The Rising Cost of College, Research Paper Example

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Research Paper

Transmittal Memo

This discourse presents an examination of the current issues related to the rising cost of college tuition.  In today’s economy, it is no longer feasible for youth to expect that they will be able to obtain a job paying more than the minimum wage, which is means that, even working 40 or more hours per week, they would not live at or above the poverty line.  In order to have any opportunity for a comfortable future, it is necessary for youth to attend college and the more prestigious the university, the more positive the outcomes are suggested to be.  This casual analysis of the political, financial, and social reasons for the astronomical rises in college tuition annually will provide a succinct presentation of the most relevant details of this issue, such as the quality of the educational staff, expenses associated with the competitive drive for institutions to own and use cutting-edge technologies, and various other expenses that may translate to increased tuition.  This paper also will discuss how tuition increases affect students, according to their various socioeconomic statuses (SES) and how SES relates to the availability of government subsidized and other forms of collegiate funding availability.  Leadership and how it relates to fiscal management is examined, detailing the organizational structure of collegiate organizations and how this hierarchy affects the ability of a college to properly manage and allocate funding to its students and various departments.  Through these descriptive details of the prominent factors affecting college costs, this paper examined how the structure and availability of financial aid and individual financing policies of collegiate institutions can minimize or maximize participation, access, and success for all students.

This publication was prepared by                                                                                , who was solely responsible for the research, analysis, and reporting of information on regarding the issues of concern presented in this paper.  The author(s) would also like to take this opportunity to give thanks to all those that provided invaluable assistance production and editing of this publication.  Finally, we want to acknowledge the work done by many education scholars in this area, and thank them for their insightful work in student financial aid and public policy.  The opinions expressed in this report are those of the author(s) and do not represent the opinions or views of                                                                                  University, the employees, the reviewers of this paper, or anyone else that has contributed to this paper.

Executive Summary

Higher education becomes more critical to the successful future of our youth with the passing of each year and this is reflected with the correlating increase in college-related expenses each year.  Education is critical to our nation’s cultural, social, and economic well-being, since an estimated 90 percent of the fastest-growing jobs in today’s technological economy all require at least two years of postsecondary education (McDonough, Calderone, Purdy, 2007).  Although a college graduate can assume that they will earn an average of one million dollars more over the course of their working life than those with a high school diploma, most students and their families can expect to pay more for college than they did the year before, a trend that continues with each progressive year (McDonough, Calderone, Purdy, 2007).  Moreover, experts are concerned that the increases in the cost of continued education may be discouraging large numbers of minority and low-income individuals from pursuing higher education, which constitutes a significant portion of the workforce.  Although both federal and state governments have adopted programs to assist middle-income and low-income students, these “merit aid” packages had very different purposes than the options focusing on needy students (Seftor & Turner, 2002).  Merit programs were intended to partially reserve the best and brightest students locally in an attempt to encourage students to perform to their highest potential while simultaneously addressing the college-cost concerns of middle-income Americans, and gain public popularity for the politicians involved with promoting the program (Micceri, 2008).  Within a short period of time, however, a number of states began to blend the two concepts, offering financial encouragement in the promise of financial aid and affordable tuition for the most academically and financially at-risk students in exchange for their preparing well for college (Micceri, 2008).

Disparities in SES the diverse cultures served by HEIs has magnified the issue of the rising costs of college tuition due to the significant achievement gaps created by race and income differences amongst American families, and caused increasing concerns about whether most schools are on an obvious path toward improving the achievement of all students by providing the necessary resources (Hanushek, 2006).  This brief discourse has establish that competition between colleges for ranking and status, the availability of government issued and other funding sources, and the organizational leadership and employee structure of the institution are the primary factors relative to the issue of the rising costs associated with acquiring a college education.  The examination of these attributes has also provided a description of the scope and magnitude of the problem through a casual analysis of the identified factors, explaining the reasons why and how this problem came to be through an examination of the relative sources. However, no solutions to this issue were rendered at this time.  Consideration of these factors that have been presented will assist in cost management of attendance at an HEI, but no recommendations for practice implementations have been made at this time.

