Successive US governments have made enhancing access to high quality and affordable higher education an area of focus and immense investment. While it is true that some progress has been made in enhancing access and affordability, the US lags behind other developed nations with regard to higher education. The cost of college education in the country is prohibitively expensive. Evidence of the high cost can be seen in the fact that thousands of college students are forced to resort to seeking loans and applying for financial aid as they struggle to meet the cost of their education. The Commonfund Higher Education Price Index (HEPI) attempts to capture the factors that drive higher education costs in the country. Whereas HEPI allows educational institutions to plan, it does not offer a comprehensive representation of the complex dynamics of higher education financing and costs.
The Inadequacy of HEPI
The purpose of HEPI is to track changes in various factors that contribute to the costs of providing higher education. Clerical and faculty salaries, administrative salaries, fringe benefits, supplies and materials, and utilities are some of the costs that make up HEPI. There is no doubt that these are some of the major costs that colleges and universities incur. As Weisbrod, Ballou and Asch (2008) observe in their text, higher educational institutions are in the business of making profit. Therefore, it can be expected that these institutions would strive to recoup the various costs that they incur. HEPI allows them to set fees at levels that enable these institutions to remain competitive and profitable. In her piece on why the US has been unable to keep higher education costs low, Amanda Ripley (2018) confirms that such expenses as paying faculty salaries account for a bulk of the costs that institutions incur. In essence, Ripley validates the use of HEPI for determining the reality and direction of higher education financing. However, it should be noted that HEPI fails to account for other issues which shape the cost of higher education in the United States. Some of the factors that have been identified as being behind the surge in the cost of college education include an increase in the range of services that colleges offer, and drops in the amounts that the institutions have to cover the costs of their services. One would expect that as they offer more services, colleges and universities would operate on larger budgets. Unfortunately, this is not the case as many colleges expand their service offerings while unable to widen their revenue sources.
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In order to understand why the cost of higher education has been rising, one needs to consider government initiatives and programs. It is alleged that state authorities have failed to provide higher educational institutions with the funding that they need to continue delivering services (Hoffower, 2018). As a result, the institutions are forced to charge higher fees for their services. As they conduct financial planning, colleges need to consider the amount of funding that they receive from the government. If the government funding is inadequate, the institutions should either turn to other stakeholders such as corporate sponsors for financing or charge students higher fees.
For the most part, colleges and universities are unlike other organizations. However, there are various similarities that these institutions share with organizations that run conventional operations. Being subject to the market forces of demand and prices is among these similarities. In the recent past, it has been observed that higher educational institutions are competing aggressively to attract high-performing applicants (Schoen, 2016). As part of their efforts, these institutions have invested heavily in various facilities and amenities. The investment is capital intensive and helps to explain why college education costs have been on the rise. While engaging in financial planning, it is vital for colleges to be practical and mindful of their financial situation when developing programs to incentivize applicants. They should balance the cost of creating and running these programs with the need to ensure that the fees that they charge are reasonable and affordable.
Higher Education Trends and their Implications
There are various trends that are shaping the higher education landscape in the US. A clear understanding of these trends is needed so as to prepare colleges and universities for the challenges of tomorrow. Deep funding cuts are among the key trends. Over the last few years, state authorities have reduced the amount of funding allocated to universities and colleges (Mitchell, Leachman & Masterson, 2017). As a result of the funding cuts, students have been forced to carry a heavier burden. Furthermore, institutions are unable to offer services of acceptable quality. In essence, the funding cuts have eroded the progress that the US had made in the delivery of affordable and quality education. The funding cuts do not augur well for higher education. Unless state and federal governments recognize the important role of higher education and increase their budgets, it can be expected that students will continue to shoulder the burden of financing their studies. Moreover, the US should brace for an increase in student debts. It is also likely that racial and income disparities in access to higher education will deepen as the poor and racial minorities continue to face hardships in their quest for college education.
Funding cuts are not the only trend that defines the current state of college education. Increases in expenditure are yet another trend that has been observed in recent years. A significant number of educational institutions have recovered from the 2008 financial crisis and are now investing heavily in various services, facilities and amenities (“Trends in College Spending”, 2016). Another trend that has been observed is that such institutions as community colleges are increasingly attaining encouraging levels of financial stability. This stability has been attributed to increases in enrollment (“Trends in College Spending”, 2016). The prevailing trends indicate that the future of higher education is promising. As institutions increase spending, they become better positioned to attend to the complex needs of their students. Furthermore, the increased spending enhances the capacity of the institutions to accommodate more students. However, there are some trends which raise concerns about the future of higher education. For example, institutions continue to over-rely on tuition fees as their primary source of revenue (“Trends in College Spending”, 2016). This means that students are financing a large proportion of the operations of educational institutions. If the colleges and universities fail to diversify their revenue streams, the student debt crisis will only worsen and the nation will encounter serious challenges as it seeks to make college education more affordable and accessible.
In conclusion, education plays a critical role in boosting the productivity of the American people. Given this fact, the need for all stakeholders to spare no effort in supporting higher education is clear. The US higher education landscape is complex as there are various forces which determine such issues as the cost that institutions incur. It has been observed with concern that the cost of college education is unacceptably high. Budget cuts, the increasing demand for college education and the accelerated investment in facilities and amenities are some of the factors blamed for the increasing costs. There is indeed a need for colleges and universities to join forces with other stakeholders to tackle the rising costs.
References
Hoffower, H. (2018). College is more expensive than it's ever been, and the 5 reasons why suggest it's only going to get worse. Business Insider. Retrieved January 17, 2019 from https://www.businessinsider.com/why-is-college-so-expensive-2018-4?IR=T
Mitchell, M., Leachman, M., & Masterson, K. (2017). A lost decade in higher education funding. Center on Budget and Policy Priorities. Retrieved January 17, 2019 from https://www.cbpp.org/research/state-budget-and-tax/a-lost-decade-in-higher-education-funding
Ripley, A. (2018). Why is college in America so expensive? The Atlantic. Retrieved January 17, 2019 from https://www.theatlantic.com/education/archive/2018/09/why-is-college-so-expensive-in-america/569884/
Schoen, J. W. (2016). Why does a college degree cost so much? CNBC. Retrieved January 17, 2019 from https://www.cnbc.com/2015/06/16/why-college-costs-are-so-high-and-rising.html
Trends in college spending: 2003-2013. (2016). The American Institutes for Research. Retrieved January 17, 2019 from https://www.air.org/system/files/downloads/report/Delta-Cost-Trends-in-College%20Spending-January-2016.pdf
Weisbrod, B. A., Ballou, J. P., & Asch, E. D. (2008). Mission and money: understanding the university. New York: Cambridge University Press.
