Making college more affordable: more than one funder has to step up

Editor’s note: When it comes to the cost of higher education in the U.S., signs of trouble abound.

For instance, states now rely more heavily on tuition to finance their public colleges and universities than on government funding.

Private colleges and universities are also struggling to make ends meet, steering a record amount of tuition revenue toward grant aid for economically needy students.

Meanwhile, the number of student borrowers who defaulted on their student loans edged up last year as did the price of higher education itself.

So we asked our panel of presidents — from Xavier University of Louisiana, Colorado College and Penn State: Given this reality, what are the top two or three things that you believe need to happen to make college more affordable — particularly for low-income students, students of color and the working class?

A college education has many funders. Federal and state governments provide support, as do the institutions of higher education themselves. And then, of course, there is the money paid by the students’ families. Improving access will require additional support from one or more of these sources.

To start at the local level, an increase in state funding would make college more affordable. After all, over 70 percent of all undergraduates attend public institutions, and historically, states have been the primary source of funding for both two- and four-year public institutions.

However, states have reduced their support in recent years and, as a result, the burden has fallen on students and their families. The “free college” plans in New York and a few other states are examples of commitments to improve access. However, given the pressure on budgets resulting from underfunded pensions, Medicaid and K-12, I am not optimistic that students can count on increased support from states. In addition, recent tax changes that limit federal deductions for state taxes will increase pressure to keep state income and property tax rates down, further hindering state funding. 

Additional support from the federal government, by increasing the Pell Grant program, could make a big difference. The maximum Pell Grant for the 2018-19 academic year is $6,095. This is sufficient to cover the annual tuition at most community colleges. For example, the average tuition at the community college in my city is $4,651. However, only students with family incomes of less than $60,000 qualify and the amount of the grant declines significantly as family income increases. Increasing the income cut-off and providing the full $6,095 to all who qualify would make college much more accessible for low- and middle-income students. 

Private nonprofit colleges and universities educate about 20 percent of all undergraduates. The “sticker price” at these institutions gives the impression that they are not accessible to low- and middle-income students. However, privates provide significant institutional aid.

The major source of this support is philanthropy, made up of earnings on endowments and annual gifts. Private institutions with smaller endowments also provide aid from tuition revenue by using the revenue from some students to provide financial aid to other students. However, increasing institutional aid by using tuition revenue is not sustainable. Therefore, the key to making private institutions more affordable is increasing endowments through philanthropy. Although it is true that the new “endowment tax” on large endowments and any changes to the tax deduction for charitable giving reduce the funds available for financial aid. In addition, private institutions could reduce “merit aid” — aid that is awarded on the basis of academic, athletic or artistic merit — and reallocate those funds to need-based financial aid. 

Of course, some may argue that rather than finding new sources of revenue, colleges could simply cut their costs and reduce tuition. This would make college more affordable but it would also reduce the quality of the education provided.

Higher education is a very competitive market, and students and their families demand quality — as they should. We must do our best to educate students in a global environment, keeping pace with technological innovations, teaching critical thinking, fostering comfort with ambiguity, and graduating nimble leaders who will thrive in a rapidly changing era.