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Competition and the Rising Cost of Higher Education

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The legal office at Rochester Institute of Technology, where I serve as president, recently received a call from the legal office at another institution asking RIT to cease and desist from using the term "Innovation University" in any public forum because they had applied for a trademark as "The Innovation University" in 2009 and intended to enforce their claim to exclusive use of the term. My initial response was to be incredulous, as I had used the term in my 2007 presidential inaugural address and, furthermore, I was confident that I was not the first to use it. The more I thought about the issue, however, I began to wonder how many student tuition dollars were being used to support such legal actions, and I began to realize that this was just one more example of how competition among colleges and universities for national eminence and high rankings continues to be the "dirty little secret" that is an increasingly important factor in our inability to keep tuition and fee increases at our institutions in line with inflation.

Now competition can be a good thing when it forces greater efficiencies and drives costs down, but in academia exactly the reverse seems to be happening. Not only is there little competition between colleges and universities to offer the best education at the lowest price, but what competition there is seems to inevitably drive up costs. Let me provide a few examples from my experience in both public and private institutions:

Since better students produce better rankings and improved institutional reputations, more and more student financial aid has moved from the need-based category to the merit-based category to offer the best prospective students an incentive to enroll at a particular college or university. This merit-based financial aid, of course, could be used to lower tuition and fees for all students, but there is no incentive for taking that approach under the current circumstances.

The competition for national eminence and high rankings is also increasing the cost of hiring faculty while reducing their teaching loads at the same time. Administrators at many of our colleges and universities are finding that they have to offer both large startup packages and reduced teaching loads to even the youngest faculty candidates, and senior faculty candidates with national reputations are often recruited to institutions with a promise of million-dollar plus research support and no teaching responsibilities for a year or two so that they can "get a running start" in their new surroundings. Interestingly, these packages are frequently signed off on by senior administrators who themselves received little more than a desk and telephone when they started their academic careers. Almost all of these senior administrators proved to be effective teachers and scholars, but despite that fact, faculty today cost considerably more to hire and teach considerably less on average than did those hired two or three decades previously.

Even candidates for campus administrative positions such as deans and department heads are frequently offered significant resources as an incentive for them to accept the positions. These resources can include additional faculty and staff positions for their administrative units, facility improvements or new construction, and reduced or zero teaching loads for the candidate.

And then there are the student amenities provided to keep pace with the competition. Prospective students touring our campuses are now taken through food courts offering everything from pizza to Mongolian barbecue to sushi, through recreation centers better than most private athletic clubs, and through student apartments more luxurious than those they are likely to occupy after graduation.

Intercollegiate athletic programs, especially those in football and basketball, are now often significantly subsidized by many colleges and universities because of the demands of alumni and friends for better teams and the resulting national exposure they produce. And sadly, in all too many cases, the student-athletes involved are admitted under much lower standards than other students and then either take soft majors or end up remaining students only until they have used up their athletic eligibility.

Finally, the increasing personnel time required to respond to ranking surveys of all kinds is itself a financial cost that most colleges and universities can cover only through increased tuition and fees, and the costs many colleges and universities are incurring in trying to "reverse-engineer" the various ranking formulas can be significant as well.

There are, of course, many other reasons why tuition and fees are increasing faster than inflation, including ever higher expenditures for energy and for employee health benefits, as well as declining state support of our public colleges and universities. But to simply say, as many academic leaders do, that the market basket for higher education is different than the one that determines the consumer price index inflation rate is being less than honest. To paraphrase Pogo, we have seen the enemy, and he is (at least in part) us.