September 27, 2023
The Cost of Higher Education
On September 27th the House Republican Policy Committee shed light on the hidden costs borne by higher education providers and the increasing unaffordability of higher education in Pennsylvania. The day’s hearing underscored the critical need for transparency in the realm of higher education, a sector that holds immense significance in shaping the future of our state and our nation. Understanding precisely what tuition fees cover is paramount to making informed decisions about post-secondary education, managing student debt, and ensuring access to quality education for all.
Transparency in higher education is not just a buzzword; it is a fundamental principle that empowers students, parents, and policymakers alike. It hinges on the idea that individuals investing in higher education should have a clear understanding of where their hard-earned money goes, beyond the surface-level "sticker price" of tuition. By gaining insight into the breakdown of expenses within higher education institutions, students and their families can make informed choices about the value and affordability of specific programs and institutions. They can weigh the costs against the benefits and outcomes, ensuring that they receive a fair return on their educational investment wherever it may be.
The testifiers that joined the Policy Committee were as follows:
Dr. Daniel Greenstein - Chancellor, Pennsylvania’s State System of Higher Education
Thomas P. Foley - President, Association of Independent Colleges and Universities of Pennsylvania
Dr. Quintin Bullock - President, Community College of Allegheny County on behalf of the Pennsylvania Commission for Community Colleges
Dr. Daniel Greenstein, the Chancellor of PASSHE, highlighted the challenges faced by the state's public higher education system. The Pennsylvania State System of Higher Education, PASSHE, is comprised of ten universities serving over 80,000 students. Pennsylvania is currently in need of more degree-holding residents, as 60% of PA careers require a college degree while only 51% of Pennsylvanians hold a degree.
PASSHE's budget relies significantly on student tuition and fees (56%) and state appropriations (34%). Ideally, PASSHE schools budget their years considering a 2:1 student and state funding ratio. Declining enrollment during COVID and increasing expectations of what a university should provide have exacerbated the economic expectations of PASSHE schools. Modern universities now have technology centers, mental health aids, impressive student housing, meals, and extracurriculars that have incurred increased costs on the university and in-turn on students.
Of all the costs discussed at the hearing employee pensions appear to have grown by the greatest percentage over the past decade. Greenstein shared that these pension costs, which have surged by 250% over ten years, are a key driver of personnel-related expenditures that make up 72% of the budget. This jarring statistic is slowly being wrangled back as COVID and baby-boomer induced retirements return to normal.
Another modern cost that has impacted higher education is the need for university-provided mental health care. Mental health care has been available pre-COVID, but following the pandemic there has been increased efforts to expand services in all higher education institutions. Mental health care is but another expectation now foisted upon our universities, and these expectations come with a cost.
PASSHE came to the hearing with both answers for why college is so expensive, and also with suggestions on how to lower costs for both students and universities alike. PASSHE’s cost-saving suggestions are as follows:
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Require financially sustainable management with clear and measurable expectations. |
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Universities should utilize systemwide procurement to decrease the cost of buying goods and services as part of a procurement collective. |
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Universities should share academic programming – degree programs, majors, and minors – to offer more options than could be provided by a single institution. |
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Share staff appointment to decrease faculty costs and enable talented people to fill vital roles at multiple institutions. |
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Share services such as labor relations, legal, payroll, human resources, data analytics, etc. to share the cost across universities. |
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Demolish unused/under-utilized buildings to eliminate maintenance costs. |
“Maintaining affordable, high-quality, financially sustainable operations requires a portfolio approach.”
Dr. Daniel Greenstein
Chancellor, PASSHE |
Tom Foley, President of the Association of Independent College and Universities of Pennsylvania (AICUP), joined the day’s hearing to represent the perspective of 90 independent nonprofit colleges and universities, serving half of all 4-year degree-seeking students in Pennsylvania. He strongly emphasized the discrepancy between the "sticker price" of education and the actual cost paid by students, with 90% of AICUP students receiving financial aid. Foley shared that many of the increased costs borne by college and universities are the same struggles being faced by Pennsylvania residents. Inflation has increased the cost of general living expenses, energy procurement, technology requirements, debt costs, transportation, and personnel wages and benefits. With inflation and increased expectations placed on AICUP Colleges and Universities Mr. Foley was proud to share that the average net tuition and fees paid by AICUP students has only risen by 0.4% over the last decade.
