The Council of Independent Colleges (CIC)
today released a report, The
Cost-Effectiveness of Undergraduate Education at Private Nondoctoral Colleges
and Universities, which provides compelling evidence that private
(nondoctoral) colleges not only produce a significant percentage of all
bachelor’s degree graduates, but they do so more efficiently and at much lower
cost to taxpayers than public institutions. The full report is available as a
PDF at www.cic.edu/CIC-Reports.
In announcing the report, CIC President
Richard Ekman said it “clearly documents how private colleges and universities
graduate a higher percentage of students within four years and with
significantly less reliance on state and federal subsidies than public
institutions. To put it plainly, a bachelor’s degree from a public institution
costs taxpayers 6.4 times more than a degree at a private institution.
Furthermore, private nondoctoral colleges and universities educate a diverse
population of students—in fact, they educate higher percentages of low-income
and first-generation students than public research universities.” Ekman added
that “policymakers who wish to increase the college attainment rate in the
United States should know that private institutions are 22 percent more
efficient at producing degrees within four years than comparable public
institutions.”
The authors are both distinguished
scholars who are not based at private institutions. William Zumeta, professor of
public policy and higher education at the University of Washington in Seattle,
and Nick Huntington-Klein, assistant professor of economics at California State
University Fullerton, propose that if states made modest grant increases to
aid-eligible students who choose a private college, significant numbers of
students would switch from public to private colleges. “Such a shift could, in
principle, save states on operating appropriations to public institutions and on
student aid grants in states where these grants currently go to primarily public
college students,” they said. Moreover, Zumeta and Huntington-Klein said,
students who switch from a public to a comparable private institution would, in
most cases, graduate more quickly, resulting in additional savings.
Ekman noted that “the researchers’ institutional affiliations as well as
their reputation for rigorous inquiry are evidence that there is no conflict of
interest in this report.”
KEY REPORT FINDINGS
- Private nondoctoral colleges and universities have a 22
percentage point edge over comparable public institutions in four-year
graduation rates and a nearly 12 point advantage in six-year graduation
rates.
- Private nondoctoral colleges retain students who are initially
interested in STEM and health to graduate with degrees in those majors at rates
(41 percent) that approach twice the rates of public doctoral and nondoctoral
institutions (24 and 23 percent, respectively).
- Private nondoctoral degrees are less costly to society overall
by an estimated 9 percent—a gap that widens to nearly 30 percent when the
additional social opportunity cost of the extended time to degree at public
institutions is taken into account (see figure below).
- Public sector degrees are 6.4 times more costly to taxpayers
than degrees at private colleges. In the period 2005–2012, the cost to state
governments for each undergraduate degree from a private nondoctoral college
averages $7,200 (mostly in the form of a tuition grant) compared with $46,401
for a bachelor’s degree from public institutions.
STATE
POLICY IMPLICATIONS
In order to explore the realistic possibilities for cost savings to states
and direct benefit to individual citizens from redirecting some future students
from public to private nondoctoral colleges, Zumeta and Huntington-Klein
selected five states and simulated the effects of plausible increases ($1,000
and $2,000) in annual state student aid grants to aid-eligible students who
choose a private college. To achieve the national goal of increasing
undergraduate degree attainment, a number of practical steps based on the report
findings can be taken in states that have projected growth in high school
graduates:
- California is a state of
interest because of its large size and prominence, the strains on its public
finances and public baccalaureate education capacity, and its considerable
number but relatively low proportion of private nondoctoral colleges. An
increase in aid spending targeted to those who “switch” from the public to
private sector would be more than offset by the assumed decrease in operating
appropriations to public institutions. This comes to $3.2–$4.8 million in
savings per cohort with a $1,000 grant aid increase or $6.2–$9.5 million with a
$2,000 grant.
- Georgia could save an estimated $0.3–$0.6 million per cohort
in targeted state grant aid with a $1,000 grant increase for private sector
students, with 387–592 students shifting to private nondoctoral colleges,
depending on net price elasticity.
- Implementation of the simulated increased grant levels has the
ability to save Kansas $21–$33 million (for the $1,000 grant increase) or
$41–$62 million (for the $2,000 increase) in public sector building costs,
respectively, depending on the response elasticity assumed.
- By shifting a significant number of students from public to
private nondoctoral institutions, Pennsylvania could produce more college
graduates. Depending on grant size and net price elasticity, the effect could be
between an additional 44 (with a $1,000 grant) and 130 degrees per year (with a
$2,000 grant), because private nondoctoral colleges in Pennsylvania have better
completion rates and times.
- Virginia is a state of interest because it has an increasing
high school age population, a vibrant private higher education sector, and a
long-standing Tuition Assistance Grant for resident students attending private
colleges in the state. Adding in an assumed decrease in appropriations per
student for public institutions, a $1,000 grant increase targeted at students
who switch from the public to the private sector would allow for state savings
of $7.5–$11.5 million per entry cohort, and a $2,000 grant increase would allow
for savings of $14.3–$22.0 million.
Overall, modest increases in grants to students who switch from public
institutions to private nondoctoral colleges and universities could
significantly improve degree attainment rates in these states. Zumeta and
Huntington-Klein, however, indicate that such financial incentives must target
particular students to achieve the desired goals: “If all aid-eligible
students—not just those who are induced to switch—receive the benefits of the
grant increase, the costs to the state quickly balloon to the point at which
they swamp any likely benefits.” They explained that one way to target students
“would be to shift policy thinking out of the current student aid paradigm to
consider simply rewarding private colleges for enrolling more state resident
students than they did in a base year.”
Ekman said that the authors’ “recommended policy changes at the state level
can help not only these states but also the nation as a whole increase the
number and percentage of undergraduate degree holders and in turn secure
America’s future in the 21st century knowledge economy.”