NAICU Letter to Forbes

December 06, 2007

Letters to the Editor

To the Editor:

Alex Davidson misses crucial differences between higher education and the for-profit business world ("Economics 101," November 12). Unlike makers of automobiles and household applicances, the nation's private, nonprofit colleges and universities provide the same quality of "product" to their students, without regard to their income. But low- and middle-income students are not the only ones subsized. The 13 percent of our students who pay full sticker price are too. The average price of tuition at our schools covers only two-thirds of the cost to the institution to provide an education.

Economies of scale that make sense in the for-profit manufacturing and service sectors would render American higher education useless. Replacing the personal attention and engagement found on private college campuses with DVDs and 500-student classes taught by graduate students would eviserate the educational experience. Study upon study has shown that the more engaged students are in the classrooms and with faculty and administrators outside of the class, the more likely they are to succeed in college and to graduate on time. It is illogical to compare the process for most effectively preparing tomorrow's scientists, teachers, health professionals, and community leaders with the models used to most efficiently provide fast-food or cell phone service to consumers.

Nevertheless, in cases where quality of education or access for students won't be sacrificed, private colleges nationwide are revamping their business practices to press costs down and improve administrative efficiency. Our institutions are entering into consortial arrangements to reduce administrative and academic redundancies, and leverage their purchasing power to obtain lower costs for energy, insurance, information technology, and other services. Consortial activities have recently been taken nationwide through the Coalition for College Cost Savings. Private colleges in 11 states are working jointly to develop and implement cost containment strategies. Private institutions also are outsourcing campus services, such as grounds and facilities maintenance, alumni relations operations, residence hall management, billing and other back-office  functions, and bookstores. They are turning to environmentally friendly systems to lower energy consumption; streamlining staff; and consolidating offices and programs to enhance efficiency. On the other side of the ledger, private institutions are increasing the revenue they receive through non-tuition sources, including philanthropic giving, and the selling and renting out of underused campus-owned facilities and properties. These efforts are helping to reduce the pressure to raise tuition at a faster pace. Consequently, five-year tuition growth at private colleges is at its lowest level since 1982.

Finally, every piece of empirical evidence--including studies conducted by the U.S. Department of Education--clearly indicates that there is not a causal relationship between increases in federal student aid and increases in tuition. What may seem like common sense has been invalidated by quantitative research. Congress is still working to make up for five consecutive years of federal cuts in student aid early in the decade. To further reduce funding would spike tuition increases as institutions struggled to stay accessible for the nation's increasingly needy student population. Certainly, this is not Davidson's intended outcome.


David L. Warren
National Association of Independent Colleges and Universities       
Washington, D.C.


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