Free ride to college? Bearing the brunt of changing expectations on who should pay for college

University Business, April, 2008 by Richard Ekman

HERE'S A PHILOSOPHY OF life that would make Ben Franklin proud: An individual ought to consider the personal expense of a college education as an investment in his or her future. Why? The lifetime earnings of a college graduate far exceed the lifetime earnings of a nongraduate--and by a lot more than the price of tuition--so the cost-benefit calculation ought to be simple.

Planning ahead helps. Parents should be encouraged to save for college while their children are small rather than using the funds for other purchases. Middle-class values of thrift and moderation, while easy to satirize, in fact make sense and are the basis of good public policy. For families whose financial circumstances make even this threshold of saving and investment impossible, colleges ought to help--indeed, they ought to help a lot. But there should be no expectation that in the normal course of things, a college education is an entitlement or a benefit provided by the state or private entities at no expense to the individual.

Let's be clear that preaching the virtues of individual responsibility is not the same as championing the "college is a private good" argument over the "college is a public good" rationale for public support of higher education. Whether students' motivation to obtain a degree is to serve humanity or to amass personal fortunes, the effect of higher education on those who participate in it is to influence the formation of these individuals' skills and their values, both personal and civic.

No matter who pays, society as a whole benefits when citizens are college graduates. We see the results in such areas as voting behavior, involvement in community and civic affairs, and charitable giving. For private colleges at least, there's even evidence to suggest that the college experience makes people feel more fulfilled in their lives.

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Still, there is reason to worry that American higher education is increasingly viewed as an entitlement that should be available at far less than the full cost. Few students pay the full amount of the tuition charge, and none pays the even larger actual cost of providing the education.

State governments heavily subsidize the price of enrollment at public institutions (often using more than 8 percent of the state's total tax revenues for this purpose), while private colleges, through endowment earnings and privately raised scholarship funds, cover an average of 25 percent of the actual cost of education (without adding to the burden on state taxpayers). In little more than one generation, higher education has achieved remarkable gains in widening access. Today, two-thirds of all high school graduates choose to attend college, and even more aspire to attend. These markers of societal commitment should offer unprecedented encouragement to students who hope to enroll.

The extent of this transformation in the commitment to college education, led largely from within higher education, makes it all the more surprising that in the past decade especially, colleges have been accused of price gouging. The accusation is refutable, but it persists in politicians' rhetoric, perhaps because we live in an era of mass higher education when every congressional district includes a high percentage of families with a direct stake in low-priced access to higher education. The politicians' rhetoric rarely expresses appreciation for how far our society has already come in a short time in widening access. Higher education is not an industry in need of a government takeover, although you would hardly know it from the recent flurry of state and federal regulatory initiatives.

EXPANDED AID ELIGIBILITY PLANS AND THEIR AFTERMATH

Enter Harvard, Yale, et al., with their extraordinary new plans to expand eligibility for financial aid. If their intention is to increase financial aid in order to appease legislative bullies, the announcements by some of the country's wealthiest institutions that they will now support not only the least affluent students but also most of the others, excepting only the very wealthiest, are worth half a cheer--but only half, because while we can applaud the extension of already generous policies to more of the people who attend highly selective institutions, we need also to worry about the effects of the new policies on everyone else. This development raises serious questions:

* Will government officials conclude from the new generosity that the wealthy colleges are conceding that they have been charging too much?

* Will middle-class families stop saving for college, expecting every college to subsidize almost every student, a result that is well beyond the capabilities of the vast majority of colleges?

* Will the almost-as-strong colleges and universities--those that have sometimes competed effectively in the past against the wealthiest colleges to attract faculty members and students--no longer be able to do so?

* Will some state universities persuade state legislatures to try to compete--adding further to public expectation that a college education ought to be available free of charge?