Thomas Harnisch, the director of state relations and policy analysis for the American Association of State Colleges and Universities, explains the price and cost of college.
Thomas Harnisch is the director of state relations and policy analysis for the American Association of State Colleges and Universities. He helps to plan the Higher Education Government Relations Conference and helps to create the AASCU Public Policy Agenda. He has a bachelor’s degree from the University of Wisconsin-Madison, a master’s degree from the University of Minnesota, and a doctorate from The George Washington University. His research includes state higher education finance, access, and affordability. He has been referenced in Time Magazine, Politico, Bloomberg, Inside Higher Ed, The Chronicle of Higher Education, Education Week, Washington Monthly.
Can you explain the difference between the cost of college and the price of college?
The cost of college is how much it costs to educate a student. The price of college is what the students actually pay. That’s the tuition prices. Your cellphone that you have, it costs a certain amount for the company to produce. But then it was priced at a different level. So it’s a lot like that. One of the reasons that the price is lower at public higher education is because the state comes in and subsidizes. So it costs more to provide for and educate a student than what they pay in tuition. The difference is made up through the subsidy–the funding that the state provides. And so, as the state provides less funding, students and family have to pay more in tuition.
Where do states allocate the money they are no longer contributing to higher education?
Politically, a lot of state policy makers don’t want to raise taxes. Especially now with Republicans controlling a large share of state legislatures–and some states have super majorities in state legislatures. And so, politically, tax increases are largely a non-starter. One of the reasons for that is medicaid expenses. Medicaid expenses are a rolling part of the state budget, and that has had some effect on the money that is available for higher education. Also remember that higher education in state budgets is what’s known as a discretionary budget item. So what states generally do is go through and fund the items that they actually have to fund. There are certain things that states have to fund, and then after that, basically, they say: we’ve funded what we had to fund, and now, what do we fund with the money we have left? And so higher education has been referred to by scholars as the balancing wheel of state budgets. That means when states have less money, higher education is the first thing to cut. And when they have more money, they give more to higher education. But the trajectory is such that the cuts are often much deeper and much more frequent than the funding increases. And when you take that and you add in the enrollment increases, you have a situation where the per student funding has gone down pretty dramatically.
So then, states are not required to provide money for higher education?
No. In some states, of course, it will be different. It is a discretionary budget item. So they have a lot more leeway to cut it than other budget items. But politically, too, higher education is one of the easier ones to cut for the simple fact that not every state lawmaker has a college in their district. Everybody has a K-12 school district, and all of them have parents of K-12 students and all have teachers. They do not all have colleges and universities. Along those lines, college students generally don’t vote. They don’t have very good voter participation. And so they just have a lot more leeway to make cuts, politically speaking.
Which states are feeling the impact of a decline in state funding the most?
It varies based on the condition of the state’s economy. Five years ago, almost all the states were hurting because of the recession. But now, the states that are hurting are mostly states that are dependent on oil revenue. The price of oil is very low, and so for some states, that has a big impact on their economy. They have a budget deficit, and higher education often gets cut. So right now, the state that’s in the most crisis–one of the states–is Louisiana. They have both low oil prices and they’ve made a lot of tax cuts in recent years. And so the combination of tax cuts and low oil revenues have produced a significant budget shortfall.
Students are graduating with more debt because of the increased price of college. How will this debt impact their futures?
The increased tuition prices due to state funding cuts have led to growing student debt. So you have a whole new generation of college graduates, and folks who haven’t graduated college as well, that have fairly significant student debt loads. And I’m not sure how prepared we are to deal with this. In most cases, the student debt load for undergraduate students attending public colleges is fairly manageable. It’s not a crisis for them so much as it is an annoyance. But for some students, they didn’t finish college, or they got over their head with student debt. So for them, it’s going to be very difficult to make a down payment on a house or afford other things because they have so much student debt. And this is a problem that’s particularly pronounced in the for-profit college industry. So students who have attended for-profit colleges generally have a much higher student debt load.
Are there any other long term implications to the current way higher education is financed?
The increased student debt. But also, for some students, they may look at tuition rates now and say: ‘hey, you know what college just isn’t affordable. We just can’t do this.’ There’s been a lot of effects. Students are working more. They’re working a job or two just to make ends meet. So they’re not focusing on their studies as much as they are on just trying to pay their bills. That’s an issue right there. Institutions have been effected pretty considerably, too. Remember that if the state goes and says we’re going to cut higher education by 300 million dollars, that doesn’t mean they’re going to raise tuition enough to cover that 300 million dollars. That would just price all the students out of college. They have had to make cuts. There are fewer academic programs, they have greater reliance on adjunct faculty, and numerous other consequences. College presidents have been very careful to make the cuts in a way that doesn’t affect the academic side of the university. But it’s very difficult to do that, simply because most of college expenses are in salaries and benefits.
Would the value of a degree go down if the cost per student spent by universities went down?
It depends on the institution. Right now we have a situation where the research institutions are spending more per student. The state colleges are relatively flat, and the community colleges have actually gone down and don’t pay as much per student. The issue is that at some level, the quality of the university will be affected by the spending per student. And so, over the last five years or so, there has been less spending per student. There are fewer programs now. And there are fewer tenured faculty members. And so you have a hard time attracting the best and the brightest faculty members if you’re not able to pay for them. There are initiatives out there–ways of using technology– that are being explored as ways to lower the cost of educating a student, while also providing a high quality education. So there are models out there that are being explored, but the problem that you run into is that at some point you get what you pay for. If you don’t spend very much per student, you have to ask yourself what is the quality of the education they are getting?
Why is it important that states help fund higher education?
I think that states should spend considerably more on higher education. The reason for that is in the decades ahead, having a college education is going to be incredibly important for having a good paying job. We want to make sure that students from all backgrounds–so low income students, students that are from traditionally underserved communities– we need to help those students get into college and go to college and graduate without a considerable amount of debt. It’s just really important that states continue to fund higher education, and increase funding for higher education in order to give them high quality, affordable college opportunities. If not, you have a situation where just wealthy students are going to college. And the university benefits from having a broad cross section of students.
Why do universities benefit from having a broad cross section of students?
It comes down to diversity. You want to have a diverse student body so that all perspectives are on the table. Students from low income backgrounds will be able to provide a certain perspective. Students really learn from each other and they should go to courses where the students have different ideas and perspectives on issues. If you don’t have any low income students, that’s a big perspective that you’re missing.