Michigan wants Lansing, schools to lead on college affordability

Michigan was known as the birthplace of the middle class, a place where anyone willing to work hard could not only get by, but prosper. A high-school diploma was enough to get a well-paying job in hundreds of blue-collar workplaces.

But the turn of the millennium brought a reckoning. Now, finishing high school is only the beginning. People seeking a solid career, even in manufacturing, need at least some advanced training beyond high school.

More than 80 percent of participants in The Center for Michigan’s Community Conversations this year said a college degree or other vocational training is important or very important to prosper in the modern economy.

But the ever-climbing cost of college makes the majority of people surveyed – about 55 percent – question whether families can afford higher education, and even whether the expense is worth it. Participants said that both the Legislature and schools must share blame for the burden college costs place on Michigan families.

MORE COVERAGE: Residents like these programs to reduce college costs

Participants in the Center’s “Getting to Work: The public’s agenda for improving career navigation, college affordability, and upward mobility in Michigan,” campaign – more than 5,000 statewide, asked in live conversations and in phone and online panels and polling – wrestled with the conundrum over and over: Student-loan debt saddles young adults with a financial burden at the time in their careers when they could be saving money, while buying cars, houses and other big-ticket items that help drive the economy.

“We should allow them to hit the ground running,” one participant said of young graduates.

Student debt is “another kind of slavery,” said another.

As Bridge has reported, the cost of a traditional four-year degree has more than doubled in a generation, from an inflation-adjusted $7,938 a year in 1975 to $18,943 annually in 2014. But agreement on how to rein in ever-rising tuition and limiting loans is harder to come by.

More than 80 percent across all three of the Center's survey methods said state government should fund public colleges and universities at higher levels to make college more affordable. And more than 90 percent of poll and online survey participants said public universities need to become more cost efficient, a view held by 80 percent of Community Conversations participants.

When asked who was most responsible for improving college affordability, residents were split, with a slightly higher number putting the blame on Lansing. The most common response was state government (47 percent in polls and surveys and 52 percent in Community Conversations). The second most common response was colleges and universities themselves (44 percent in polls and surveys and 41 percent in Community Conversations).

In the 2001-02 academic year, Michigan public universities got about 48 percent of their budgets from state support. By 2013-14, that share had dropped to 21.5 percent, according to the state’s House Fiscal Agency. Other costs connected to higher ed have gone up, at the same time scholarships have dried up.

More than 80 percent of Michigan residents interviewed by the Center agreed that public colleges and universities could and should become more cost-efficient. A return on the steep investment college requires is, increasingly, an expectation of those surveyed. One parent put it this way: “When we visit college campuses, we always ask ‘What’s the job placement rate and how much do you have to do with that? Are you giving students internships?’ I’ll pay, but I don’t want the debt and no job for my kid.”

Requiring Lansing and the state’s colleges and universities to cooperate in lowering costs is complicated by their DNA; Michigan’s higher-ed institutions have constitutional autonomy from the legislature, at least in terms of how they are run. Lansing’s leverage is in controlling the amount of money in the state budget steered to schools. The legislature has made “tuition restraint” a string attached to portions of funding it has awarded for five years. Yet administrators at some schools, notably Wayne State in 2013 and Oakland University in 2015, have raised tuition well beyond Lansing-imposed limits, by 8.9 percent and 8.48 percent, respectively. (The caps were 3.75 percent and 3.2 percent in those years.) Both institutions forfeited state aid, but said the increased revenue from tuition increases was necessary after years of cuts in state appropriations.

Taming costs

Community Conversation participants have their own list of suggestions for reducing college costs (See accompanying article), some of which are shared by policymakers and administrators:

Reform the student-loan industry. Lower interest rates for education loans. (“My kids have an 8.5 percent interest rate on their loans. You can buy a car at a lower rate,” said one resident.) Take the banks out of the picture. (“The banking industry is a huge lobbying power that serves as a huge roadblock to student loan debt reform,” said another.)

Let students earn more college credit in high school. Advanced Placement classes, middle-college/dual-enrollment programs (which allow students to earn college credit while still enrolled in high school) and other initiatives help students bank early credits, free of charge, before they write their first check to a college bursar. “If you increase dual enrollment, it makes their post-high school opportunities cheaper, but you also have actual college experience. How you prepare for classes (and learn) what is it going to be like it puts you far ahead,” said a participant.