The Rising Cost of College

Introduction

There is a consensus among scholastic experts that educated individuals enjoy better socio-economic and living conditions and it has been statistically determined that there is a significant labor market advantage to attending prestigious undergraduate institutions since a college graduate can expect to earn an average of over $1 million dollars more over the course of their working life than individuals with only a high school education (Eide, Brewer, & Ehrenberg, 1998). A great deal of attention has been recently concentrated on the swiftly increasing costs associated with a college education, and whether the remunerations of going to an exclusive private college measure up to the cumulative expenses (Eide, Brewer, & Ehrenberg, 1998). Tuition rates for private colleges and universities have risen by two to three percent more than the rate of inflation annually over the last hundred years and has been rapidly growing nearly two and a half times faster than the cost of living since the early 1980s (Ehrenberg, 2000; Eide, Brewer, & Ehrenberg, 1998).  However, disparate socioeconomic statuses (SES) of families in which white, black, and Hispanic children grow up have enabled significant achievement gaps by race and income to persist among American families, and concerns abound about whether most schools are on an obvious path toward improving the achievement of all students by providing the necessary resources (Hanushek, 2006).  This brief discourse will establish the pertinent facts relative to the issue of the rising costs associated with acquiring a college education by first describing the scope of the problem, and then performing a casual analysis of the identified factors, explaining the reasons why and how this problem came to be through an examination of a range of quality sources from mainstream journalism, but not indicating any definitive solutions to the problem.

Prevailing Contributory Factors to Educational Cost Increases

Basic education is good for learners but it is equally important that students pursue higher education. Indeed research has shown that individuals who have spent longer durations of time in school tend to be more successful than their counterparts who have spent shorter periods in education systems (Micceri, 2008). The United States is home to representatives of nearly every culture on the planet, making it the most culturally diverse nation in the world and racial and ethnic minorities comprise an increasingly large proportion of the U.S. demographic, constituting the majority of residents in many regions nationwide.  Approximately one third of the total U.S. population is of minority descent and, as such, it is important for more minorities to pursue higher education for the betterment of their communities (Micceri, 2008). Studies that track students over time, particularly students from low SES backgrounds, find that the racial and ethnic gaps account for students’ inability to maintain their achievement levels, and in many cases, the disparities result in poor performance over time (Micceri, 2008).  Falling achievement should warrant attention, particularly among students from low SES backgrounds (Micceri, 2008).

Socioeconomic Issues

Whether students decide to pursue higher education through college or graduate school depends on the educational experiences they have in early childhood and throughout their years of primary education.  Previously, due to a variety of factors, both individual and systematic in nature, especially during the periods of racial segregation in American history, minorities’ lives were punctuated with apathy and hopelessness. hinder students that drop out of school from achieving prosperity later in life. When schools fail to create the necessary needed support to help families become involved in education it can be a challenge to the learners and also the education system as well, since it cuts off a relevant part of the education sector. The differences in the environments of primary schools and those of Higher Education Institutes (HEIs) and today’s modern universities can be a shocking experience if the individual is not properly prepared (Sharp, Ward, & Hankin, 2009).

Over the years, HEIs have become more available to the public and higher education is now mass-marketed to the public (Sharp, Ward, & Hankin, 2009).  However, the older, elite universities, like Harvard, Yale, Oxford, and Cambridge, still remain at the top of this educational hierarchy, although they are not always rated this way by their students (Sharp, Ward, & Hankin, 2009).  Research has also shown that offspring from poor or middle-class families who attend secondary or tertiary schools have high aspirations (McDonough, Calderone, Purdy, 2007). The availability of HEIs to the public has increased enrollment from five percent in the 1960s to 40 percent and this growth in enrollment has changed the funding dynamic of the university system, creating the tuition system where students are responsible to pay for their own education (Sharp, Ward, & Hankin, 2009).  Income, education, family structure, and neighborhood conditions are the four main elements of SES and determine many future outcomes for the individual and society as a whole, as it is the working class that carry most of the social burdens of the impoverished through higher crime rates, drug addiction, and joblessness in poor neighborhoods.  These elements can be attributed to the tremendous opportunity gap from which many lower SES students are subjected to throughout their educational experience.  Many state controls, such as high school exit exams, proficiency standards, and other accountability systems designed to ensure retention of curricula and provide policy solutions have failed, due forces and factors beyond system control should be implemented, but are non-existent and leave these individuals unprepared for higher education.  Even though the gaps in the educational achievement between the people of color and white students were halved in the 1970s through to 1980s, the tendency has not been significantly arrested (Kane, 1994).

