Colleges Contemplate How to Cut Costs

By Jackson Adams

Illinois News Network

As the cost of attending an Illinois state university continues to climb, Illinois lawmakers are pushing various pieces of legislation to try and address affordability.

One such bill, HB 5323, passed the Illinois House this week by unanimous vote.

The bill requires the Illinois Student Assistance Commission, ISAC, to study the feasibility of “Pay it Forward” programs.

Such programs 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.

“I’m a father of two sons who are going to college,” said the bill’s sponsor, state Rep. Jack Franks, D-Marengo. “As I started digging into this, I wondered how people could afford it. This is very serious. Student loan debt has ballooned in this country, and I believe it’s the next bubble.”

According to ISAC, tuition at public universities more than quadrupled, from an average of $2,066 per semester in 1989 to $9,452 per semester in 2009.

Experts disagree as to why education costs have skyrocketed.

While some argue that recent cuts in state higher education funding are the lead cause, others argue that 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 DC. “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.”

Bennett cited rising costs of university bureaucracy and the plush amenities offered to students as a few ways universities have overspent their resources.

“On an institution by institution basis, university models don’t behave like businesses. They behave like government bureaucracies,” he said. “They don’t necessarily think about cost and benefits in the way that any private enterprise would think about behaving economically. … The risk they run is that by continuing to push up the price so high that people are going to seek out alternatives.”

Dr. Randy Kangas, associate vice president of planning and budgeting at the University of Illinois, said the majority of U of I tuition went to salaries.

“The single biggest expense the university has is of course people. And tuition revenue, about two-thirds of it goes to what we call personal services. … We’re a people-intensive operation,” Kangas said. “Top professors are now in a national or an international market. So we have to be competitive in compensation for those people. We’re all capitalists at the end of the day, and you have to be competitive in salaries.”

“We have reorganized and reduced staffing across the campus,” said Southern Illinois University Chancellor Rita Cheng. “We look for ways that maybe we can reduce course offerings. In addition, we’ve cut our support staff by combining departments. … We are deferring some of the maintenance on our buildings, we’re replacing and upgrading equipment more slowly.”

Cheng continued, “We have also focused a lot on new sources of revenue. One of those is developing a robust distance education, online program.”

The new executive director of the Illinois Board of Higher Education, James Applegate, says there are many more ways to cut costs.

“We could look a lot at what private-sector entities have done to really increase efficiency,” he said. “There are a lot of good examples. … For example, in energy costs we could have multi-state shared purchased agreements, to help us come together in groups and purchase at scale to drive down prices and cost.”

Applegate cited the university system in Maryland, which was able to drive down its energy costs by millions of dollars simply by purchasing its energy as a system instead of each school purchasing its own.

He added that by using technology and data, universities could increase their productivity. This in turn would help students get graduate in less time.

“There is a lot we can do that’s not exactly rocket science to become more productive and get students through faster and make college more affordable on the academic side,” Applegate said. “In doing that… we are better able to make the case to our funders, whether they be the state or the federal government or foundations, that we are a good investment.”

Applegate is among those calling for more state funding to education, but with Illinois’ unfunded liabilities such as pension payments requiring more and more of the state budget, some lawmakers say the ability to do more with less may be the only way, ultimately, to drive down costs.

“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.”

Students, meanwhile, are making the best choices they can.

Robert Hwang, from Crystal Lake, Ill., picked Illinois over his other choice, Iowa State, in part because the in-state tuition was more affordable.

“I’m very lucky that my parents are helping me out pretty much with all of my tuition,” said Hwang, a sophomore at University of Illinois Champaign. “I’m also working and help with some expenses. But it’s definitely tough for the kids who are independently paying for their tuition.”