Congressmen John Boehner and Buck McKeon
September 2003
The head of the House Education and the Workforce Committee and the chair of the Competitiveness Subcommittee released this 20-page analysis of college costs and their implications for American higher education. With reauthorization of the Higher Education Act cranking up (in piecemeal fashion so far), it's important to know that the two most influential Republican House members in this area believe that the "gains of the Higher Education Act are being severely hampered by what can only be described as a college cost crisis." This they define as tuition increasing faster than inflation, faster than family income, and faster even than "increases in state and federal financial aid." Report the authors, "These cost increases are pricing students and families out of the college market, and forcing prospective students to 'trade down' in their postsecondary educational choices because options that may have been affordable years ago have now been priced out of reach." The authors attribute the problem to laxity and profligacy in many (but not all) institutions of higher education, the absence of productivity gains, and lack of consumer-accountability in the higher education industry. In releasing the report, Messrs. Boehner and McKeown hinted at what the Washington Times termed a "new round of federal accountability measures" during the forthcoming legislative cycle.
The basic analysis is surely right. What's missing, however, is consideration of a very different approach to higher-education financing, one that some states seem to be sliding toward without acknowledging what they're doing. Once termed "full cost pricing," it would set the "sticker price" for higher ed - public as well as private - at or near the true cost of delivering the service, then devote all available federal and state (and private) resources to sweeping need-based aid programs that would make these prices affordable for all Americans. This approach has three big pluses: it eliminates unneeded subsidies for wealthy families attending public colleges and universities and targets the subsidy money on those who need it. It more or less erases the tuition gap between private and public institutions, thus eliminating that policy-induced incentive to attend a state college rather than a private campus. And by, in effect, "voucherizing" all public subsidies for higher education (save for R & D and other activities that need direct institutional financing), it empowers consumers (and the marketplace) to express their preferences and hold down prices.
A quarter century ago (yikes!), Dave Breneman and I proposed this approach in a Brookings book entitled Public Policy and Private Higher Education. It made sense then. I believe it makes sense today - and is more constructive than just decrying high tuitions. Though our proposal was long assumed to be politically unrealistic, the fact is that in the past several years many states are de facto allowing their public college tuitions to float upward in a way that isn't very different from what we proposed. Why not do it purposefully - and make sure the needed student aid follows? Meanwhile, you can find the Congressional report on tuitions at http://edworkforce.house.gov/issues/108th/education/highereducation...