Although some biased admission guidelines have been revised to permit more minorities to attend colleges and beyond, “…the average cost of attending an elite private college or university is about $1000 a week, while the average cost across all private colleges and universities is about $630 a week, and the average cost of attending a public college or university is only around $250 a week” (Eide, Brewer, & Ehrenberg, 1998, p.371).  In addition, even though the Consumer Price Index (CPI) rose 296% between 1976 and 1996, the average college tuition nearly doubled during this same period, increasing by about 500% (see Figure 1) (Micceri, 2008).

Figure 1: Inflation-Adjusted Published Tuition and Fees Relative to 1981-82, 1981-82 to 2011-12 (1981-82 = 100)

Inflation-Adjusted Published Tuition and Fees Relative

(College Board Advocacy & Policy Center, 2011)

To look better than their competitors, the institutions wind up in an arms race of spending to improve facilities, faculty, students, research, and instructional technology (Ehrenberg, 2000).  Top institutions have chosen to maintain and increase quality largely by spending more, not by increasing efficiency, reducing costs, or reallocating funds (Ehrenberg, 2000).  This turned higher education into a business, with tuition rising as the demand for higher quality standards and competitive curriculum increased to make graduates able to compete in global markets (Sharp, Ward, & Hankin, 2009).  This occurrence encourages critics to speculate as to whether Baumol’s cost disease model is relevant in regards to these cost increases since productivity not warranting such increases (Ploeg, 2006).  The Baumol model discusses the rise of salaries in jobs that have experienced no increase of labor productivity while other occupations that have grown do not have the same salary increases (Ploeg, 2006). This goes against the theory in classical economics, which states that wages are always closely tied to labor productivity changes, and in the case of university tuition cost increases, wage gains in jobs without productivity is caused by the necessity to compete for highly skilled employees with jobs that did experience gains and can pay higher salaries, just as classical economics predicts (Ploeg, 2006).  High standards ensure that graduates will have an education or skill that will guarantee them a job, which is a progressive step for the economy (Sharp, Ward, & Hankin, 2009).  Since many universities have the liberty to determine what they teach and what counts as knowledge, HEIs were not always accessible to the public, but only to the elite members of society (Sharp, Ward, & Hankin, 2009).

Competition, Ranking, and Funding

The demand for better educational standards always includes the demand for better teachers.  Professional development must be found within practice in order to be the most effective, must be practical in designing and support their practice, and must encourage student participation (Decker, Decker, Freeman, & Kopf, 2009).  Open universities allow students the luxury of distance learning and the ability to earn correspondence degrees, which some critics say has contributed to the overall decline of academic quality in universities (Sharp, Ward, & Hankin, 2009).  The new educational model allows students to have a say in what material is taught in their degree program, which has made trivial subjects popular and caused the traditional areas of study to be discontinued because they were unpopular with the students (Sharp, Ward, & Hankin, 2009).  Other concerns include the change in the motives of the university from educating students to teaching “performance skills” that will enable students “to perform” in employment markets (Sharp, Ward, & Hankin, 2009, p.102).  The key to effective teaching is to keep a low student/teacher ratio, which requires a larger number of qualified staff members, typically accounting for up to 80% of the budget in many universities (Decker, Decker, Freeman, & Knopf, 2009).  Other costs of operation include increasing salaries to remain competitive for qualified personnel, technology upgrades, meeting the needs of increasingly diverse student populations, and meeting deferred maintenance needs (Micceri, 2008). Continually increasing regulations and accreditation requirements result from bureaucratization and the effects of “increased scrutiny” due to perceptions regarding the inefficiency of higher education. These add additional, unnecessary expenses onto higher education’s already difficult costing task (Micceri, 2008).

