Office of the Provost

Memorandum

TO: U.S. Senator Arlen Specter
FROM: James V. Maher
DATE: August 29, 2003

Tuition Caps

I am writing to you because of my deep concern about possible Congressional legislation that would impose “tuition caps” at colleges and universities. I strongly believe that such caps would cause serious damage to America’s public research universities, and I hope that you will not support such action.

I am concerned about continuing tuition increases and their impact on students and families. There are, however, significant factors in the current situation of public research universities that can and do influence their very survival as such, and these necessitate tuition increases larger than the rise in inflation.

Research universities play a unique role in higher education: They both educate a large fraction of the nation’s professional and public leaders and also create a standard which tends to be emulated by higher education institutions whose mission is more restricted. A careful examination of the pressures exerted on public research universities that have led to the need to raise tuition in recent years shows that these universities are currently quite vulnerable. Tuition caps would have a crushing effect on public research universities while exerting much less pressure on the private universities whose 20-year long expansion of tuition has probably reached its limit.

If I may provide some context. Research universities, whether public or private, hire their faculties in the same market. In 1980, on average, faculty salaries were the same at all ranks when public and private research universities were compared. By 2002, after two decades of rather large tuition increases at private universities and considerably more fiscal discipline at the publics—both in controlling tuition increases and in contending with more modest increases in state appropriations—the private university salaries exceeded public university salaries by approximately 27 percent for each professorial rank. This difference has reached the point at which it is very hard for public universities to recruit and retain the high-quality professors they need to fulfill their mission. Failure to address this problem will jeopardize the engine that has driven many of the nation’s innovations and much of its economic development in recent decades, and it will also degrade the education available to a large number of our nation’s most promising students.

At just this time of crisis, other financial problems have led almost all states to reduce appropriations to their research universities, leaving tuition as the only revenue stream that could grow to meet the dual challenge of faculty retention and state withdrawal of funds. While the recent tuition increases at state universities have appeared large in percentage terms, the base tuition is so much lower than for the private schools (public tuitions are almost all well under $10,000 per year, while private tuitions run in the $25,000 to $35,000 range) that even the low percentage private tuition increases of the last few years tend to exceed the dollar value of the public “catch-up” tuition increases. And, of course, the benefit from the increase in public tuition tends to be eroded significantly by reductions in state appropriations.

There is reason to believe that the private tuitions are near the peak that the market will support. The high quality public research universities, despite their recent tuition increases, are such a bargain that their applicant pools have recently become larger and better qualified, and this almost certainly is partly a reaction to the very high private school tuitions. Public tuitions are unlikely ever to approach the current private school tuitions, but in order to continue to deliver the quality that the public has come to expect of a first-rate college education, these schools must gain more revenue. Maintaining the option of first-rate public education will have to place more burden on individual families as states make policy choices to cap or reduce their commitments, and this will mean public tuition increases that exceed the higher education price index until the readjustment is complete. But these schools will still be a bargain compared to the private schools, and if they are not allowed to readjust, the public education sector will no longer offer a truly high-quality research university education as an option.

Thus the net effect of a federally imposed cap on college tuition increases—especially one calculated on fractional increases in status quo tuitions—would be to degrade public research universities while having little or no effect on the very high tuitions that are already in place at private institutions.

Please do all that you can to avoid this destructive approach from becoming law.

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