During the second presidential debate President Obama was asked a question about gender equity. He took the opportunity to emphasize his commitment to making access to higher education available to more students, “We’ve expanded Pell Grants for millions of people, including millions of women.” In the first debate Governor Romney went on record about funding higher education, “I don’t have any plan to cut education funding and grants to people going to college.”
The candidates are right: graduating from college is a very good social and economic bet. The Bureau of Labor Statistics reports that in 2011 the median weekly income for college graduates was $1,053 while high school graduates earned $638. For young people in search of a better life a college degree is close to a necessity.
This is particularly true today when upward mobility has essentially stopped in the United States. Among industrialized nations, the United States is near the bottom on measures of upward mobility. The Economic Mobility Project of the Pew Charitable Trust found that 65 percent of those born in the bottom fifth of the income distribution stay in the bottom two-fifths.
While holding down the cost of higher education is only one part of the mobility puzzle it is important because disadvantaged students are not in a position to pay the high tuitions and fees charged by post-secondary institutions. Bloomberg News reports that since 1978 college tuitions and fees have surged by 1,120 percent. To enroll and graduate requires many students to go into real debt. According to the New York Times federal and private student loans now top one trillion dollars; student debt now exceeds credit card debit.
How can institutions of higher education hold down their costs? One possibility is to shift the budgeting paradigm. Much of higher education today budgets in response to the real and perceived needs of faculty, staff and administrators. This leads to escalating tuitions and fees and a general culture of caveat emptor. As one college president said to me, “It’s like wine, the higher the price the more likely the consumer is to think its worth more.”
But there are better ways of budgeting. Socially responsible ventures have developing budgeting practices and principles that include increased stakeholder engagement, the more effective mobilization of resources, harnessing better and more strategic data and developing a management culture based on social responsibility.
The shift from past practices would not be easy; colleges and universities are slow to change. But as the public and politicians begin to focus more closely on the costs of higher education the wise path is to embrace a more realistic, broader and socially sensitive strategy for holding down costs.
It will take more than thoughtful budgeting in higher education to ignite a new surge in upward mobility, but without this new thinking the American Dream will become increasingly elusive for so many eager but disadvantaged students. Whoever wins in November would do the nation a great service by encouraging colleges and universities to walk-the-walk of social justice and make college affordable. An open and dynamic society is built on the talents of all its people.