Written by Frank S. Waterman
What’s in your wallet? Not much, Colorado College parents and students discovered after last week’s announcement of the 5.1% increase in 2015-16 Comprehensive Fee. Under the last four years of President Tiefenthaler’s reign, the comprehensive fee has increased a whopping 22%, from $49,310 to $60,210 for the 2015-2016 academic year.
To learn about her agenda, one does not have to look any further than the speeches and publications link on the Colorado College website. During a presentation called Why Does College Cost So Much, given by the president (and economist) at the WACUBO Annual Meeting in May of 2012, Tiefenthaler presented her reasons for the yearly fee increases. The following are excerpts taken from her power point presentation.
“How do we increase QUALITY? Need REVENUE!”
“Unlike for-profits who benefit from decreasing costs, cutting costs might lower Q (quality).”
“Students/families want quality. As a result, universities compete on quality NOT on price”
“No benefit to lowering sticker price.” “Price is seen as indicator of quality.”
“Therefore lowering sticker price risky – may not increase demand.”
I applaud Kevin Carey’s new book, “The End of College,” which was recently reviewed in the New York Times by Joe Nocera. Nocera indicates the book “is both a stinging indictment of the university business model and a prediction about how technology is likely to change it”.
“Schools like George Washington University and NYU became top–tier universities in no small part by aggressively raising their prices – which in turn, became part of the reason they are now considered prestigious universities,” Carey wrote.
It appears the President and Board of Trustees of Colorado College are on a similar mission, raising prices without regard to the detrimental economic impact the increased fees are having on students, families and the American economy. Student loan debt in the USA has risen to $1.2 trillion, according to Frank Mussano former Dean of York College of Pennsylvania. Many economists predict that we will suffer another economic Armageddon like the one in 2008 that if the better part of these loans go unpaid.
The following are two more enlightening quotes from her talk:
“Students who can pay have inelastic demand.”
For those of us who are not economists the definition of inelastic demand is: A situation in which the demand for a product does not decrease correspondingly with rise in its price (or vice versa).
With this, the President implies when it comes to college tuition, the parents who have the ability to pay are not sensitive to price.
“Others are elastic but get financial aid and are not sticker price sensitive.”
This implies that, for those of us who do not have the ability to pay, the high price is not a burden because financial aid and government loans will make up the difference.
This all helps to explain why, according to Bloomberg Business, college tuition in America has soared more than 1225% since 1978 which is almost double the rate of health care costs. Clearly, college presidents are operating their fiefdoms in isolation from the realities of the broader marketplace.
What they are reluctant to disclose is the number of college administrators has increased 50% faster than the number of instructors since 2001, according to Mussano. It is a sobering fact that administrative costs have far outpaced other college expenses during the last 20 years.
One other justification for the increased Comprehensive Fee is to fund financial aid in order to increase access. That’s all well and good, however if President Tiefenthaler and the Board of Trustees continue on the present pace, in just ten years, a four year stint at Colorado College will cost more than $400,000!
If so, by then I suspect the children of the ‘2%’ will make up over 90% of the student body. Where will children of middle income parents be attending? According to Economics Professor Gilbert L. Skillman, at Wesleyan University the proportion of students from families making between $50,000 and $150,000 has dropped from 51% to 37% since 2001.
Furthermore, to quote Ronald G. Ehrenberg, an Economics Professor and former Trustee at Cornell University who is an expert on higher education finance “colleges face a very unstable business model”.
He believes selective colleges will remain generous with poor families, but “what I do worry about is that the middle (class) will melt away.”