant impact on overall textbook prices.
Many students lack the financial resources to pay tuition up front and must rely on student loans and scholarships from their university, the federal government, or a private lender. All but a few charity institutions and the United States Service academies charge students tuition, although scholarships (both merit-based and need-based) are widely available. Generally, private universities charge much higher tuition than their public counterparts, which rely on state funds to make up the difference. Because each state supports its own university system with state taxes, most public universities charge much higher rates for out-of-state students. In 2002, state governments gave their state colleges a total of $66 billion to partially subsidize students tuition. The average tuition then of a state college was $4,081 annually for a four-year college. The average cost of a private school was $18,273.
The total cost of all higher education in 2002 was $289 billion.
Annual undergraduate tuition varies widely from state to state, and many additional fees apply. Listed tuition prices generally reflect the upper bound that a student may be charged with regards to tuition. In many cases, the “list price” of tuition—that is, the tuition rate broadcast on a particular institution’s marketing platforms—may turn out to be different from the actual (or net) tuition charged to a student. A student that has applied for institution-based funding will know his or her net tuition upon receipt of a financial aid package. Since tuition does not take into account other expenses such as the cost of living, books, supplies and other expenses, such additional fees can cause the overall cost of college to exceed the tuition rate multiplied by the number of courses the student is planning to take.
In 2009, average annual tuition at a public university (for residents of the state) was $7,020. Tuition for public school students from outside the state is generally comparable to private school prices, although students can often qualify for state residency after their first year. Private schools are typically much higher, although prices vary widely from "no-frills" private schools to highly specialized technical institutes. Depending upon the type of school and program, annual graduate program tuition can vary from $15,000 to as high as $50,000. Note that these prices do not include living expenses (rent, room/board, etc.) or additional fees that schools add on such as "activities fees" or health insurance. These fees, especially room and board, can range from $6,000 to $12,000 per academic year (assuming a single student without children). Such fees are not at all government-regulated, allowing a theoretically enormous increase each year. While tuition is monitored to some degree in legislature and often publicly discussed, fees on the side are frequently overlooked in public opinion and regulatory policies.
In addition to tuition, living expenses, books, supplies and fees, students also face a less-acknowledged opportunity cost in years of missed potential income. A high school educated person could expect to earn about $84,000 for four years of work. In choosing to attend and pay for college, an individual also forgoes those earnings.
In 2010, community colleges cost an average of $2,544 per year for tuition and fees. A private 4-year college cost an average of $26,273 annually for tuition and fees.
College costs are rising at the same time that state appropriations for aid are shrinking. This has led to debate over funding at both the state and local levels. From 2002 to 2004 alone, tuition rates at public schools increased by just over 14 percent, largely due to dwindling state funding. A more moderate increase of 6 percent occurred over the same period for private schools. Between 1982 and 2007, college tuition and fees rose three times as fast as median family income, in constant dollars.
To combat costs colleges have hired adjunct professors to teach. In 2008 these teachers cost about $1,800 per 3-credit class as opposed to $8,000 per class for a tenured professor. Two-thirds of college instructors were adjuncts. There are differences of opinion whether these adjuncts teach better or worse than regular professors. There is a suspicion that student evaluation of adjuncts, along with their subsequent continued employment, can lead to grade inflation.
Additionally, schools are increasingly using price discrimination as a strategy across different programs to increase revenue (i.e. employing strategies like a for-profit business). Yet the school is still fundamentally different from a for-profit business entity in that it is restricted by its school mission. For example, a school may charge particular types of students (such as low-income or moderate-income students) less tuition in order to help them. Another example is merit-based aid, in which the school will grant high achieving students money.
Princeton sociologists Thomas Espenshade and Alexandria Walton Radford published a book-length study of admissions that found that an upper-middle-class white applicant was three times more likely to be admitted to an American college than a lower-class white with similar qualification. New York Times columnist Ross Douthat has cited this as an example of how U.S. universities can exacerbate wealth inequality. A 2006 report by Future of Children, a collaboration of Princeton and the Brookings Institution, concluded that "the current process of admission to, enrollment in, and graduation from colleges and universities contributes to economic inequality as measured by income and wealth."
Read more about this topic: Higher Education In The United States