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Trusteeship Magazine

Cost Containment in Higher Education

By Kevin P. Reilly

From tuition to textbooks, from compensation to campus construction, there’s a big national conversation these days about containing college costs. President Obama, in his recent State of the Union address, put colleges and universities “on notice,” saying the federal government will not “subsidize skyrocketing tuition.” He then introduced a number of measures designed to incentivize cost controls and productivity.

At the core of this debate are complex problems without clear solutions. Among them, how do we, as a nation, meet the growing demand for more well-educated graduates, even as the resources to produce those graduates continue to diminish?

In the University of Wisconsin System, we have sustained relatively modest tuition rates while earning a reputation as one of the nation’s most respected systems of higher education. However, those efforts are insufficient as we face a veritable Bermuda Triangle of challenges.

Operational costs continue to rise, alongside record enrollments and demands for greater contributions to economic development. Lower state and federal tax revenues lead to constrained or decreased funding for both operating budgets and student financial aid, resulting in higher tuition bills and longer waiting lists for need-based grants. The depressed economy leaves families with lower incomes, depleted savings, and justifiable fears about the future.

Even as the sticker price of college tuition goes up, we know it is not an accurate measure of students’ costs. The College Board calculates that average net tuition and fees for in-state students across the United States increased by just $170 over the past five years, in inflation-adjusted dollars. That figure accounts for all non-loan grant aid and tax deductions, painting a very different picture.

Data compiled by the Grapevine project, meanwhile, show that state funding for higher education in America fell by an average of 7.6 percent in fiscal year 2012—the largest such decline in 50 years. Here in Wisconsin, we experienced a 13.3 percent drop, with more cuts proposed midway through the current academic year.

As a result, a heavier financial burden is being shifted onto students’ shoulders. About 10 years ago, Wisconsin subsidized 64 percent of the cost of educating each resident undergraduate. Today, state taxpayer support covers only 40 percent of those costs.

In the absence of reliable state support, one of the best ways we can control costs for students is to focus on “net price” and the role of needbased financial aid. Institutional leaders and their governing boards must advocate strongly for more robust investment in financial aid from both public (taxpayer) and private (donor) sources. Such investments will take on even greater importance as we enroll more first-generation students and those from lower-income families.

More public and private aid for needy students is one solution, but it does not absolve us of the need to pursue even greater operational efficiency. The cost to educate a student in Wisconsin has grown at an average annual rate of 3.6 percent over 30 years, roughly mirroring the general rate of inflation. In a climate of continued constrained resources, however, college and university leaders must be willing to tackle all the drivers affecting our operations, including those at the core of our mission, such as the largely traditional methods we use to deliver undergraduate education.

Ten years ago, the UW System offered about 860 electronically mediated and distance-education courses, with enrollments of 19,300. Today, we have more than 4,500 such courses, and enrollments exceed 111,800. We are proud of that progress, but it’s a very small slice of the total number of courses and enrollments. We must do more to incentivize more creative coursedelivery techniques in every academic department and school.

In the end, keeping college costs down is a goal that requires attention on numerous fronts. Trustees can play many key roles in pursuing this goal, but we all need to focus on the efforts that will yield the biggest and most meaningful results.



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