How does government regulation affect tuition rates?
More than 60 percent of college students have federal scholarships or loans governed by a stack of federal regulations that stands twice as tall as I do. A former Stanford University president estimated that it costs his institution seven cents of each tuition dollar to comply with these regulations.
Regulations imposed on states drive up tuition at public universities. For example, the new healthcare law requires states to expand and help pay for Medicaid coverage, spending state money on Medicaid that could be going to colleges and universities instead. When such state support for public higher education goes down, tuition rates go up. In Tennessee, during the last 10 years, state support for Medicaid has risen 43 percent and for universities has dropped 11 percent, while tuition at the University of Tennessee has risen nearly 120 percent.
What are the implications of federal regulation for institutional autonomy?
A recent Chinese survey ranks 35 American universities among the top 50 globally, eight among the top 10. Our research universities have been secret weapons in developing the competitive advantages that help Americans produce 25 percent of the world’s wealth. This excellence is the result of two factors: First, competition that flows from the more than $100 billion in federal funds each year following millions of students to college, as well as from universities competing for $30 billion annually in federal research funding; second, institutional autonomy giving each campus the freedom to chart its own course. Overregulation limiting this autonomy is a greater threat than underfunding.
How can boards play a role in keeping costs low and quality high?
Board members and trustees might heed the warning that American Motors President George Romney gave the American auto industry in the 1960s: “There is nothing more vulnerable than entrenched success.” While colleges are not the same as car companies, there are similar signs of vulnerability within higher education. Many institutions are not listening to their customers or legislators, who are unhappy about rising tuition costs.
Board members must demand changes that reduce cost and improve quality, such as offering three-year degrees to well-prepared students. Former George Washington University President Stephen Joel Trachtenberg suggests opening campuses year-round. “You could run two complete colleges, with two complete faculties, in the facilities now used half the year for one,” he says. “That’s without cutting the length of student’s vacations, increasing class sizes, or requiring faculty to teach more.” Requiring one mandatory summer session for every student in four years—as Dartmouth College does—would improve his institution’s bottom line by $10 to 15 million, he says.
How can boards help make the case for less government regulation and more institutional autonomy?
First, find a way to answer the question that I most often hear from my colleagues in Congress: “Why do you raise tuition rates every time we raise Pell Grants?” To put it simply, persuade members of Congress, legislators, donors, and parents that you are doing something about rising tuition costs. Second, make your case at home. Too often, college presidents travel to Washington when they should be finding their congressman at home and explaining to him or her exactly what an institution is doing to cuts costs, reduce tuition, and improve quality. Finally, make sure accrediting agencies are doing their jobs. These agencies are the substitute for congressional interference in institutional autonomy. If Congress loses confidence in them—or in you—the government will step in with its own rules and regulations. The result of such wellintentioned regulation would be more smothering of the autonomy that is the source of excellence for American college and universities.
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