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United States Trends in Postsecondary Costs and Degree Attainment Jane Wellman INTERNATIONAL SYMPOSIUM ON UNIVERSITY COSTS AND COMPACTS CANBERRA, AUSTRALIA.

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Presentation on theme: "United States Trends in Postsecondary Costs and Degree Attainment Jane Wellman INTERNATIONAL SYMPOSIUM ON UNIVERSITY COSTS AND COMPACTS CANBERRA, AUSTRALIA."— Presentation transcript:

1 United States Trends in Postsecondary Costs and Degree Attainment Jane Wellman INTERNATIONAL SYMPOSIUM ON UNIVERSITY COSTS AND COMPACTS CANBERRA, AUSTRALIA JULY 2008

2 2 Summary of Major Dynamics Affecting Costs and US Degree attainment Need to increase degree attainment Persistent gaps in access and degree attainment affecting low income and minority groups Funding needed to increase degree attainment with current cost structures is highly unlikely under current trends Among public institutions, prices are increasing but spending is not – subsidy shift from state funds to tuition revenues Privatization of revenues has not benefitted instructional function; competition is further increasing spending Low income and minority students increasingly clustered in public two-year sector – where spending is low, and fewer than 30% of students get to a baccalaureate degree Public perceptions/critique about higher education sharpest on issues of cost and cost management

3 Total Headcount Enrollment Growth by Sector, and Institution Type Total 12,423,910 14,435,418 16,873,337 Public Research3,184,4653,468,9883,886,981 Public Master's1,931,7292,158,6372,443,878 Public Associates4,115,6765,075,6906,035,652 Private Research883,580925,7871,018,483 Private Master's841,8811,031,0281,241,227 Private Bachelors594,391698,964811,725 Proprietary218,688296,108530,241 Other Institutions653,500780,216905,150 U.S. Nationwide enrollment demand in 2005 at an all-time high 3

4 Growth steepest in public two-year, proprietary and private masters’ institutions…. Market shares dropping for public four-year and private research institutions Sector Share of Enrollments Avg Annual Percent Change Institution Type Total100% 1.4%2.3%1.7% Public Research25.6%24.0%23.0%0.8%1.6%1.1% Public Master's15.5%15.0%14.5%1.0%1.8%1.3% Public Associates33.1%35.2%35.8%1.9%2.5%2.1% Private Research7.1%6.4%6.0%0.4%1.4%0.8% Private Master's6.8%7.1%7.4%1.9%2.7%2.2% Private Bachelors4.8% 1.5%2.2%1.7% Proprietary1.8%2.1%3.1%2.8%8.7%5.0% Other Institutions5.3%5.4% 1.6%2.1%1.8% 4

5 5 But US educational attainment dropping in an international context – from #1 for older students, to #7 for 15-and above Reasons? Other countries are increasing attainment and US is staying even US better at access than degree completion Attrition is highest among students who are the majority of new students Declining high school graduation rates

6 The Attainment Challenge: Degree Completion Rates, 2004 SOURCE: OECD, Education at a Glance 2007

7 Closing the Gap—Number of Degrees Required Beyond Current Production by

8 Collective Cost to States Assuming no change in tuition $ 31.0 Billion =Annual Costs of Additional Students at Current $ per Student $ 78.2 Billion =Current State Contribution 39.7% =Percent Increase in Annual State Support Needed

9 Average Cost to Students, Assuming: No Additional State Investment 9 $ 2,565 =Additional Annual Costs to Students at Public Four-Year Institutions 47.9% Increase in Tuition and Fees (Currently $5,355) $ 1,824 =Additional Annual Costs to Students at Public Two-Year Institutions 108.8% Increase in Tuition and Fees (Currently $1,677)

10 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 Private ResearchPrivate Bachelor’sPrivate Master’sPublic ResearchPublic Master’sPublic Associate’s Median Full Educational Cost per FTE Student, 2006 Enrollment of FTE Students, 2006 United States: Money versus students: per capita spending per student (excludes research, service and auxiliary enterprises) against student enrollments (2006) $ spending/student; number of students enrolled Source: Delta Cost Project IPEDS database.

11 } Estimated “general purpose”= Tuition and fees+state appropriations + portion of private gifts ($/FTE/CPI-U /2005) 11 General purpose revenues are declining as a proportion of revenues among public institutions Nationwide trends in median revenues by major source, }

12 12

13 Average Annual Percent Change in Median Spending per FTE Student – Average Annual Percent Change in Median Spending per FTE Student – Publics and Public Research Public Masters Public Associates Instruction 0.5%0.4%0.6%0.4%1.0%-0.2% Research 3.9%3.2%4.3%3.2%-3.7%1.0% Public Service 5.0%7.2%5.4%3.7%2.1%0.0% Academic Support 2.3%0.1%2.0%0.6%1.0%0.2% Student Services 2.4%0.9%1.3%0.4%2.0%0.3% Institutional Support 0.6%0.9%1.8%1.2%1.3%0.5% Operations and Maintenance -0.4%2.0%-0.6%1.8%-0.3%0.9% Institutional Grants 9.5%7.5%7.6%6.4%6.1%4.6% 13 + Spending increases most apparent in research, public service, and institutional grant aid - + Instruction and institutional grants funded from general funds; research and public service from designated revenues. +

14 $4,602 $6,328 $3,529 $4,649 $1,974 $2,585 $15,215 $17,469 $10,349 $12,715 $9,767 $11,970 $8,516 $7,191 $6,085 $5,416 $6,518 $6,051 $13,653 $16,635 $4,066 $4,075 $8,175 $8,844 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40, Public ResearchPublic Master'sPublic AssociatesPrivate ResearchPrivate Master'sPrivate Bachelors Average Full Educational Cost per FTE Student, 1998 and 2005 (in 2005 dollars) – Excludes Spending for Research and Service Average SubsidyNet Tuition per FTE Source: Delta Cost Project IPEDS database, 19-year unmatched set. Subsidy Price $13,118 $13,519 $9,613 $10,065 $8,492 $8,636 Cost = $28,868 $34,103 $14,414 $16,790 $17,942 $20,814 As Educational Costs Rise, the Subsidy Share of Costs is Decreasing and Students Are Paying More 14

15 15 The policy critique is sharpening Perception that higher education finance is a “dysfunctional top-line enterprise with no bottom line” Critique that the line between profit and non-profit is blurring Senate finance committee investigation into non-profit tax status Massachusetts state proposal to tax college endowments Federal proposal re: excessive tuition increases


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