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The National Commission on the Cost of Higher Education was formed in August 1997 by Public Law 105-18 (Title IV, Cost of Higher Education Review, 1997) as an independent advisory board. Public concern about college affordability and the perception that tuition increases at four-year public institutions had become an unreasonable burden for parents and students drove its creation. The Commission was charged with examining specific factors including tuition increases, trends in administrative costs, and trends in faculty workload and remuneration.

The Commission, an eleven-member panel (three each appointed by the Speaker of the House of Representatives and the Majority Leader of the U.S. Senate; two each appointed by the Minority Leader of the House and the Minority Leader of the Senate; and one appointed by the Secretary of Education), held meetings and hearings over a four-month period. The panel met with presidents of colleges and universities, politicians, consultants, and representatives of higher education organizations.

The Commission's final report was released in January 1998. It analyzes costs and prices of higher education for full-time undergraduates who are financially dependent on their parents and attend not-for-profit four-year institutions and community colleges. Given the availability of data, the Commission felt more confident in drawing conclusions for these students than others. The report concludes with a series of recommendations for various stakeholders including academic institutions, higher education associations, and Congress.

Current Status

According to the Commission, the United States has a world-class system of higher education, and a college degree has become a key requirement for economic success in today's world. The Commission also asserts that it finds that American higher education remains an extraordinary value. Nevertheless, it recognizes that public anxiety about how to pay for college is high and expresses deep concern that most academic institutions have "permitted a veil of obscurity to settle over their financial operations." Many have yet to take seriously basic strategies for reducing their costs. The Commission urges colleges to work hard to maintain costs. Institutions are also urged to educate parents and students about the costs and the price of higher education. The Commission emphasizes that one major component of such an educational effort is defining the terms used in the discussion of this issue. The definitions used in their report follow:

• Cost per student. The average amount spent annually to provide education and related services to each full-time equivalent student.


• Price. What students and their families are charged and what they pay. Sticker price is the tuition and fees that institutions charge. Total price of attendance is the tuition and fees that institutions charge and other expenses related to obtaining a higher education (housing, books, transportation, etc.). Net price is what students pay after financial aid is subtracted from the total price of attendance.


• General Subsidy. The difference between the cost to the institution of providing an education ("cost per student") and the tuition and fees charged to students ("sticker price").

It is not clear what will emerge from the report within the pending reauthorization of the Higher Education Act. Both the House and Senate bills require colleges and universities to report new information on costs, prices, and student aid, but they differ substantially in what they mandate. When the House and Senate meet in conference this September, they will work out the difference between the two bills. In all likelihood, the compromise they reach will look very different from what's in either piece of legislation. Of particular concern is an amendment adopted in the Senate panel fining campuses $25,000 if they do not meet all of the cost reporting requirements. It is also possible that some Commission recommendations could be included in state legislation.

The degree to which the Commission's recommendations are made into law may depend in part on the success of a national campaign, announced in late May by Stanley Ikenberry, President of the American Council on Education (ACE). The campaign is intended to give the public a better understanding of college costs, the availability of financial aid, and the steps higher education institutions are taking to restrain the growth of college tuition. In May, ACE completed its own research study on what the public knows about financing higher education; the study identifies a wide gap between what the public knows about financing higher education and what it believes it knows. The ACE campaign is a response to the findings of the ACE's study and the Commission's report.

Implications for Institutions

The Commission's recommendations for mediating concerns about costs include the assertion that institutions, families and students, and other patrons share responsibility for maintaining quality and reducing cost. The forty-two recommendations fall into five categories. Recommendations that relate to data, research, or information gathering activities that are of interest to institutional researchers are listed below.

Strengthen institutional cost control

• Individual institutions, acting with technical support from appropriate higher education associations, should conduct efficiency self-reviews to identify effective cost-saving steps that are relevant to institutional mission and quality improvement.


• Academic leaders should communicate the results of these self-reviews widely, providing the campus community and institutional constituents with information on issues such as administrative costs, faculty teaching loads, average class size, faculty and student ratios, facilities management, and expenditures on technology.


• The philanthropic community, research institutes, and agencies of state and local government should adopt the topic of academic cost control as a research area worthy of major financial support. Besides grants to support efforts to undertake such changes, best-practice and recognition-award programs should be established and supported.

Improve market information and public accountability

• Individual institutions of higher education should annually issue to their constituent families and students information on costs, prices, and subsidies in the way the Commission has approached these issues in this report.


