What’s Wrong With PA Higher Education?

In the midst of rising tuition, dwindling tax revenue, and a recession, the presidents of 13 state-owned colleges are collectively receiving $147,427 in raises, which would equal tuition for 27 students. The Central Penn Business Journal reveals that nine of the ten highest paid state officials work in higher education. And a recent national pay survey, conducted by the Chronicle of Higher Education, found compensation for public university presidents increased 7.6% from last year, more than double the rate of inflation.

Pennsylvania’s four-year, public universities have the fourth highest tuition in the nation. The average student attending a Pennsylvania State System of Higher Education (PASSHE) school would have to earn $13,000 every summer (about $27 an hour) to cover the cost of tuition and fees. It is no wonder Pennsylvania college graduates shoulder the sixth highest college debt burden in the nation, despite the largest state grant program in the country. Pennsylvania students are paying more for their education and leaving school with more debt. It is time to ask why college presidents are receiving large pay raises while students are finding college less affordable.

This is not to demonize college presidents. Several presidents around the country are foregoing or donating a portion of their compensation in light of current economic forecasts. University of Pennsylvania president Amy Gutmann has donated $100,000 to help fund undergraduate student research. Yet colleges need to evaluate how they are spending their resources, especially when many are demanding additional taxpayer assistance.

Tuition and student debt have risen despite dramatic increases in higher education subsidies and taxpayer-funded financial aid though PHEAA and federal grants. Still, college presidents and lobbyists for state universities demand further increases in taxpayer funding under threat of additional tuition hikes. Theoretically, any increases in tuition should be offset by increases in available aid. So what went wrong?

There is strong evidence that increased state appropriations for higher education are actually responsible for higher tuition costs. Instead of helping universities lower tuition fees, state aid provides administrators with a never-ending source of undesignated funds. This means the money meant to lower a student’s tuition bills is easily spent on frills, like a new sports stadium or non-academic building.

The real problem is the very structure of the higher education model. Colleges simply are not accountable for the state funding they receive. Moreover, parents and students often fail to scrutinize the cost—at least until after graduation—because a large share of tuition is paid by federal, state, and private loans.

While colleges are facing the same challenges as businesses—including rising healthcare costs, union wage laws, a host of government regulations, slumping endowments, and the cost of remediation for students who are not prepared for college—many cost increase drivers are their own doing.

Universities are not suffering from a lack of funds, but an excess of state handouts. The entrenched system of tenure and a dramatic increase of administrators requires higher tuition, but does little to improve the quality of education. Higher education suffers from its own "edifice complex"—emphasizing expensive building projects to beautify campuses rather than teaching. Likewise, an increase in academic research contributes to rising tuition costs by shifting the focus away from instruction, creating lighter teaching loads and the need for more faculty.

If the state insists on funneling more taxpayer dollars into these institutions, aid should be contingent upon freezes in tuition and greater spending transparency. The current system of rewarding higher tuition with greater taxpayer-funded financial aid should be replaced with a system awarding fixed grants directly to students.

Making college more affordable begins with revamping the current spending system. It will require increased transparency so that funding flows directly to the student, blocking the ability of colleges to base their tuition on state aid, and restoring the original mission of higher education— teaching students rather than building prestigious research and athletic facilities.

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Elizabeth Bryan is a research associate at the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, nonprofit public policy research and educational institute based in Harrisburg.

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