Saturday, March 29, 2008

Mission Abandoned: The Primacy of the Market

In 2001, in the midst of a recession, the Commonwealth rolled back its appropriations to Penn State. Graham saw a dire situation and he reacted by setting up a Tuition Task Force.

Our current and future efforts to enhance the quality of our teaching, research, and service missions will depend largely upon our ability to secure sufficient financial resources. Failure to do so would undoubtedly preclude us from improving-or even maintaining-Penn State's standing as a world-class university.


...Penn State has faced significant cost increases for salaries and benefits, capital improvements and maintenance, information technology, and library materials, as well as other cost drivers. ...[T]uition has had to increase substantially for many years in order for Penn State to remain competitive with our peer institutions in terms of the quality of educational experience we provide.


It is unlikely that state appropriations in Pennsylvania (or any other state, for that matter) will increase at a sufficient rate to reverse the relative decline in the public's contribution to Penn State's support in the coming years. Thus, we are left with the prospect-or more likely, the reality-that tuition will have to assume an even larger share of the University's operating budget....

I am creating a Task Force on Tuition...

I am charging the task force to consider realistic projections of a range of tuition increases that may be necessary over the next 5-10 years to support the continued competitiveness of the University as a premier institution.
While Graham wrote about taking into consideration access,affordbility and maintaining the University's land-grant mission,these were secondary considerations. The purpose of the this task force was to determine what the market could bear in terms of tuition increases.

The Tuition Task Force report downplays the impact of higher tuition on Penn State students,

* The median debt for Penn State students who have debt upon completion of their baccalaureate degrees in 1999-2000 was approximately $17,125. A recent national survey regarding student borrowing, released by the American Council on Education (ACE), indicates that the median amount borrowed by bachelor's degree recipients in 1999-2000 was $15,375 at public institutions, and $17,250 at private colleges and universities.

* ACE has concluded that borrowing is still an excellent investment for students, considering the potential increase in their lifetime earnings with a college degree. The added lifetime earnings that accrue to the typical holder of a baccalaureate degree have been estimated at $1 million, while the added earnings to those with a graduate or professional degree can reach $3 million;

The Task Force recommended raising tuition to meet costs +1% and suggests that the effect of this on low income students be mitigated in the future by fundraising for more need-based institutional scholarships.

How has this worked out?

The number of students from low income households declined by 4% between 2001 and 2007. The average debt load of a graduating senior has increased by 47 % to $26,300 from $17,900 in 2002-2003. Total parental debt went from, $23,729,760, none of it need based, in 2002-2003 to $81,244,287, of which $59,496, 820 was need based, in 2007-2008, an increase of 242%.

The average need based scholarship went up from $4145 in 2002-2003 to $5477 five years latter. That increase of 33% did not meet the increase in student debt or in parental loans.

I think it is safe to say that the attempts to mitigate the effect of tuition increases on students from low income families hasn't worked out all that well.

Was the money used to improve the quality of a Penn State education?

Let's take a look at the way some measures of quality have changed between 2002 and 2008. The student-to-faculty ratio in 2002-2003 at University Park was 17.4 to 1. In 2007-2008 that had change to 17.0 to 1, a 2% reduction. In 2002-2003, the percentage of full-time faculty with terminal degrees was 66%, while today that number is 68%, a 2% increase. That's a pretty small improvement given the cost.

But there's some evidence that there has been an increasing in the number of fix term faculty. Seventy-one percent of full-time faculty had a rank of professor, associate professor, or assistant professor in 2002-2003. That had decreased to 68% in 2006-2007, the last year for which this data is available.

I would have to say that the tuition policy of cost +1% hasn't done anything to dramatically increase the quality of education and, as I wrote earlier, the policy was likely instituted primarily to help Graham to continue his building program. I leave it as an exercise to my readers to count the number of building which have been built over the last five years. The fact that the Tuition Task Force report is still online, although it really is an embarrassment, is likely due to the need of Old Main to assure the bond markets that Penn State's cash flow will be strong regardless of what Harrisburg does.

I remind you that it is time for a radical change at Penn State.

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