Whether you're an oppressive foreign dictatorship or an American state in the process of committing fiscal suicide, you know you're losing the public relations battle when encounters between armor-clad riot police with truncheons and college students are broadcast on TV. That's the sad situation California found itself in last week, after the University of California Board of Regents announced a staggering 32 percent midsemester tuition hike. Students responded by demonstrating, chanting, and occupying administration buildings. Things got unruly, law enforcement was called, and within hours it was every spin doctor's nightmare, replayed endlessly on YouTube and cable news.
As is often the case, California is leading a national trend. Higher education is becoming less affordable across the country every year. If states and universities don't make major structural changes in the way they operate, anger and frustration could start to boil over nationwide.
The UC tuition crisis is a symptom of the larger collapse of governance in the Golden State. It takes two thirds of both houses in the state General Assembly to raise taxes, while new spending programs can be created by public referendum. Tax dollars are too hard to raise and too easy to spend, leaving the state lurching from one budget crisis to the next. The young men and women rushing to the barricades on UC campuses are Ronald Reagan's children, victims of a failed antigovernment movement that managed to turn people against taxes while leaving their appetite for public services unchecked.
The pattern has been repeated in state after state over the past 30 years, even in places that raise and spend money in a normal way. Every time a recession hits, tax-frightened state legislators raise revenue by cutting university budgets disproportionately and allowing tuition to make up the difference, a back-door levy that hits poor and middle-class students the hardest. New York State, for example, is following California's lead with severe cuts to its public universities.
A recent report from the College Board shows the result: In the 1980s, tuition at public universities increased by 3 percent above inflation, on average, every year. In the 1990s, the after-inflation increase jumped to 4 percent. By the 2000s, it was nearly 5 percent. The price of college is growing faster than family income, GDP, and even the health-care costs that are threatening to break the public treasury. And those numbers were compiled before the huge price hikes in California and elsewhere.
As a result, more students are borrowing more money for college than ever before, and loan default rates have increased sharply in just the last two years. Increasingly, low-income students are getting priced out of four-year universities and forced into lower-cost community colleges—or out of higher education altogether.
And while legislators deserve their share of blame, colleges themselves also bear some responsibility for out-of-control tuition. In a mad dash for fame and status, they have spent billions of dollars on new buildings, Division I sports teams, so-called "merit" scholarships (which often go to wealthy students), and expensive marketing campaigns. According the NCAA, typical big-time college athletic departments lose $8 million per year, money that has to be made up from other sources, such as tuition. Even as state revenues decline, college spending is trending upward, and students are being asked to fill the growing gap.
Colleges argue that there's nothing they can do about this, because they work in an industry that depends heavily on skilled, expensive labor. But it's perfectly possible for higher education to do what scores of other industries have done: use technology to improve service quality while simultaneously lowering costs. Indeed, hundreds of colleges have already taken this step, using system-redesign techniques pioneered by a nonprofit organization called the National Center for Academic Transformation. Rote lectures are being replaced by computer-supported courses in which students learn at their own pace with the help of graduate students and tutors. The NCAT has found that at many of those institutions, learning results are up and costs are down.
The problem is that these reforms haven't spread quickly or widely enough, and where they have, the savings haven't ended up in the pockets of students in the form of lower prices. In a normal industry, this would create a fertile environment for new competition. But higher education isn't normal, with high start-up costs (libraries and football stadiums are expensive) and government regulations (new universities have to go through a lengthy, bureaucratic accreditation process in order to access public funds) that limit the number of competitors who can enter the market. Some industries are dominated by companies that didn't exist when the first George Bush was president. The richest, most influential colleges were well established when George Washington was president.
All of this creates an unsustainable trend, and the economy is still struggling to recover from the last time California was at the forefront of a debt-fueled industry that tried to defy the laws of pricing gravity. If we don't want to see college education added to home ownership on the list of broken American dreams, states and universities are going to have to do business in a very different way.
States will need to start setting aside money during good times for the inevitable rainy day. And they'll need to make higher education a bigger priority. Over the last 30 years, about the only thing in California that has grown as fast as college tuition is spending on the state’s vast network of new prisons. At the same time, it has let the best public university system in the world crumble.
Colleges and universities will need to join the rest of society in the 21st century in utilizing advances in information technology. The alternative is unacceptable: that lower public investment, higher costs, and skyrocketing tuitions will turn public universities from engines of social mobility into enclaves of privilege. That's the possibility students in California are fighting against. Everyone who believes in the promise of public education should be on their side.