Private Colleges Have No Meaningful Role in Fixing the Cost of Higher Education

There, I said it.  I suppose I could have gone with the more clickbaity title, “What role do private colleges have in fixing the cost of higher education? The answer will shock you!”  But I didn’t.  You’re welcome.  This is a continuation of thoughts that have come up while reading Sara Goldrick-Rab’s  Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream as part of Bryan Alexander’s online reading group.  This is, in theory, on chapters four and five, although I just finished chapter six, so it’s possible some of that chapter will creep in here.  Why do I think there is no meaningful role for private colleges? The answer, not surprisingly, is multifaceted.

Private Colleges Have a Sticker Price Delta Problem

I know, that’s right from the “duh” files. But let’s look at it anyway.  Here on Oahu, the University of Hawaiʻi at Mānoa is the local, public university (it also happens to be the flagship of the system and the land grant institution).  Their 2016/17 published tuition for in-state residents is $10,872 per year (two semesters).  The institution at which I work, Chaminade University, is a private, Catholic university about a mile from the UH Mānoa campus.  Our 2016/17 published tuition is $23,180 (two semesters).  Even assuming every other line item in our respective estimated cost of attendance sheets is the same (they aren’t but I think theyʻre pretty close), that means Chaminade is $12,308 more per year than UH Mānoa (or $49,232 over four years).  I can hear someone screaming into their monitor already that sticker price is not what students pay.  True, but since the Pell grant doesn’t even cover the UH costs, then a low income student will have to make up that cost difference with loans (unless they are very fortunate and get either one of our Catholic grants or one of the new Kamehameha grants).  The stories in Paying the Price show students not taking loans for which they are eligible, or students who can’t depend on their family to make the family contribution, or even students who need to keep providing for family while going to college (Dr. Goldwick-Rab called this, I think, negative family contribution in FAFSA terms).  Another $50,000 in loans may simply be a bridge too far for many students.

While this is only one example, I think you’ll find the general principle holds true for most private/public comparisons.  If somebody is bored, try Duke University and UNC Chapel Hill.  (having schools in close proximity helps control for cost of attendance differences)

Private Colleges Have a Location Problem

For many of the students interviewed for Paying the Price, staying home was an important part of their decision.  This wasn’t just (or at all) about making college “cheaper,” but rather often about being able to continue their obligations to the family, being near their support structure, and/or finding work that fit their schedule needs.  Many private colleges are set in what could be politely described as “out of the way places.” Idillic to be sure, but frequently far from all the things I listed above.  Chaminade is fortunate in that we are next door to the local university, so for us, at least, that is not as much of an issue.  The same can’t be said for most parts of the country.

Let’s look at New York as an example.  It is rumored that the distance between any two schools in the SUNY system was designed to be no further than you can ride a horse in a day.  And while I’m on record saying that having a business model based on how far a horse can walk is an antiquated model, the one thing it has going for it is locality.  Students with access to a car (not necessarily a forgone conclusion for many low income students) can certainly commute to at least one SUNY school within a very reasonable time (probably no more than an hour at the outside).  In New York if you need to live at home and commute to school, there will almost certainly be a SUNY school for you to attend.  The same isn’t true for the privates in New York.  Sure, Hamilton College (a private) is right down the road from SUNY Polytechnic, but Hobart and William Smith Colleges (another private) isn’t close to basically anything.

Private Colleges Have a Selectivity Problem

OK, problem here might be a strong word.  But if I change it, it will ruin the repetition of the sub-topics.  So go with it.  While many private colleges are not very selective (Chaminade, for instance, is only somewhat selective; we accept around 80% of applicants), at least as many are highly selective.  As you move across the selectivity scale, only the very best students get into schools.  Those students came out of high school highly prepared and frequently highly affluent.  A private college might offer very generous grant based financial aid, but if low income students haven’t been properly prepared during their K-12 experience, it won’t matter; they might never get in.  As a personal example, I went to Duke University and graduated with no college debt.  I didn’t “manage” that per say, rather I was fortunate that Duke had a loan replacement grant funded by the Duke Endowment for students from North and South Carolina that meant every dollar of loans the federal government said I could have was replaced with grant money from Duke. But I would have never gotten that grant had I not gotten into Duke in the first place.  I was fortunate to attend a private high school on a faculty scholarship (my mother taught math and computer science there).  That was very likely the difference, as I barely got in to Duke as it was (I was on the wait list and accepted very late).  Low income students from other parts of Charleston County never had those kind of chances, and so never got the Duke Endowment grant.

Private Colleges Have a Scale Problem

If you haven’t seen it yet, take a look at this interactive New York Times article on the breakdown of how colleges enroll students across the economic spectrum and how those colleges improve (or don’t) students’ upward mobility.  Many private schools enroll more students from the top 1% than the bottom 20% of the economic spectrum, and even the very economically diverse schools don’t get much past 15% or so from the bottom 20%.  But even if every private college in the US started building classes where 20% of the students were from the bottom 20% of the socio-economic scale it would barely move the needle on the overall population.  Public institutions, by their shear size, can have large impacts with relatively small percentage changes in the makeup of their student population.

Private Colleges Have a Diversity of Revenue Problem

If we assume that any change we can make to the expense of having a college open can be applied equally to private and public colleges, then private colleges are at one final disadvantage: They have limited revenue streams.  Specifically private colleges are mostly funded through tuition (which includes federal financial aid money) and endowments/donations.  For a private college to reduce the cost to a student in a real way (i.e. not by saddling the student with more debt), funding can only come from one place: philanthropy. I think it’s safe to say that most private colleges are endowment poor.  Only a very few of the most endowed colleges can decrease costs to students through either lower tuition or targeted grants.  Public institutions, on the other hand, have those sources available as well as another important one: state funding.  While we have certainly seen a significant reduction in state funding, we are also seeing some states reinvest in higher education.  It requires only the will of state leaders (and the people of the state) to reduce college costs for students.  I’m not saying that change is easy, but it is possible and, I suspect, much more likely that large scale, across the board donations to private colleges.

Conclusion

As I said in the beginning, private colleges have no meaningful role to play in reducing the cost of higher education.  There are too many systematic issues whose interplay keep them from moving the needle in any meaningful way.  Does that mean private colleges should just give up and educate only the elite?  I certainly  hope not.  Private colleges play a vital role in diversifying the landscape of higher education, and many are committed to serving under-served and under-resourced populations.  But as a society, if we want to fix the issues with college costs, we must look to and support the public sector for solutions.

student in graduation gown holding degree that says "debt" standing next to the Grimm Reaper.

“Indentured Student – Cartoon” flickr photo by DonkeyHotey https://flickr.com/photos/donkeyhotey/6304808136 shared under a Creative Commons (BY) license

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