Increase enrollment at community colleges. These schools provide a low-cost entry into a four-year plan for those who eventually want to earn a bachelor’s degree, as well as those seeking a two-year or vocational degree. Cost per credit hour is lower at community colleges, making them attractive for students looking to take lower-level courses at a bargain price, despite some concern over whether all credits will transfer. “I went to community college and it gets your life going faster and earning more. I know that it works. I came out with no debt,” one said resident.

Rep. Joel Johnson, R-Clare, said “expanding our definition of ‘college’” will go a long way toward making post-secondary education easier to swallow. Certification programs for many careers don’t require four years, and some not even two. But they prepare students for skilled careers at very reasonable prices.

Johnson, chairman of the House Workforce and Talent Development Committee, said he also supports apprenticeship and internship programs, so-called “earn while you learn” opportunities. And better counseling while students are still in high school can guide them to career programs with good track records and solid prospects for employment.

The Purdue experiment

Many in higher education are watching Purdue University, in West Lafayette, Ind., as a model of how a large, four-year institution can cut costs without compromising academics. Led by former Indiana Gov. Mitch Daniels, hired by the university in 2013 after his second term ended, Daniels immediately imposed a tuition freeze that was recently extended through the 2016-17 academic year. Room and board costs have fallen by 5 percent, through “imposing efficiencies on food services,” said William Sullivan, treasurer and chief financial officer of the university. Flat tuition and falling room and board make for an overall decline in costs, a fact the university has boasted about nationwide.

By contrast, Michigan’s universities saw tuition rise an average of 3.62 percent just in the last year.

Purdue is also looking for a way to cut four-year degrees down to three, and Daniels has dangled a $500,000 bonus to the first department that comes up with one. It’s also opening a charter high school in Indianapolis to better prepare students for the rigor of college work in STEM fields. All of this is happening while state subsidies continue to fall. Sullivan said the administration is “looking under every doormat and behind every door, trying to think of ways to get more efficient,” as well as exploring corporate-style cost-sharing. A on-campus joint venture with Amazon, with what the university says is the online seller’s first brick-and-mortar store, gives students a discount on books, while returning royalties to the university.

“No nugget is too small,” Sullivan said. “If you go after enough (small cost cuts), pretty soon it adds up to a pretty big number.”

Purdue is a selective school, but even the selective ones shouldn’t be free of the mandate to control costs, said Dewayne Matthews, vice president of strategy development for the Lumina Foundation, an Indianapolis-based nonprofit working to increase higher-education attainment.

“It’s getting harder and harder, if not impossible, to simply pass on a fixed-cost framework to tuition-paying students,” said Matthews.

Lumina has been studying the cost question, and in August rolled out its Affordability Benchmark for Higher Education, seeking to define what is a reasonable investment by students.

Lumina wanted to know whether “it is actually possible to define or determine how much people can afford to pay for college,” Matthews said. The formula researchers came up with is that costs should be capped at 10-10-10: A family should save 10 percent of discretionary income, over 10 years, with students contributing by working 10 hours a week while enrolled. (Working more than 10 hours a week impedes academic progress, Matthews said.)

Obviously, that’s a different number for every family that calculates it, but Matthews notes this is the start of the discussion. The next job is to take it to policymakers and administrators, and compare how current institutions’ costs compare with, say, a median number.

At Purdue, Daniels has nudged the school toward a more business-oriented conversation, with emphasis on creating jobs, responding to workplace needs and return on investment for students. Such discussion can lead to philosophical questions of what the purpose of higher education is – mind-expander or trade school? Community Conversation gave this question considerable thought.

“What’s the point of college?” asked one. “Is the point of college exclusively to get a job, or is there a value at some level of having an informed citizenry with a well-rounded liberal arts education. I’m not suggesting one way or the other, there needs to be a balance of both. To know things other than your job is important.”

