Higher education is more expensive than ever. Over the last 20 years, inflation-adjusted costs at four-year private universities have increased 75 percent, while increasing 139 percent at four-year public universities.
Such stratospheric pricing is leading many to question the actual value of undergraduate degrees, especially given the large debt many students are left with after years in college.
Now, some members of Congress think they see a "solution": targeting for-profit universities as "exploiters" of American students. Senators such as Tom Harkin, chair of the Senate's Health, Education, Labor and Pensions committee, are ginning up anger that for-profit universities are reaping large profits while few students graduate and many more leave burdened with debt. But the reality is that the for-profit education market is simply responding to the same incentives and benefits that non-profit and public universities have enjoyed for decades. And those incentives arise almost entirely from state and federal governments.
It is the massive volume of government subsidies, grants, and taxpayer-backed student loans that incentivizes colleges and universities to seek warm bodies to fill their classrooms and thus their coffers. Evidence suggests that more and more universities, to maximize revenue, prey upon students they know are unlikely to ever graduate. This is a significant reason why national college graduation rates are so dismal.
According to the College Board, only 27 percent of students at for-profit universities who enrolled in 2000 graduated within four years. Meanwhile, just 29 percent of public college students graduated within four years.
Nevada's public institutions fared far worse. According to the National Center for Education Statistics, the 2008 four-year graduation rates for the University of Nevada, Las Vegas and the University of Nevada, Reno were 11 percent and 15 percent, respectively. This record is far below the average for-profit university currently under attack by Congress.
Graduation rates in Nevada are so poor that after eight years, UNLV and UNR graduate just 46 percent and 54 percent of their students, respectively. Were the presidents of UNR and UNLV subjected to the same performance standards with which Congress is beating up for-profit universities, our esteemed academics would be tarred and feathered.
Apologists for public higher education typically seek to justify it by appealing to ideals of "fairness" and "justice." They argue that higher education serves low-income students especially, providing the skills and knowledge necessary for them to escape the poverty trap. However, Federal Pell Grant data — often considered a proxy for low-income student participation — indicate that only 19 percent of UNLV students and just 13 percent of UNR students receive such help. This means that the primary beneficiaries of the Nevada System of Higher Education are the well-off, subsidized through the taxes that low-income families pay to finance these "elitist" institutions.
This brings us to higher-education costs. When all taxpayer subsidies to higher education are included, it appears that for-profit universities are, on average, less expensive than public universities. According to Neal McCluskey of the Cato Institute, "[t]he annual burden per undergraduate at a four-year public school is around $15,794 vs. just $10,272 at a for-profit. For a two-year program, the for-profit is just somewhat costlier: $10,960 vs. $8,489."
By comparison, state appropriations for UNLV and UNR in FY 2008 cost taxpayers an average of $11,030 per pupil. This cost balloons to $17,500 per pupil when including local, state and federal grants, and swells to more than $33,800 when including all sources of revenue.
If public four-year universities have higher costs and graduation rates are about the same, then public universities are as predatory, if not more, than the for-profit universities currently being harassed by congressional demagogues.
Incentivized by billions of taxpayer dollars, institutions of higher learning are already preying upon the hopes, dreams and aspirations of many young Americans. With its high costs and universally bad graduation rates, U.S. higher education is bestowing upon many students nothing but debt and disappointment.
Nevada — and America — must allow more rational discourse on higher education, while restraining the out-of-control government subsidies that fuel the hyperinflation of tuition.
Unless and until we do, higher education will continue to rob the poor to pay the Ph.D.
Patrick R. Gibbons is an education policy analyst at the Nevada Policy Research Institute. For more information visit http://npri.org.