• TO MAKE A COLLEGE EDUCATION ACCESSIBLE AND AFFORDABLE
  

• SINCE 1983, COSTS IN VIRGINIA'S UNIVERSITY SYSTEM HAVE INCREASED 210%, 88% MORE THAN INFLATION.
  
  
• REAL COSTS HAVE INCREASED 4.3% PER YEAR SINCE 1983.
  
  
• REAL COSTS INCREASING AT THIS RATE WILL THREATEN AFFORDABILITY AND ACCESSIBILITY.
  
  
• REAL COSTS AT CURRENT RATES WILL INCREASE 50% IN 15 YEARS AND 100% IN 25 YEARS.
  
  
• IF REAL TUITION PER STUDENT DOUBLES AGAIN IN THE NEXT 20 YEARS, ABOUT ONE OUT OF EVERY TWO PEOPLE WE WOULD EXPECT TO SEEK A COLLEGE EDUCATION WILL NOT BE ABLE TO PAY FOR IT. EVEN IF TUITION INCREASES BY ONLY 25% OVER 20 YEARS, ONE OUT OF FIVE STUDENTS WILL BE EXCLUDED.
  

• EVERY VIRGINIA COLLEGE AND UNIVERSITY HAS A STRATEGIC PLAN, DO ANY HAVE A GOAL OF HOLDING COST INCREASES TO NO MORE THAN INFLATION? THE ANSWER IS NO.
  
  
• WE HAVE A CHOICE, WE CAN:
  
  
  
  • Direct schools to establish a goal of holding cost increases to no more than inflation or,
    
    
  • Accept consequences of decreasing affordability, much larger state subsidy, or increased student debt
    
  
  
• ONE SUGGESTION IS TO ALLOW NO INCREASED FUNDING IN EXCESS OF INFLATION UNLESS SCHOOL LIST SERVICES WHICH IT WOULD OTHERWISE REDUCE TO MEET TARGET.
  
  and
  TRUSTEES AGREE INCREASED SPENDING IS NECESSARY AND DESIRABLE.
  and
  GOVERNOR CONCURS.
  

• Reduce Student Cost
  
• Provide Options to University Foundations
  
  
  • PROVIDE INCENTIVE TO USE FOUNDATION FIXED INCOME INVESTMENT FUNDS TO FINANCE TUITION.
    
    EXAMPLE
    
    State Incentive of 2%
    Foundation can provide funding for 7.5% and Realize 9.5% or,
    Provide funding for 5% and Relize 7% or,
    any number they desire.

  • RISK ATTENUATION MEASURES CAN REDUCE DEFAULT RISK.

  • COULD PROVIDE $400 MILLION AT COST TO STATE OF $8 MILLION.

• IT IS DOUBTFUL THAT STATE BUREAUCRACY IMPROVES TEACHING, IT IS NECESSARY TO ACCOUNT FOR $1.5 BILLION, BUT CAN STATE BUREAUCRACY MANAGE 39 DIFFERENT SCHOOLS WITH DIFFERENT GOALS AND OBJECTIVES?
  
  
• WE WANT A SYSTEM IN WHICH THE STATE DOES WHAT IT DOES BEST AND THE SCHOOLS DO WHAT THEY DO BEST.
  
  
• EVERY UNIVERSITY WANTS
  
  
  • Faculty pay higher than average
    
  • To be the best in its niche
    
  • To aspire to be better
    
  • To have the latest in internet facilities
    
  • To have comfortable modem dormitories & classrooms
    
  • To compete for the best students which can require a large student aid budget
    
  
  
• WHEN FACED WITH TRADE OFF BETWEEN TUITION INCREASES AND ASPIRATIONS, THE PATH OF LEAST RESISTANCE IS USUALLY TO LOBBY FOR INCREASED STATE SUPPORT.
  
  
• LET'S DO DIRECTLY WHAT IS NOW BEING DOING INDIRECTLY.
  STOP SUBSIDIZING SCHOOLS AND SUBSIDIZE STUDENTS.
  
  
• CURRENT AVERAGES ARE $9,125 per FTE Undergraduate at 4 Year Schools $4,800 per FTE at 2 Year Schools.
  
  
• SCHOOLS WHICH PROVIDE THE BEST EDUCATION FOR THE PRICE WILL THRIVE.
  SCHOOL DIVERSITY WILL FLOURISH AS SCHOOLS SEEK TO ESTABLISH A NICHE. SOME SCHOOLS WILL STRUGGLE.
  
  
• TWO PROBLEMS
  
  
  1. PER CAPITA SUBSIDIES WILL BE DIFFICULT.
     
     
  2. SCHOOLS WILL WANT TO RAISE TUITION TO MARKET.
     

V. SUMMARY

1. HOLD COST INCREASES TO INFLATION OR KNOW WHY HIGHER COSTS ARE DEEMED DESIRABLE,
   
   
2. PROVIDE INCENTIVE TO FOUNDATIONS TO PROVIDE STUDENT FUNDING,
   
   
3. SUBSIDIZE STUDENTS - NOT INSTITUTIONS. (Zero Base Budgets)
   
   
4. RAISE TAG GRANTS TO MAKE PRIVATES MORE AFFORDABLE AND SAVE MONEY.

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Posted: July 2, 1999
By The Educational Policy Institute of Virginia Tech
sjanosik@vt.edu