College Executives Advocate Cost Containment, Public Support

College executives urged more support for public colleges and universities as well as innovation and cost containment for all higher education during a debate at the National Press Club on April 27.

William E. Kirwan, chancellor of the University System of Maryland, opened by agreeing with the debate proposition, “The business model of higher education is broken.”

Higher education is not meeting the nation’s need, he said, because the proportion of young adults with two- or four-year degrees is still the same, 39 percent, as it was three decades ago. The country needs to raise the proportion to 55 percent by 2020, he said.

States, Kirwan added, cannot provide the additional funds, so university administrators must “make cost containment a way of life.”

Public support will not keep pace with rising costs, shifting the burden to students and families, Kirwan said.

He added that it would be important to align high school graduation requirements with college entrance requirements to reduce the costs of remedial education.

Richard C. Levin, president of Yale University and a professor of economics, said the model was not broken because enrollments are growing even as costs rise faster than inflation.

“Education pays,” he said. On average, a year of education raises life time earnings by 10 percent.

Higher education costs are rising faster than inflation, Levin explained, because inflation is an average of trends across industries. Costs decline where productivity rises--for instance, in the technology sector--and rises where productivity stays much the same, as occurs in education when teacher-student ratios are maintained.

Nonetheless, Levin said, there are possibilities for cost containment. Yale has reduced its budget 13 percent by taking costs out of the “back office.”

Despite leading a private institution, he supported Kirwan’s call for more support for public institutions, arguing it is necessary “for the system as a whole” to survive.

Daniel Hamburg, president and CEO of DeVry, Inc., which provides private, for-profit higher education, pointed out that there are three business models in U.S. higher education – large state universities, community colleges, and private colleges and universities. He cited this diversity as evidence that the business model of higher education is not broken.

Hamburg identified three issues higher education must address – capacity, quality and access. Private capital could support all three, he said, and would be particularly important if public support is waning. He also emphasized that most students are not traditional high school graduates going directly to college full-time; 75 percent of students are now non-traditional.

Gail O. Mellow, president of La Guardia Community College in Long Island City, Queens, underlined Hamburg’s points. She said that the average age of a college student is 25, 85 percent also work and 40 percent are part time.

She echoed Levin and Kirwan’s calls for more public support. “A broken system has led us to disinvest in higher education,” she said. She noted that over half of college students are in community colleges .

Ray Suarez, senior correspondent for the PBS NewsHour moderated the debate. The Miller Center at the University of Virginia and the Club sponsored the event, which was produced by MacNeil/Lehrer Productions for later airing on PBS.