Affordability: how big is the gap between income and college cost?
The tool Americans use to study the effect of inflation on family buying power is the consumer price index (CPI), a hallowed statistic much more relevant to manufacturing than to higher education. "Higher education is a labor-intensive industry rather than a capital-intensive one--that is, a college is more similar to a law firm than to an automobile manufacturer," wrote economist and Chapman University president James L. Doti in a February 6, 1998, Chronicle of Higher Education article.

Doti favors using the services consumer price index (SCPI). Where the CPI pegs inflation from 1982 to the present at 55 percent, the SCPI places it at 100 percent--a difference that can be traced to greater productivity gains in manufacturing than in services like teaching. Viewed in this light, the rise in college tuition in the past decade is much less dramatic.

Doti goes on to discuss the changing affordability of college for both a high-income family ($116,000 in 1996 dollars) and a low-income one ($35,000). The high-income family, paying full sticker price, spent about 10 percent of its income on college in 1986 and just a fraction more (10.7 percent) in 1995. The low-income family, which benefits from need-based financial aid discounts, spent 23 percent of its income in 1986 on education. In 1995, however, that proportion had decreased, and the family spent 19.4 percent of its income on education.

Rising costs: what drives them up?
Faculty and staff: Reed's largest expenditure is employee costs for both the staff and faculty. Changes in the nature of education, the marketplace, and government regulation have required an expanded support staff. Computing, additional classrooms, library and information resources, admission, fund raising, campus safety, and health and counseling services are areas that have demanded new, often highly trained staff.

On the faculty side, Reed has enhanced its student/ faculty ratio from 13:1 in 1977 to the current 11:1.This enhancement is due to an increase in the number of faculty members from 87 in 1977 to 106 today; it has allowed greater course offerings and additional specialties such as linguistics and Chinese humanities.

Faculty salaries throughout higher education faced a crisis in the 1980s, as educators lost ground in terms of their real income. To continue to attract the highest quality professors, Reed had to take strong action. Tuition increases in the 13 percent to 15 percent range in 1990, 1991, and 1992 for the purpose of faculty "catch-up" brought us to parity with our peer colleges. (In the past five years, we have been in a leadership group of schools holding tuition increases below four percent annually. Faculty salaries have again fallen below the median for our peers.)

The larger issue, however, is not simply competition among colleges; we are competing to attract and hold talented people--on both the faculty and staff--who might otherwise choose a non-academic career.

Technology: The technology explosion of the past 10 years is something all of us can relate to. As NCCHE points out, the percentage of courses using computer technology has risen significantly, even since 1994. I'm not talking simply about hardware and software enhancements, but also about infrastructure and the staff to maintain and support this technology. Computing has certainly enriched our educational activities and has the long-term potential to save us money; at this stage our use of technology, however, is still distinctly additive, not reductive. Every college in the country is scrambling to equip its laboratories, libraries, and dorms with the resources that twenty-first century education requires and today's students demand. Some of these resources are very costly. In the past decade book costs have increased nationally by 62 percent and the cost of scholarly journals has increased by 148 percent--nearly twice the rate of health care and more than three times the rate of inflation.

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