Everyone knows that the cost of attending college in Virginia has soared in recent years, even as family incomes have stagnated. A good way to visualize the divergence between cost and affordability is to calculate the number of hours it takes for a family earning the Virginia median hourly wage to pay for a year of average tuition & fees. That’s exactly what Paul M. McNabb and James V. Koch have done in their 2017 State of the Commonwealth Report. The results can be seen in the chart above. The number of working hours required to attend a four-year college has increased 82% since the 2001-02 academic year, while the number for a two-year college has increased 67%. (These numbers don’t include room, board, textbooks and other miscellaneous costs.)
Higher education is the most inflationary sector of the U.S. economy, with cost increases outpacing that of the inflation-prone housing and healthcare sectors. In their analysis of Virginia’s higher-education system McNabb and Koch explain the causes of runaway tuition increases and explore the impact on Virginians. (Note: Koch, a former president of Old Dominion University, serves on the board of Partners 4 Affordable Excellence @ EDU, a sponsor of this blog.)
The question naturally arises whether Virginia’s colleges and universities are pricing state residents out of higher education. Pointing to the declining head count in the state’s public institutions — nearly 6% between the 2011-12 school year and the 2016-17 year — the authors say yes. “Simply put, increasing numbers of students have decided that our public colleges have become too expensive compared to the benefits they generate in return.”
The sticker price of college tuition & fees is not the same as the actual price that many students pay. The federal government dispenses Pell grants to low-income students, the state operates its own financial-aid program, and higher-ed institutions themselves extend financial aid. Consequently, the net price paid by students often is considerably lower than the advertised price.
Colleges and universities raise much of the money for financial aid by raising the sticker price that students from affluent families pay. In effect, the authors write, “the pricing policies of most colleges and universities today … administer a collegiate version of a steeply progressive income tax, taking from the more wealthy and giving to the less wealthy by means of the net prices each group pays.”
Despite their redistributionist tuition policies, universities remain economically and socially stratified. While some of Virginia’s elite public universities do offer steep discounts to low-income students, high admission standards mean that, as a practical matter, only a small number make it in.
If the denizens of the bottom 60 percent of the income distribution can be fashioned as “common people,” then one might say that at least five Virginia public institutions (University of Virginia, William & Mary, Virginia Tech, University of Mary Washington, and Christopher Newport University) have relatively few common people in their undergraduate student bodies.
McNabb and Koch raise the question of whether the General Assembly should financially support colleges and universities whose pricing policies imitate that of private universities.
Is it appropriate for the citizenry to subsidize institutions that increase social and economic inequality rather than provide the traditional ladders of opportunity that diminish differences?
Tough question. Virginia’s elite universities are unlikely to change their policies. Programs designed to increase the presence of lower-income students at the elite institutions might endanger their coveted Top 25 rankings if they eroded SAT score, ACT scores and on-time graduation rates.
Rare is the president of a top-ranked institution who wants to preside over a noticeable decline in his or her institution’s rankings. What member of an institution’s board of visitors will brag about the lower national ranking that came about because more Pell Grant recipients were admitted?
The authors point to the University of California system as an alternative model that Virginia might emulate. At the University of California at Berkeley, for example, 30% of undergraduates were Pell Grant recipients in 2015-16, while at UCLA the number was 35%.
But Virginia institutions are moving the opposite direction. At least a half-dozen Virginia public four-year institutions appear to have pursued policies that had the effect of restricting access of lower-income Virginians, say McNabb and Koch. “Is this a trend that the citizenry should support? We do not have the answer to this question, but it is easy to observe that what is perceived to be good for an individual institution’s national rankings may not be synonymous with what is good for Virginians.”
Bacon’s bottom line: That’s where the authors leave it. They don’t carry their thinking to its logical conclusion: that Virginia should cut off state funding and turn its elite public universities loose, letting them be free to be what they want to be — like, say, Duke or Dartmouth — and then redistribute state funds to institutions that appeal to a broader cross-section of the population.
I’m not sure how I stand on the issue, but I do see the logic.