Another considerable concern regarding the cost of a college education is based on the economic return to attending a selective private institution, for the student as well as for the institution itself, which is considered to be large and increasing (Ehrenberg, 2000).  Published prices, also called sticker prices, include the tuition, fees, and room and board charges advertised by postsecondary schools and are the price students pay if they do not receive any financial aid. Many students receive discounts from the institution, as well as grant aid from other sources that help them pay the published prices (College Board Advocacy & Policy Center, 2011).  The variation in published prices explains the variations between the tuition and fees of public and private institutions, across states and regions, two-year and four-year institutions and by the types of degrees offered and there is also a wide range of prices within each of these categories (College Board Advocacy & Policy Center, 2011). The net price is the published price with the grant aid, the tax credits, and deductions that students are awarded subtracted and is frequently much lower than published prices and represent the amount students actually pay. Institutional finances describe the variety of sources that colleges and universities derive their revenue from in addition to tuition and fees and include state and local appropriations for higher education, income from endowments and annual giving, research grants, and hospitals and other enterprises (College Board Advocacy & Policy Center, 2011). Although board trustees are typically knowledgeable in cost cutting techniques and meeting budget constraints, they have little to no autonomy and, if the president tells them that they need funds to enhance the living and learning environment to attract students or, that they need to spend money to maintain the strength of the university in a particular field, they are bound to comply (Ehrenberg, 2000). The quality of leadership within any scholastic program, which is commonly demonstrated through the educational background, pedagogical knowledge, and skill levels exhibited by the faculty, has a considerable influence on the performance and level of achievement of the students within the program.  Knowledge of the importance of this criterion has encouraged school reformers to insist on the establishment of effective performance standards designed to measure the success of school leaders and strengthen educational leadership as a whole (Decker, Decker, Freeman, & Kopf, 2009).  The current state of flux within the field of education has created a multitude of opportunities educational leaders can use to mentor novices, participate in informed advocacy, make the public aware of the field’s reliance on a code of ethics, and learn from veteran educational professionals as well as emerging leaders, and, when appropriate, effect positive change within the field through suitable research that will increase current knowledge about the characteristics and lifelong benefits of quality programming for all students (Decker, Decker, Freeman, & Kopf, 2009).

Causal Analysis: Why and How

Since the 1970s, larger percentages of minority groups have managed to successfully transition into the ranks of higher levels of education (Decker, Decker, Freeman, & Knopf, 2009).  This can be partially attributed to the fact that individuals who have achieved certain levels of academic achievement expect their sons and daughters to complete scholastic pursuits up to or even beyond the levels they themselves went (McDonough, Calderone, Purdy, 2007).  The established potential benefits of quality educational programs has strengthened funding agencies’ and policy makers’ commitment to ensuring all families have access to programming that can support and enhance student development, growth, and learning (Decker, Decker, Freeman, & Knopf, 2009).  However, it would be shrewd to be conscious of the fact that endeavoring to graduate college and beyond is troubled with disparities and inequalities biased upon race and ethnicity (Kane, 1994).  Statistical data from 1992 indicated that over 80% of students whose parents were college educated enrolled in college directly after high school (Kane, 1994).  This trend was not however complimentary to the facts of the day which showed that only 54% of students whose parents had completed high school and only 36% of students whose parents had attained a level of education lower than high school, immediately enrolled in college direct from high school (Decker, Decker, Freeman, & Knopf, 2009).

