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By Annie Wood
October 2, 2014
Caption : While the initiative aims to get schools to lower their tuition rates on their own, public institutions have little choice in their tuition. Soaring tuition at public colleges and universities has more to do with less state funding than anything else.     

This year, the number of Americans with student loans surpassed 40 million and student loan debt ticked past $1.2 trillion. With the cost of college clearly spiraling out of control, the White House leapt into action to address higher education affordability. Since the cost of attending college has increased 1000 percent in the past thirty years, the Obama administration has created a grading system to help students make economical choices and to hold the schools themselves accountable.

The College Scorecard, a part of the U.S. Department of Education’s College Affordability and Transparency Center, allows anyone to look into colleges by location, area of interest, and other criteria. Individual schools’ report cards show actual costs, graduation rates, loan default rate, and how much students at that school borrow in loans. The Department of Education is also planning to add information on employment of schools’ grads, and how much they earn.

Schools that receive better report cards may stand to get more federal funding, and those that do worse may be penalized, or penalized in that less students choose to attend.

Susan Dynarski recently took a closer look at the report card initiative and rising tuition in the New York Times’ column “The Upshot,” and drew the conclusion that while the information provided by the Education Department is good and useful, it probably won’t lower tuition itself—at least at public colleges.

One might think that colleges are reaping the benefits and profit of the uptick in tuition. Public colleges, however, are not actually making any more money per student than they were decades ago.

First of all, 80 percent of undergraduate college students attend public institutions. Despite tuition having doubled from 1988 to 2013, revenue per student has stayed the same. In 1988, public, 4-year institutions were making about $11,300 per student, and in 2013 made about $11,500, adjusted for inflation. How is this possible?

Public universities get their revenue from two places: students’ tuition and appropriations from state legislatures. If the universities are research institutions they sometimes get grants and endowments as well. However, institutions have seen serious disinvestment by state governments in recent years, which is why tuition has been raised to make up for state dollars lost.

In 1988, state legislators provided funds for an average of $8,600 per student; students just had to make up $2,700 in tuition. In 2013, states were only ponying up $6,100 per student, leaving students to pay $5,400 in tuition. Because of the way state funding works, tuition at public schools in particular haven’t necessarily raised because of out-of-control costs. The direct shift away from state taxpayer money has landed the burden squarely on individual students to make up the difference.

The new grading system, according to Dynarski, may be more effective in lowering the cost of tuition at private colleges and in shedding light on bad actors like for-profit colleges. Hopefully, it may also spark dialogue and change at the state-level with regard to funding higher education. It’s certainly still too soon to know, but either way, the Obama administration’s new resource promotes transparency, providing students with salient information in deciding where to pursue their education.

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