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Ted W
Tue, 09/15/2015 - 9:46am
A college education would not be so important to obtaining a job if the high schools in the state had not dumb down their requirements for a high school diploma. Kids come out of high school not able to do basic math and can hardly read because they have been passed along to be with "grade appropriate" students. So they have to go to a remedial program that increases college costs. I think the problem starts in the high schools which especially in the urban areas are failing our kids.
Doug
Wed, 09/16/2015 - 7:06pm
Don't make that a blanket statement about all schools in the state. That's far from true. Yes there are areas where students are not getting a quality education. But don't make a general statement so that it sounds like all schools. Also have you thought that maybe the universities might have made their testing for placement hard so they can make more money by requiring students to take extra classes to graduate?
Carol
Tue, 09/15/2015 - 10:16am
Increasing funding to colleges has only served to increase tuition and thus loans to students. The student loan program is now in the hands of the federal government. Lots of luck getting the interest rate substantially reduced! I would like to see increased grants tied to work programs. Another issue is the number of non-productive college programs. (Dance? I know someone who almost completed her degree and now waits tables... making more money than she would have with the degree. Not unusual.) Students incur large debts to gain degrees in subject areas where there is no employment, and the debt piles up. Take the politics out of this and put someone who really understands numbers in charge. Someone who can actually come up with an approach to college funding that doesn't make the problem worse.
David Waymire
Tue, 09/15/2015 - 10:32am
Carol, you should be aware that, adjusted for inflation, state support for each student in a Michigan public university has declined from $6,698 in 2001-02 to $3,583 in 2012-13. So the idea that "increasing funding to colleges has only served to increase tuition" is simply nonsense.
Matt
Tue, 09/15/2015 - 5:21pm
Dave, If the New York fed says there is some significant pass through effect for federal student aid fueling tuition inflation, why would you believe there isn't one for state spending? These "pass through effects" seem to be common where ever you look. http://www.newyorkfed.org/research/staff_reports/sr733.html
Charles Richards
Tue, 09/15/2015 - 2:44pm
Carol says, "Lots of luck getting the interest rate substantially reduced! " after the loan program was taken over by the federal government. I don't see her logic. It is much more likely that politicians looking for votes will reduce the interest rate than a bank would. She goes on to say, " Students incur large debts to gain degrees in subject areas where there is no employment, and the debt piles up." Who chose those majors? Why can't students do some research into what different fields pay? Such information isn't difficult to obtain. A little thought on the part of the student will show them how much debt they can afford to incur for a given degree. I recently read about a student who took on $100,00 in debt to pursue her heart's desire of becoming a public defender. . And Carol says, "Take the politics out of this and put someone who really understands numbers in charge. Someone who can actually come up with an approach to college funding that doesn’t make the problem worse." Yet she offers no suggestions as to what that approach might be. She might consider the possibility that all the government funding has allowed colleges to increase their tuition without pricing potential students out of attending their institution. It has been estimated that every dollar of subsidy drives costs up by sixty cents. Yes, the student gains a net benefit of forty cents, but costs for the next student have been driven up by sixty cents. It is an endless treadmill.
Steve S.
Tue, 09/15/2015 - 10:30am
I find the over rehashed outcry of college costs to be nothing more than allowing for great headlines and fruitless whining. Having said that if one actually wants to control costs and student debt there is so much low hanging fruit. Start with the need for remedial courses. The student and primary school system failed when this time and money is necessary. Emphasis has to be placed on achievement at this level. There are many tests that are already used to see if the student needs remedial courses once entering college. These tests need to be given in the 8-9th grade so coursework and effort has time to get the student ready for college. This is more important that handing out college credits for specific course work in high school. I have experience in the whole loans and degrees system. I stayed away from doing this for the most part but many others did not. The student will often qualify for a subsidized loan much greater than the costs of tuition, books and needed supplies. Over and over I saw students who every semester maxed out their loan cap. This money was like free money to them. They spent it freely on whatever they decided. This very foolish. This is really no different than giving out credit cards to people who really are not thinking about having to pay it back. It leads to recklessness spending and very burdensome debt. My experience though is I took all my courses on and off campus but never lived on campus. There is a huge proportion that does the same. Couple this with a complete withdrawal of all social services support if you are in school. Everyone is asking how can college be more affordable and then any type of living support is removed from a student. I had to take night courses to continue to draw unemployment. I got laid off and like many you look at your skills and education. Should a person in that situation every be penalized for trying to increase their prospects? Then there is the whole text book scam. Explain to me why in many courses you need new versions every year or couple of years. How much can the principles of any subject change in even a decade, very little. Text books should be tried and true and used for at least a decade at a time. A smaller yearly coursework booklet is all that is needed and should be considered a course consumable.
