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Winter/Spring 2007 |
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In forecasting
the economic future of higher education, a Presidents Institute
panel predicted that colleges and universities will likely see
continued strategic use of tuition discounting, particularly at
highly selective institutions; increasingly constrained federal
and state funding for higher education as a result of the nation’s
ballooning budget deficit; and major demographic and geographic
changes in the demand for higher education.
“These
statistics indicate we’ll have a much more vibrant and interesting
campus in the future, which is great. But as we become more diverse,
with significant increases in lower income students attending college,
the least selective campuses with lower endowments will face the
necessity of trying to replace lost revenue,” Schapiro noted.
Raising tuition is an option for institutions facing a financial situation such as this, said Doti, because studies have shown that tuition increases are associated with higher quality. But he cautioned against a high-tuition, high-discount policy for some institutions. Using a sample of 107 colleges and universities included in both the 1992 and 2002 NACUBO surveys, the data indicate that “charging a higher price and offering discounts can have a positive impact”—but mainly for more highly selective institutions. According to his analysis, “High selectivity schools retained 57 cents for every dollar they spent on tuition discounting; low selectivity institutions retained only 35 cents per dollar—therefore low selectivity institutions are not as able to effectively utilize a high-tuition, high-discount policy…. Empirical analysis suggests it is the wrong strategy for low selectivity schools.” McPherson’s observations about the national fiscal picture in the next decade—particularly the predicted $3.5 trillion federal budget deficit—do not bode well for higher education. “Declines in federal revenue mean that finding any money to fund higher education will be a struggle, and we anticipate that state government spending on higher education will also be severely constrained.” In fact, McPherson predicted a “long-term decline in governmental priority given to higher education spending.” However, “when the federal government does not have money to spend on a problem, regulation and assessment” become the policy options, he noted, adding that this shift is already occurring with the Spellings Commission. But “the conversation is at an early stage and there is still an opportunity for college presidents to influence policy makers.” Rather than saying “no” to everything, presidents should tell officials what colleges and universities are already doing to assess educational effectiveness; and they “need to breed a ‘culture of evidence’ on campus.” Finally, McPherson cautioned that “student aid is likely over the next decade to come under serious attention by federal officials. It is a cumbersome, confusing system that increasingly is seen as operating in a self-serving way, which is eroding the underlying trust in the system. We’ll see persistent pressures in the next decade for simplification of student aid and calls for more accountability as to where the money goes.” |
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