During divisive political times, elusive patches of common ground are holy ground. Both Republicans and Democrats, in a rare fit of agreement, think that college tuition hyperinflation is a pressing problem that demands immediate legislative redress. Both at least pay lip service to the threat the swelling ticket price of a college degree poses to our economic future, widespread educational access and, by extension, the health of our democracy.
A sense of shared purpose is of little value, though, without a plan. What can the government do to lower ballooning college costs or, at the very least, arrest the breakneck pace of annual increases?
First, a necessary point of clarification and a concession to legislative reality. Despite the political obsession with freezing loan interest rates, the real problem is the colossal principal. A several-percent rate increase won’t be the financial downfall of the next crop of graduates to enter the job market heavy on debt and light on opportunity. The mountain of debt they willingly assume, at whatever rate of interest it accrues over time, is the real shackle that tethers their future.
Also, neither party has any real incentive right now to end the mostly harmful subsidization of college costs. Who wants the reputation for shooting the goose that laid the golden egg? Everyone knows the central reason for the unchecked tuition hikes is the abolition of the market mechanisms typically responsible in a free economy for anchoring price to value. No one is stirred by electoral interest to intervene. The question, then, is: How do we reintroduce normal market competition into the consumer experience for college shopping?
As a former college professor, allow me to offer a modest proposal based on my own professional experience that should satisfy both liberals (because it assigns a central place to governmental intervention and regulation) and to conservatives (because it buoys competition and consumer choice). Compel all colleges that receive a penny in federal funds to follow a standardized and transparent model of financial reporting.
The despairing truth is that parents largely have no idea what they’re paying for and no easy means of discovering it. Imagine purchasing a car loaded with extra features you never requested, that you’ll never use or even discover, and that end up costing a fortune. Now imagine that all cars are sold in this manner. Why wouldn’t a car dealer promiscuously add expensive options with impunity?
The embarrassingly gratuitous options foisted upon the consumer of higher education are legion and legendary. I remember one university I worked for spent $20,000 on a celebrity from the Food Network to speak to a room of 50 students on culinary diversity. At another, $10,000 was dropped on something called “transvestite bingo.” I still have no idea what precisely that was. Think $5,000 is a steep expense for a men’s choir to perform for a couple of dozen students? I know some administrators who didn’t.
I could recount an endless parade of these prodigalities, all elective expenses. I choose these, in particular, because I specifically remember they occurred at the height of our nation’s economic downturn, while the university in question froze hiring and salary increases.
Ideologically inspired spending would be harder to pull off if parents had some sense of to what ends their savings were being funneled. Compel universities to provide clear, line-item catalogs of major expenses. Competition presupposes a well-informed army of consumers. The government can effectively oblige colleges to detail their ludicrous financial commitments.
Mandatory, comprehensive fiscal disclosure also indirectly addresses two other familiar complaints parried at our institutions of higher learning. One, it will expose the myth that they are chronically starved for funds, living a lean, spartan life in order to make it to the next semester. According to a report recently issued from the National Center for Education Statistics, they are prodigiously successful at raising cash even during the most straitened circumstances. Often, bureaucratic drives to channel money to matriculating students is merely an excuse for colleges to raise tuitions.
Also, many have plaintively observed that our universities are awash in politicized ideology, offering courses that amount to aggressive programs in moral re-education. Many parents would find such offerings and the instructor hires attached to them wasteful and maybe even offensive. Nothing chastens a college’s partisan crusade like consumers who can direct their money elsewhere.
Our government has shown little compunction about saddling other industries with onerous accounting requirements, even when they clearly haven’t contributed to increased competition or consumer choice. Today, higher education gets away with higher costs because their finances are fashioned in shadows, subsidized by loans, and paid for by unsuspecting parents and their soon-to-be-debt-laden children. Shining some light into the darkened corridors of a university’s questionable finances will help consumers choose wisely and colleges adjust accordingly.
Ivan Kenneally is the senior editor of the Sourcing Journal.