Rich
Tue, 09/15/2015 - 10:39am
What ever happened to parents saving money for their kids education? I know my sister and I had our educations paid for, as did my kids. It's just like retirement, save early, save often, and you eat the elephant with many, many small bites.
David Waymire
Tue, 09/15/2015 - 4:44pm
25 years ago, when many of us were in college, the state paid 75 percent of the cost of an education. Today, it pays 21 percent. In addition, the minimum wage that many of us received as we worked during summers was the equivalent of close to $15 an hour today. Add it together -- and there is no wonder it's harder to afford a quality education. Government policies are to blame, and many of those complaining now were up front a few years ago saying the state shouldn't be subsidizing college degrees. That's obviously short sighted, but it allowed them to rationalize massive tax cuts over the last 15 years in MIchigan, with business and income tax cuts meaning the state cannot support higher ed the way it did when you were going to college.
Duane
Tue, 09/22/2015 - 1:16am
David, You make it sound hopeless so parents shouldn't save for their children's education. My disappiontment is that all we hear about is people wanting a 'magic bullet' that kills the need for their paying for college. I think paying for ones own education is part of the education, I know when I was involved in the interviewing process, a graduate that worked to pay for their education was better appreciated then one that had others pay or loans paid for it. We found they were more willing to make the extra effort, be willing to do the mudane parts of the job, were better at managing their time, were better prepared for working with others.
EB
Tue, 09/15/2015 - 3:02pm
In terms of the state's contribution to higher education, we're not getting useful numbers. Instead of telling us how much taxpayers are spending on state colleges, I'd like to know how much we're spending per student. Although I've never seen these numbers, I suspect we're educating many more four and two year college students than we did, let's say in 1965. Is this twice as many, four times, eight times? Adjusted for inflation, what was the average state taxpayer expenditure per four and two year college student in 1965 and what is this expenditure today? Are we spending more per student or less? If, for example, were educating twice as many students but at half the inflation adjusted state contribution per student as we did in 1965, then we now know the primary cause of student debt.
Dave
Tue, 09/15/2015 - 3:04pm
Professionally- Post secondary needs to be complimentary to on the job training not a prerequisite. As an employer we try to hire students whenever possible for entry level or staff positions to help them offset the cost of college and to give them a practical workplace education while attending school. I think our informal co-op program is working for us and our future leaders. For those who want to debate how sending their kids to a four year school for art history at a total cost of $111K with a starting range of $11.00/hr- I have no help I could offer except perhaps a few Dave Ramsey courses. For those who think they need to send their kids to college and this somehow stamps their "I'm a great parent card"- I would disagree if your kid has no business being there. Why burn cash- educate them for their place in the workforce and realize their career will not define them or you.
Charles Richards
Tue, 09/15/2015 - 3:19pm
The article says, "More than 80 percent across all three of the Center’s survey methods said state government should fund public colleges and universities at higher levels to make college more affordable." Why should citizens whose sons and daughters will not be going to college subsidize those who do go to college and reap the financial rewards of that education? This is asymmetrical. Those gaining the benefits are not paying the full costs of those benefits, while everybody else is paying part of the costs, but not reaping any of the reward. The extra income generated by a college degree in a well chosen field easily justifies a certain amount of debt. Ms. Derringer says, " Student-loan debt saddles young adults with a financial burden at the time in their careers when they could be saving money, while buying cars, houses and other big-ticket items that help drive the economy. " Did she consider the possibility that the taxes required for them to avoid that debt might crimp the ability of taxpayers to " help drive the economy."? What is the point of transferring purchasing power from one group to another?
Doug Curry
Sun, 09/20/2015 - 10:09am
The greatest INVESTMENT we can make to improve and expand the middle class is to make the first two years of university/community college free. We need a pre K - to grade 14 free public school system. It is time to put your money where your mouth is.