Jane Wellman

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United States Trends in Postsecondary Costs and
Degree Attainment

• Jane Wellman
• INTERNATIONAL SYMPOSIUM ON UNIVERSITY COSTS AND
  COMPACTS
• CANBERRA, AUSTRALIA
• 14-15 JULY 2008

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• Summary of Major Dynamics Affecting Costs and US
  Degree attainment
• Need to increase degree attainment
• Persistent gaps in access and degree attainment
  affecting low income and minority groups
• Funding needed to increase degree attainment with
  current cost structures is highly unlikely under
  current trends
• Among public institutions, prices are increasing
  but spending is not subsidy shift from state
  funds to tuition revenues
• Privatization of revenues has not benefitted
  instructional function competition is further
  increasing spending
• Low income and minority students increasingly
  clustered in public two-year sector where
  spending is low, and fewer than 30 of students
  get to a baccalaureate degree
• Public perceptions/critique about higher
  education sharpest on issues of cost and cost
  management

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U.S. Nationwide enrollment demand in 2005 at an
all-time high
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Growth steepest in public two-year, proprietary
and private masters institutions. Market
shares dropping for public four-year and private
research institutions
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• But US educational attainment dropping in an
  international context from 1 for older
  students, to 7 for 15-and above
• Reasons?
• Other countries are increasing attainment and US
  is staying even
• US better at access than degree completion
• Attrition is highest among students who are the
  majority of new students
• Declining high school graduation rates

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The Attainment Challenge Degree Completion
Rates, 2004
SOURCE OECD, Education at a Glance 2007
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Closing the GapNumber of Degrees Required Beyond
Current Production by 2025
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Collective Cost to StatesAssuming no change in
tuition
31.0 Billion Annual Costs of Additional
Students at Current per Student 78.2
Billion Current State Contribution 39.7
Percent Increase in Annual State Support Needed
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Average Cost to Students, Assuming No
Additional State Investment
2,565 Additional Annual Costs to Students
at Public Four-Year Institutions 47.9
Increase in Tuition and Fees (Currently
5,355) 1,824 Additional Annual Costs to
Students at Public Two-Year Institutions 108.8
Increase in Tuition and Fees (Currently
1,677)
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General purpose revenues are declining as a
proportion of revenues among public
institutions Nationwide trends in median revenues
by major source, 1987 - 2005

Estimated general purpose Tuition and
feesstate appropriations portion of private
gifts

(/FTE/CPI-U /2005)
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Spending increases most apparent in research,
public service, and institutional grant aid
-



Instruction and institutional grants funded from
general funds research and public service from
designated revenues.
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The policy critique is sharpening

• Perception that higher education finance is a
  dysfunctional top-line enterprise with no bottom
  line
• Critique that the line between profit and
  non-profit is blurring
• Senate finance committee investigation into
  non-profit tax status
• Massachusetts state proposal to tax college
  endowments
• Federal proposal re excessive tuition increases