Policy Barriers to Postsecondary Cost Control

Abstract

What if we took President Obama’s challenge seriously? Could we afford it as a nation? Is it a good value? In today’s higher education system, I think the answers are “no” and “not as much as we think.” In 2008, 2.2 million or 68 percent of students who graduated in the previous year were enrolled in college.¹ To achieve Obama’s goal for high-school graduates only, one million more students would need to be absorbed into the system in the first year. The average tuition, not including room and board, of a year of college to individuals is about $10,000.2 Further, in 2007 states spent an additional $5,353 per student enrolled in public higher education.³ In today’s higher-education system, it might cost about $15 billion to provide one year of college to these remaining students. Since many of these students would stay in the system, the annual cost would likely approach $20 billion or more. Even if everyone did have a year of college, studies show the true return on a college degree at less selective institutions is about $250,000 over the course of a lifetime.⁴ Presumably, the return on a single year of college would be less than a quarter of this. Further, this was calculated before the nation’s economic slump and without the glut of newly degreed individuals that an obligatory year in college would create.

And so tonight, I ask every American to commit to at least one year or more of higher education or career training. This can be community college or a four-year school; vocational training or an apprenticeship. But whatever the training may be, every American will need to get more than a high school diploma.

—President Barack Obama, February 24, 2009

The cost of a private four-year college runs about $25,143 (up 5.9 percent from last year). The cost for a public four-year, $6,585 (up 6.4 percent from last year). When adding in living costs, and books several recent studies present an overall price tag of $30,000.

—College Board, 2009