Update on “Perspectives on the elephant of college pricing” — by Lloyd Armstrong, University Professor and Provost Emeritus at the University of Southern California


The situation from all perspectives is obviously greatly exacerbated by the current unusually bad economic times. Pressures to increase discounting have been enormous for many institutions, especially those whose selectivity is lower. Economic times eventually will get better, of course, but NACUBO warns that it may be some time before institutions see the year-to- year gains in net tuition revenue they experienced before the beginning of the economic downturn. In fact, there are increasing indications that there may not ever be a return to such gains for many institutions.  There are serious questions being raised by the general public regarding whether higher education produces a value equal to its cost. This issue will hit those institutions that are “non-elite” most strongly, and make it increasingly difficult for them to raise tuition at the historic rate.   It also may well be the case that the American public will be more cautious in taking on loans in the future, and thus will look much more carefully at the concept that a loan is really decreasing the net cost of education (as the current terminology implies). Should this happen, it could significantly raise pressure to raise grant aid, leading to higher discount rates.

All in all, the data clearly indicate that the current cost/price model of higher education is working less well with each passing year from each of the three perspectives. Is it time to start thinking of sustainable alternatives?