By MARK G. YUDOF
January 11, 2002
Public colleges and universities have raised tuition this year at the highest rates in eight years, according to the most recent annual College Board survey -- ratcheting up fees by an average of 7.7 percent, or more than twice the rate of inflation. Most observers point to the faltering economy as the major reason for the increases, as public institutions have sought to offset drops in state support. More recently, the attacks of September 11 have compounded pre-existing economic difficulties.
Indeed, the National Conference of State Legislatures has reported that 43 states are experiencing revenue shortfalls and more than half are considering budget cuts. And at least nine governors have warned universities to expect midyear rescissions in their state appropriations.
For public research universities, those developments represent only the deepening of a long-term and structural trend toward relatively less state support. Even in the past few years, when state budgets were expanding, public research universities made little headway against the legacy of previous lean years. Thus, regardless of the economy, in the foreseeable future, students at public research universities will have to pay more of their own educational costs, and the role of such institutions will fundamentally change.
More than a century ago, state governments and public research universities developed an extraordinary compact. In return for financial support from taxpayers, universities agreed to keep tuition low and provide access for students from a broad range of economic backgrounds, train graduate and professional students, promote arts and culture, help solve problems in the community, and perform groundbreaking research.
Yet over the past 25 years, that agreement has withered, leaving public research institutions in a purgatory of insufficient resources and declining competitiveness. The gap between professors' salaries at public and private universities, for example, has grown from $1,400 in 1980 to $22,100 today. As a result, public institutions find it increasingly difficult to compete for the best faculty members who, in turn, attract the brightest students and significant research dollars.
Demographic changes lie at the heart of public research universities' predicament. Over the past 40 years, the proportion of American family households with children has declined from almost one-half to one-third. The country's aging population appears more interested in issues like health care and public safety than higher education. While higher education's share of average state spending fell 14 percent from 1986 to 1996, Medicaid's share nearly doubled. The funds allocated to correctional facilities grew by more than 25 percent.
Observers may note that, over the past 25 years, state support for higher education has generally kept up with inflation, as measured by the consumer price index. But public research universities are extraordinarily labor and technology-intensive enterprises; to attract top talent and stay on the cutting edge, they must invest and spend significantly more than the inflation rate.
Meanwhile, as state support for higher education has declined relative to other public services, the value of education to students has increased substantially. After adjusting for inflation, a male college graduate today makes an average of $32,000 more each year than a high-school graduate, compared with a $15,000 gap in 1975. Over a lifetime, a person with a bachelor's degree will earn an average of $1-million more than a high-school graduate; a professional degree widens the differential to $3-million. With the wage premium rising, education is increasingly seen as a private, rather than a public, good.
Given that reality, both federal and state policy makers are asking students to shoulder a larger share of their higher-education expenses. Already students at public research universities are paying more; at the University of Minnesota, for example, their tuition covers nearly two-thirds of the direct cost of instruction, compared with the one-third that their peers paid 25 years ago. In the same vein, elected officials prefer market accountability -- with institutions competing with each other for students -- rather than traditional public oversight to ensure quality. And rather than provide operational support to universities, they encourage universities to charge higher tuition, then favor giving direct aid to students in the form of scholarships and tax benefits to help make that tuition affordable.
As state support erodes, flagship research universities face other challenges. Many local businesses now operate more globally and are less oriented toward state or regional concerns. In addition, businesses are creating their own educational programs, such as Motorola University or Dell University, to focus on specific work-force needs.
Moreover, increased enrollment in higher education over the past 30 years, and the growth of regional universities within states to meet that demand, has further diluted state support. Although such institutions often have limited research capacities, their emergence has sharpened competition for state dollars.
Where will such trends lead? The 21st century will see the evolution of a hybrid public research university, one with roots in both the public and private spheres. That new hybrid will confront significant new challenges.
The first will be to convince the public and decision makers -- governors, legislators, and regents -- that tuition must increase significantly to keep public research universities viable and competitive with private research universities. Raising tuition further will be anathema to many students, who are already paying a larger part of their instruction costs. University advocates will have to demonstrate that it is "worth it" -- to their regional economy and society, as well as to students -- to charge more in order to support a high-quality research institution. To do so, and to maintain the tradition of public universities, they will have to ensure access for low-income and historically disadvantaged students through expanded institutional student-aid and scholarship programs. That, in turn, will require public universities to accelerate their efforts to garner philanthropic dollars, as well as to secure stronger political support for government initiatives that give financial aid and tax benefits to students.
The continuing need to provide public goods will be another challenge. Especially at land-grant institutions, students and parents may question using tuition dollars to pay for extension services and other outreach activities that don't directly improve students' education. Also, what can be done about professional-degree programs that usually cost far more money than tuition will ever generate -- for example, those in medicine, dentistry, and veterinary science? Public universities may have to explore new partnerships with private foundations and organizations, charge fees for traditionally free programs, and call for more direct, earmarked state support.
The hybrid university also faces a philosophical tug of war: To compete in the market, it will have to operate more efficiently and radically improve student services. But to remain a great learning institution, it will have to continue to nurture learning for its own sake, transmit cultural values, encourage civic understanding, and foster other less quantifiable and profitable -- but still valuable -- features of the university.
The author William Arthur Ward once said, "The pessimist complains about the wind; the optimist expects it to change; and the realist adjusts the sails." Unfortunately, we at public research universities and our supporters have fallen into a pattern of blaming the circumstances of the day -- this year's economy, the current legislature or governor, or the media -- for our dwindling share of state resources, rather than focusing on our future over the long haul. Keeping public research universities relevant and thriving will be no easy task, and we should start by recognizing that the long-term political winds have shifted.
Mark G. Yudof is the president of the University of Minnesota.