THE ISSUE: Colleges contemplate how to cut costs
OUR VIEW: Illinois needs a better business model
College is expensive.
This is not new information. But the costs have skyrocketed in recent years. As a correlation, student loan allocations have ballooned as well. And with jobs for graduates becoming more scarce, the ability of people to repay those loans is diminishing.
According to a recent Federal Reserve Bank of New York report, 11.5 percent of outstanding student loan debt in America was more than 90 days delinquent — a higher rate than any other category, even credit card debt.
In Illinois, tuition at public universities more than quadrupled over 20 years, from an average of $2,066 per semester in 1989 to $9,452 per semester in 2009, according to the Illinois Student Assistance Commission.
The Illinois News Network found conflicting viewpoints on the root cause.
Many are inclined to fault state budget cuts to higher education. It's the same reason local school boards say they have to raise property taxes or make budget cuts — the state isn't supplying the same level of money as before.
Others argue state and federal subsidies caused the inflation in the first place.
“Since the 1970s the subsidies of higher education have really skyrocketed,” said Daniel Bennett, a research fellow at the Center for College Affordability and Productivity based in Washington, D.C. “They are much higher no matter how you measure it. Over the same period of time tuition has gone up as has the so-called ‘cost of college.’ ”
Bennett said the situation has created a revenue cost spiral, in which institutions hoping to get the same amount of resources every year have to find ways to spend their resources.
“The more money we give them the more things they find to spend it on, and nobody in an administrative capacity wants to cut spending in certain areas,” he said. “It actually becomes a politically difficult situation for an administrator to actually cut anything.”
Sound familiar? It's the same thing that happens in Springfield. Lawmakers get an influx of cash — say from a "temporary" tax increase — and instead of spending wisely, they add to the bottom line. Then when it comes time for the money to go away, no one wants to cut anything. Voters complain about high taxes, but they also don't want to lose any government services or facilities.
“They don’t necessarily think about cost and benefits in the way that any private enterprise would think about behaving economically," Bennett said, "The risk they run is that by continuing to push up the price so high that people are going to seek out alternatives.”
Fortunately, though perhaps not most expediently, there are people in Illinois looking for ways to drive down expenses at the state's public universities. The state House unanimously passed a bill requiring the ISAC to study programs that give loans to eligible students and only require the loan to be repaid in proportion to the income of the student borrowers, generally after they find work.
University officials are looking at other states, where shared expenses among institutions have helped save millions on energy costs, information technology and data usage.
“We’ve created a system that we can no longer afford,” said state Rep. Robert Pritchard, R-Hinckley. “We’ve got to do something to stabilize our costs. It can’t just keep growing. ... That’s why I think we need to challenge the whole institution of how they are delivering.”
That's the exact right attitude to have. It doesn't mean no new spending, it means spending wisely — such as seems to be the case with recent growth at Illinois Valley Community College.
Illinois can't and shouldn't get out of the business of higher education. But it can find a better business model, one that serves both students and taxpayers. That's the map to long-term success.