• The U.S. Department of Education should collect and make available for analysis not only annual tuition and price data but also information on the relationship between tuition and institutional expenditures.


• Multiple agencies in the private sector are strongly encouraged to use those data for developing college-cost reports or handbooks that are widely disseminated to prospective students, their parents, and the media in print and over the Internet.


• Where necessary, the format of existing governmental and private higher education data-collection systems and financial reports should be modified to allow for collecting and reporting information that calculates costs, prices, and subsidies the way the Commission has approached them in its report.


• IPEDS should be redesigned to collect corresponding information. It can then be made available to any person or institution, in a form that is comparable for public and private institutions. The redesigned survey should include estimates of direct instructional costs by level of instruction, capital expenditures, and the replacement value of capital assets. It also should be expanded to improve data (and data comparability) on faculty compensation and workload plus factors related to administrative efficiency.


• The Commission recommends the following with respect to the collection and analysis of different kinds of data, particularly financial data:
  • The National Center for Education Statistics, working with the appropriate organizations, especially higher education associations, should redouble its efforts to ensure that institutions respond to surveys and that survey data are edited and released in a timely manner.
  
  
  • The National Center for Education Statistics should take steps to understand how institutions respond to the IPEDS financial survey, particularly given changes in accounting and reporting standards for private, not-for-profit institutions. This is necessary because there are several acknowledged inconsistencies in the way institutions report this information.
  
  
  • The U.S. Department of Education should undertake a study to gather comprehensive data on the needs of part-time students, including the actual costs to the institutions educating high numbers of such students. This study should be integrated into the Department's higher education data-collection efforts. Given increasing numbers of part-time students and reliance on a formula that equates three part-time students to one full-time student, such a study would provide more accurate and reliable cost measures.
  
  

• Accrediting associations should reshape existing standards and review processes to include a greater emphasis on measures of effectiveness, especially student achievement, and less emphasis on resources.


• Accrediting bodies and their member institutions are urged to devise standards and review processes that support greater institutional productivity, efficiency, and cost constraint.


• With standards and review processes focused more on output and cost efficiency, institutional self-study processes should concentrate on efficiency, productivity, the wise use of resources, and the extent to which the institution is meeting the educational quality goals defined in its mission.

• Congress should monitor the effectiveness of the new higher education and lifelong-learning tax provisions to determine what effect they have on access, the nature of student financial assistance, and institutional decisions about awards of institutional aid and campus-based financial aid.



The fifth category of Commission recommendations, "Deregulate higher education," included suggestions to develop new approaches to academic regulation that "emphasize performance rather than compliance, and differentiation in place of standardization." None of these recommendations were specifically directed at the work of institutional researchers, but deregulation along the lines suggested by the Commission might influence institutional research activities. Examples of these suggestions are summarized below.

• Repealing statutory provisions that require colleges and universities to give the IRS personal financial information on students.


• Requiring agencies to adopt performance-based rather than command-and-control models for compliance.


• Urging state and county governments to review their regulations to determine cost implications


• Including colleges and universities in Congressional discussions related to the electronic production of information


• Rewriting the Higher Education Act to consolidate provisions related to mandated disclosure of information in Student-Right-to-Know and Campus Crime legislation

Timelines

August 1997 - Commission formed

December 1997- Draft report released

January 1998 - Final report released

Summer 1998 - Possible incorporation of some of the Commission's recommendations into the reauthorization of the Higher Education Act.

Fall 1998 - American Council on Education to lead national campaign to improve public understanding of the financing of higher education.

National Commission on the Cost of Higher Education (1998). Straight Talk about College Costs & Prices, The Report of the National Commission on the Cost of Higher Education.. Phoenix: Oryx Press.

American Council on Education (1998). Too Little Knowledge is a Dangerous Thing, a report on public perceptions of the costs of higher education. Phoenix: Oryx Press.

Web site for in-depth coverage of the reauthorization of the Higher Education Act http://chronicle.com/che-data/indepth.dir/hea.dir/hea.htm

Web site for in-depth coverage of the Higher Education Act and college costs
http://chronicle.com/che-data/indepth.dir/hea.dir/costs.htm

Author:
Lucy Drotning

Coordinated by the Higher Education Data Policy and Publication Committees. All opinions expressed herein do not necessarily reflect the official position of the Association for Institutional Research