Socioeconomic Issues

Although policies have been designed and implemented to improve aspects of socioeconomic status, like income, education, and family structure, no policy can improve SES directly.  According to existing affirmative action guidelines, ethnic minorities and low-income students are underrepresented and this concerns the rising cost of college and increased student debt because poor and middle class students are struggling to pay their debt following graduation, which leaves them still in poverty despite their expensive education.  Middle-class Americans are finding it increasingly more difficult to balance their waning paychecks and the rising costs of basic items such as health care, housing, energy, and the growing burden of college tuition, which has affected this group the most since wealthy people can afford it and poor people may be eligible for financial aid, although the continual increases has also diminished the capacity of financial aid to cover the entire financial burden of tuition for many students (McDonough, Calderone, Purdy, 2007).  In the 1970s minorities were recovering from the effects of centuries of discrimination in virtually all aspects of their lives, including social, economic, and educational cultural points that were heavily exploited.  As such, the culture of most minority youth that were at or near college age during this time tended to be on of apathy or absence of hope and belief in the system that existed then.

Many African American youth do not think they can afford college unless they qualify for a full athletic scholarship and do not embrace education as way of making it in life, thinking their only options are music or sports (Micceri, 2008). For minorities, financial barriers, especially in the current financial crisis, pose a challenge to the bleak prospects that already exist and have seen most household lose such basic necessities as their housing, which makes it even more difficult for them to afford to educate their children beyond high school.  Socioeconomic and ascriptive influences undoubtedly affect high school students’ school performance, which impacts their subsequent college choices. A critical policy issue involves whether or not socioeconomic and ascriptive factors also have influences on college choices that are independent of their influences on academic performance and they do have independent effects, but they are relatively minor and more “social” than “economic” (McDonough, Calderone, Purdy, 2007).  There have also been various scholarships put forward by the government of United States as well as in other countries with special focus to assist bright young men and women of color and other ethnic groups’ access to higher education.

This effort has significantly contributed to the process of bridging the gap that was created by many years of a biased system of education that placed more emphasis on educating the main stream groups, leaving out the minority groups. Affirmative action has also been utilized to ensure that the number of ethnic minorities and people of color attending colleges are increased (McDonough, Calderone, Purdy, 2007). This has helped accommodate for the educational biases created to prevent minorities from meeting the qualifications to attend Ivy League and other above-standard universities, giving them the opportunity to further their education. These efforts include structuring education policies and organizing the system so that it fosters the aspiration of under privileged students and helps the parents to understand the importance of their role in supporting their children in achieving their aspirations (Decker, Decker, Freeman, & Knopf, 2009).In the mid-1990s, it was thought that the middle-class had faded from attendance at expensive colleges, but it was later discovered that colleges’ were actually losing the wealthy students who could afford to pay full price (McDonough, Calderone, Purdy, 2007).  In spite of this loss, from 1985 to 2000, college costs have continued to escalate and the financial aid system has become progressively more reliant on student loans (Kane, 1994).

Competition, Ranking, and Funding

A considerable increase of middle class students at nonselective colleges, having been supplanted from highly discriminating institutions by pupils with higher levels of parental revenue and academic achievement, due to proposed cuts in interest rates on student loans that were later adopted as part of the College Cost Reduction Act of 2007 (Micceri, 2008).  In addition, the implementation of strategies to facilitate easier transfers from lower-cost community colleges to four-year colleges and universities in 29 states created the potential for a middle-class  to reintegrate into larger universities due to the fiscal constraints faced by state governments and the trends in the demand for access to higher education (Micceri, 2008).  The findings regarding the effects of college tuition costs on early career educational, occupational and economic achievements were estimated for a national sample of black and white college students and suggested that attending a relatively high tuition college tends to have positive influences on consequences like occupational status, income, women’s entry into sex-atypical careers, and educational attainment (McDonough, Calderone, Purdy, 2007). These determinations endured despite student background characteristics, like secondary school achievement, SES, scholastic and professional ambitions, the academic selectivity, whether the student attended private or public institutions, academic major, academic achievement and social experiences, class sizes, and graduate orientation of the college attended (Decker, Decker, Freeman, & Knopf, 2009).