The cost of providing higher education falls largely into two categories. There are inflation/economic drivers of cost – which impact all Americans, as well as instructional/student support costs which are unique to higher education but influenced by K-12 schooling and modern expectations. Mr. Foley compiled these costs and provided the following to the Policy Committee:
| Inflation/Economic Drivers of Cost |
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General Living Expenses – Food, water, sewage, and housing costs have risen significantly due to inflation. |
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Energy – Gas and electricity costs are extensive for large universities. |
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Technology – Computers and system upgrades. Our universities need the most modern tools and equipment. |
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Debt Costs – Bond yields decrease as inflation eats away at the interest potential. |
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Transportation – New vehicles and increases to university-provided transportation carry significant expense. |
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Personnel Costs – Retirements, benefits, and healthcare. Healthcare costs are expected to dramatically increase in 2024. |
| Instructional/Student Support Services Costs |
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Mental Health – Post COVID, universities saw rapid expansion in much-needed mental health care offered to students. |
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Learning Loss – K-12 students experienced significant loss in their educational offerings during COVID, and the impact is now being felt in our universities who must provide increased remedial services and support. |
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Changing Student Profile – Students today differ in the opportunities and affluence of past generations. Schools have found that they must assist with food insecurity, housing concerns, and lack of transportation to facilitate an education for students of varied means and backgrounds. |
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Overall Expectations – College campuses are a 24/7 living and lived-in environment. The responsibilities and services of what a university should provide has grown, and has led to increased costs. |
AICUP, like PASSHE, also provided some suggestions for students, K-12 education providers, and universities alike to further cooperate to save time and money when pursuing a world-renowned higher education. These common sense solutions build upon existing supports, can be implemented with little to no cost, and are as follows:
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Expand PHEAA’S Ready to Succeed Scholarship (RTSS) Program and remove or adjust current GPA limitations to increase access. |
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Encourage collaboration between higher education institutions to decrease costs and provide greater access to their student bodies. Collaboration can include cyber-security programs, energy procurement, bond financing, software licensing, group purchasing, benefits/health insurance, retirement programs, student textbooks, and more. |
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Encourage transfer and articulation agreements between colleges/universities and community colleges. |
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Invest in high school dual enrollment opportunities to enable high school students to earn college credits and jumpstart their pursuit of higher education. |
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Reduce legislative, regulatory, bureaucratic, and unfunded program requirements placed on institutions. Data reporting requirements are duplicitous, time consuming, and require additional staff. |
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Invest in financial literacy education for both students and parents. Some schools have begun to require a financial literacy course for all incoming freshmen students to discuss budgeting, borrowing, and loan repayment. |
“We should invest in programs that allow students to obtain college credits while in high school, particularly through dual enrollment.”
Tom Foley
President, AICUP |
Dr. Quintin Bullock, the President of the Community College of Allegheny County, spoke on behalf of the Pennsylvania Commission for Community Colleges and their 15 community colleges across the state. Bullock explained that the finances of Community Colleges are not as reliant on state funding as other institutions, with state funding constituting 22% of community college budgets and tuition covering more than 60%. Community Colleges have a different student body than PASSHE or AICUP universities, and their offerings and expenditures reflect the needs of their students. Knowing that receiving a degree is not always the goal of students who attend a community college these schools offer varied courses to offer certifications, skill refinement, and appeal to the general interests of local residents wishing to increase their knowledge and abilities. To avoid raising tuition, community colleges have needed to eliminate some programs and decrease their workforce by 29% in the last decade.
Community college is a fantastic cost-saver for students in pursuit of a 4-year degree. If the tuition, room and board, and extra expenses of a traditional college or university is too overwhelming or financially taxing a student can save substantial time and money through two years of classes at a local community college. The credits are less expensive, classes are often tailored around student work schedules, and baccalaureate-granting institutions are increasingly accepting credits and certifications achieved from community colleges. School credit transfers differ between universities, but all PASSHE schools accept up to 60 credits from PA community colleges, enabling students to enter a university with full junior standing and essentially “skip” two years of university-level expenses. This is a great boon to PA students and saves an average of tens of thousands of dollars per degree.
Community colleges also offer a cost-saving tool that both PASSHE and AICUP highlighted, the ability for high school students to “dual enroll” and receive both high school and college credits simultaneously. Similar to Advanced Placement (AP) classes, high school students can choose to take college-level courses through their local community college and get a jumpstart on their college path. These students, already on a collegiate path, enter into a university with credits, significant experience, and more freedom to entertain other courses and personal ventures.
“What we pride ourselves on is the ability to work very closely with business and industry to ensure that the programming that we offer aligns and supports the needs in our various communities.”
Dr. Quintin Bullock
President, Community College of Allegheny County
On behalf of PA Commission for Community Colleges |
The testimonies of Dr. Daniel Greenstein, Tom Foley, and Dr. Quintin Bullock throughout the hearing illuminated the multifaceted challenges facing Pennsylvania's higher education landscape. They underscored the fact that the expectations of what a university must provide have evolved, with institutions now serving as not only centers of academic learning but also as support systems for students facing diverse challenges. Students today often enter college less prepared, necessitating increased investments in remedial services and support. As these expectations and demands continue to grow, they generate increased costs in delivering quality education.
As we contemplate the path forward, it becomes abundantly clear that the solution to reducing the cost of higher education extends beyond the ivory towers of universities. It requires a holistic approach, beginning with a renewed focus on K-12 education to better prepare students for the rigors of higher learning. Equally crucial is a commitment to increased transparency throughout our educational system. This transparency is not just about understanding where tuition fees go; it is about fostering an open and accountable educational ecosystem that empowers individuals to make informed decisions about their learning journey and the investments they make in their future. By investing in both the foundation of K-12 education and the principles of transparency, we pave the way for a more affordable and accessible higher education system, ensuring that every aspiring student has a fair shot at success in the knowledge-driven world of tomorrow.