Last night, I watched potential independent candidate for president, Howard Schultz talk about how higher education has become too expensive. I believe CNN’s Poppy Harlow asked him if private companies should do more to help students pay for college and general solution as a whole. His answer was rough. Meanwhile, I started to dig and find the policy paper I wrote almost four years ago detailing how companies like Apple could begin to support students and universities in tuition assistance. Take a look below:
The purpose of this memo is to educate the readers on the state of higher education costs in the United States. With that, comes the discovery of the overarching problem: skyrocketing tuition rates for public and private institutions. Though, there are solutions and alternatives that may diffuse this issue: university and government officials could implement a freeze on tuition rates for a set amount of time, universities and large corporations could build a coalition to reduce school fees across the board for students, decrease the number university officials and administrators, or the institution could implement a deferment plan so that students could pay their loans back over time. All of these alternatives and problems will be discussed further as we delve deeper into this important topic.
The Rising Costs of Higher Education in the United States.
The costs of higher education is increasing at an exponential rate. Along with students worrying about how they can pay back the loans that they applied for when attending their respective universities, students and parents are also concerned with how they can afford college and related costs. Public university tuition rates have increased by more than 80% over the past ten years and close to 50% for private universities.
Four Alternatives for Addressing the Rising Costs in Higher Education
Freezing Tuition Rates. Tuition rates are climbing at an exponential rate. To combat this problem, one alternative would be to slow or freeze tuition rates for a set period of time. Creating stability in regards to tuition would be a relief to students and parents who are currently involved with the university system. For those looking to attend a university, seeing the rates slowdown may spur enrollment or general interest in a 4-year higher education school. In Wisconsin, Gov. Walker proposed a 2-year budget bill that would freeze tuition rates for the University of Wisconsin System. However, the biggest concern of this alternative is that tuition can only stay stagnant for so long before revenue for the schools drop and programs, services and salary payouts begin to take a hit.
Corporate Assistance. Large corporations tend to invest their capital into projects and other business ventures that they believe will yield a return. A university is a great investment vehicle because the return potential is extremely high when approached correctly. Organizations and companies could develop a program that would subsidize their tuition and in return an early-stage internship or research opportunity would be provided to the student to pay for the rest of the student’s tuition and/or external expenses such as: books, room and board, etc. This alternative has the potential to succeed, however, there may be some pullback from university officials as to how involved the businesses are with their students.
Consolidation of Salaries & Staff. Many would assume that tuition rates are increasing due to inflation rates or lack of federal or state funding. However, that isn’t the case per say. According to the Department of Education and Bloomberg News: over a sixteen year period (1993-2009), administrative position increased by 60%. Consolidating or reducing the salaries of administrators and university officials may impact tuition rates. A portion of tuition allocated to the service and payment of those who work for the university. Reducing those costs could potentially reduce the going rate of attending a university.
University-based Loan& Tuition Deferment. Sallie Mae and Freddie Mac offer students the option to defer their student loans until after they have completed their coursework and graduated from their respective colleges. Universities should do the same. Instead of asking for a lump-sum upfront for tuition. Students would have the opportunity to pay back the loan that they took from the university back over a longer period of time. This could increase retention rates amongst students because they would be able to afford more than one academic year of higher education. Along with that, if a plan like this were implemented, we would see that the interest rates for these university-based loans would be substantially less than that of a government or private loan.