Tuition funding assistance, like the Pell Grant, has increased the schooling of veterans and is the largest source of federal grants for college (Ehrenberg, 2002).  Studies of its introduction in 1973 have produced mixed results; with some examinations reporting no notable no effect of the Pell Grant on the college enrollment rate of low-income youth, and some recent work by correlating studies have found a positive effect on the schooling of a slightly older population (Ehrenberg, 2002).  Financial aid entitlement also seems to benefit completed schooling, though this outcome is less accurately estimated (Eide, Brewer, & Ehrenberg, 1998). Government-sponsored tuition to public colleges, which varies considerably by state, is another large source of education subsidies and cross state tuition variation estimates may be based on biases, since states with a preference for education may have both low tuition prices and high college attendance rates (Ehrenberg, 2002). Grants to post-secondary schooling do appear to affect education choices and best estimates suggest that eligibility for $1,000 of subsidy increases completed schooling as well as boosts college attendance rates by approximately four percent (Ehrenberg, 2002).

Conclusion

Disparities in SES the diverse cultures served by HEIs has magnified the issue of the rising costs of college tuition due to the significant achievement gaps created by race and income differences amongst American families, and caused increasing concerns about whether most schools are on an obvious path toward improving the achievement of all students by providing the necessary resources (Hanushek, 2006).  Although program objectives should be considered first, no collegiate program is completely free of financial limitations, despite the most meticulous fiscal planning, and this affects all aspects of a program (Micceri, 2008).  This brief discourse has establish that competition between colleges for ranking and status, the availability of government issued and other funding sources, and the organizational leadership and employee structure of the institution are the primary factors relative to the issue of the rising costs associated with acquiring a college education.  The examination of these attributes has also provided a description of the scope and magnitude of the problem through a casual analysis of the identified factors, explaining the reasons why and how this problem came to be through an examination of the relative sources. However, no solutions to this issue were rendered at this time.

Reference

College Board Advocacy & Policy Center. (2011). Trends in Higher Education Series: Trends in College Pricing, 2011. Retrieved from http://trends.collegeboard.org/downloads/College_Pricing_2011.pdf

Decker, C., Decker, J., Freeman, N., and Knorpf, H. (2009). Planning and administering early childhood programs (9th ed.). Upper Saddle River, NJ: Pearson

Ehrenberg, R. (2000). Tuition rising: Why college costs so much. Cornell University. Retrieved from http://net.educause.edu/ir/library/pdf/ffp0005s.pdf

Eide, E., Brewer, D.J. & Ehrenberg. R.G. (1998). Does it pay to attend an elite private college? Evidence on the effects of undergraduate college quality on graduate school attendance. Economics of Education Review, Elsevier Science Ltd., 17(4), 371–376. Retrieved from http://nersp.osg.ufl.edu/~lombardi/edudocs/eide.pdf

Hanushek, Eric A. (2006, September 14). The alchemy of “Costing Out” an adequate education.  Education Working Paper Archive. Retrieved from (ED508948)

Kane, T.J. (1994, October). College entry by blacks since 1970: The role of college costs, family background, and the returns to education. The University of Chicago Press, Journal of Political Economy, 102(5), 878-911. Retrieved from http://www.jstor.org/stable/2138651.pdf

McDonough, P.M., Calderone, S.M., & Purdy, W.C. (2007, June). State grant aid and its effects on students’ college choices. Western Interstate Commission for Higher Education. Retrieved from ERIC database (ED499423)

Micceri, T. (2008, May 26). Why higher education appears less efficient than it really is to legislators and the public. Online Submission, Paper presented at the AIR Annual Forum, Seattle, WA, May 23-26, 2008. Rterieved from ERIC database (ED504914)

Ploeg, F.V.D. (2006, October). Sustainable social spending in a greying economy with stagnant public services: Baumol’s cost disease revisited. CESIFO Working Paper NO. 1822 Category 1: Public Finance. Retrieved from http://www.econstor.eu/bitstream/10419/25867/1/518891003.PDF

Sharp, J. Ward, S. and Hankin, L. (2009). Education studies: An issue based approach. UK: Learning Matters

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