Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, April 13, 1990 TAG: 9004131047
SECTION: NATIONAL/INTERNATIONAL PAGE: A/1 EDITION: EVENING
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
Arthur Hauptman, an independent research consultant, said his study shows that college costs are beginning to catch up with the value of a college degree. That may result in more moderate prices in the 1990s after a decade of huge increases, he said.
"I don't think there is as big a gap, simply put, between price and value as there was 10 years ago," Hauptman said in an interview. "I think the same market forces that led to tuition escalation in the 1980s may well lead to moderation in the 1990s."
Hauptman used available data to conduct the study for the American Council on Education and The College Board.
He said college tuition and fees increased by slightly less than 10 percent a year - about twice the rate of inflation - from 1980 to 1987, serving as "a lightning rod for criticism of the American system of higher education."
During the same period, the median family income rose only 5.6 percent a year and the costs of all goods and services increased 4.7 percent, including 3.8 percent for new cars and 3.9 percent for food. However, stock returns rose 13.8 percent a year and bond returns by 15.3 percent a year.
The trend of the 1980s was in sharp contrast to the late 1970s, when tuitions and other charges grew more slowly than inflation.
Hauptman said both public and private institutions were affected by a decline in the number of traditionally college-age students. With the leveling of enrollments, institutions could no longer spread fixed costs over a growing number of students, he said.
Patterns of state funding had a strong influence on the size of tuition increases at public colleges in the 1908s, Hauptman said.
To compete for students, independent colleges and universities decided not to cut prices and risk hurting the quality of their programs, Hauptman said. Instead, they raised tuition to pay for improved facilities and services, higher faculty salaries and more student aid.
"In a lot of measurable ways, I think schools are better now for having indulged in this process," said Hauptman. "I think that's true of both the public and private institutions. The facilities are better. The services are better. They are more diverse. The one area of concern is with the quality of teachers."
However, Hauptman cautioned that colleges should not carry the budget policies and strategies of the last decade into the 1990s.
"Some schools will be lulled into a sense that they can keep going on this path and I don't think they can," he said.
"The difficulty is that [if the schools] continue to do this and start to lose applicants and lose students, once you start down that slope it's very hard to go back and say `Oh, we made a mistake and priced ourselves too high," he said. "Schools would be in a bit of trouble in terms of adjustment."
A recent study by The Associated Press found many colleges and universities are starting the new decade with some of the smallest tuition increases in years.
Stanford University raised fixed student fees by 5.25 percent in 1990-91 to $20,210, the smallest increase in 15 years and considerably less than the 8 percent hike in the current year. Massachusetts Institute of Technology announced in March its rates for the fall will rise to $20,700, a 7.1 percent increase, slightly less than the 7.2 percent the previous year.
The University of Michigan and Wayne State University in Detroit are holding increases to the lowest level in years - 6.5 percent. A year ago, Michigan posted a 9.6 percent increase, the AP study found.
Cornell University said 1990-91 tuition at its state-supported undergraduate units - the College of Agriculture and Life Sciences, the College of Human Ecology and the School of Industrial and Labor Relations - will rise 5.9 percent to $5,900 for New York state residents, and by 8 percent to $10,840 for out-of-state students.
by CNB