Wage trends, drops in subsidies raise university, college leaders’ concerns about affordability

Choosing a college these days is becoming increasingly difficult.

Many students feel limited to selecting a university based on whether it is affordable or accessible or high quality, Temple University President Neil Theobald said at the annual USC Rossier School of Education’s Center for Enrollment, Research Policy and Practice conference.

“We need to tie those three things together,” Theobald said.

Theobald was among an estimated 170 college presidents and administrators, financial aid experts and analysts who gathered at the center’s eighth annual conference to discuss ideas to make college affordable and accessible without compromising quality or jeopardizing their institutions’ sustainability.

Financial factors

Multiple economic and financial factors are to blame for the increased scrutiny on student debt and college affordability.

There’s a huge amount of stratification going on in our society.

Jerome Lucido

“There’s a huge amount of stratification going on in our society,” CERRP executive director Jerome Lucido said in an interview before the conference, which he organizes annually to discuss current issues affecting college admissions. “There is greater income disparity and there is greater disparity in education than there has been in the past. It becomes really important for colleges and universities to reach out and address this problem.”

College and university administrators are increasingly asked to defend their institutions’ return on investment as policymakers, journalists and members of the public question continued increases in tuition and fees, rising student debt and the value of some certification or degree programs.

Clouding this discussion, some conference speakers noted, is the shifting American attitude about higher education. College was once considered a public good, but now many consider it private good, said Richard Staisloff, the founder and principal of rpkGROUP, who provides universities and colleges with advice on strategies for investment and cost cutting.

Lucido said that it’s clear the public perception of higher education as a private benefit is affecting support for students to attend college. It means students have to depend on other sources for funding their degrees.

“This is going to take the family to pay a portion, the student to pay a portion, the institution through aid and the federal government to aid the student if the student qualifies,” he said.

Focus on the student

Colleges and universities have a tougher job of maintaining affordability since federal and state subsidies for higher education have been reduced. At the same time, their customers — families — have tighter financial situations.

Since the 2007 recession, wages for many U.S. workers have not risen, and studies show that they have stagnated or dropped. More families fell into lower income brackets. For colleges and universities, this means more of their customers may need loans or other aid to pay for their degrees. The economic trend escalates colleges’ fears that some potential students may choose not to attend college at all — or worse, financial data show, that they’ll start but then drop out and end up defaulting on their loans.

“We should be focusing on the student and making sure the student can afford to go to college,” said Sandy Baum, a senior fellow of the Urban Institute who tracks financial aid issues. “If [college] is going to increase your long-term, lifetime standard of living, then it’s affordable. If it’s not, then it’s not affordable.”

She added that “affordable” should not be confused with “expensive” or “cheap.”

“It is not affordable to go to a cheap law school if you’re not going to be able to get a job,” Baum said.

College graduates generally earn much more than workers who did not attend and graduate from college, but if wages continue to stagnate or drop, it may affect college attendance and will certainly affect college financial aid and loan repayment.

“I do worry about whether some of those students have those earnings that should be associated with having a college degree,” said Robert Shireman, senior fellow of The Century Foundation.