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 Tuesday, January 25, 2005 IssueFaculty/Staff E-Newsletter


From Interim Chancellor Phil DiStefano: In the spirit of keeping you informed on the progress of campus initiatives, I am continuing the practice of asking administrators to provide updates on current plans in their area to share with you through this column. I thought you would be interested in the following message from Ric Porreca, senior vice chancellor and chief financial officer, on the cost of a quality education.

The Cost of a Quality Education: How Much and Who Pays?
Ric Porreca, Senior Vice Chancellor and Chief Financial Officer

After your home mortgage, a higher education degree may be the most significant investment that you will make in your life — and it will very likely be the investment that has the greatest lifetime rate of return. But how much does it cost to provide a quality education, and how much of that cost should you expect to pay in the form of tuition, fees and other expenses?

Private vs. Public Universities

First, we need to recognize that the costs of providing a quality education are about the same for every university, whether it be a private school, like Stanford or Duke; or a public, like Virginia, Michigan or Colorado. These universities are competing for the same excellent faculty and staff; they pay the same construction costs for labs, classrooms and dorms; and they pay similar rates for utilities, insurance and library books. The national average for providing a quality education at a major university is currently about $18,000-$25,000 per year, not including room and board. Room and board typically are covered in a direct "payment for service contract" separate from tuition and fees.

Private schools recover these costs by charging tuitions ranging from $20,000 up to $30,000 or more per year. Tuition received in excess of costs is typically redistributed as financial aid for students from lower income families, redirected into endowments to fund new initiatives, or used for construction. Despite the high price, admission to these institutions has never been more competitive. Apparently, more and more folks realize the extraordinary lifetime value in attending a quality institution and are willing to make the investment through work savings, family contributions, and loans to be paid back from future earnings.

The same cost structures apply to public universities, but there is an expectation that such costs will be subsidized by the state, resulting in lower tuition, and therefore making an education accessible to all and the investment an even greater "value" for residents. This is one of the principles embedded in the public mission of state-supported universities. Across the country, states provide about $10,000 per year on average for each resident student to subsidize operations. States routinely provide funds for the construction of facilities and for their maintenance over time. States also often provide separate financial aid programs to further assist students with financial need. As a result, tuitions at state research universities average around $7,000 a year, but are over $10,000 at some of the best public colleges -- a bargain compared with private tuition prices.

At the University of Colorado at Boulder, the faculty and staff have worked hard for many years to offer an education that currently is on par with some of the best universities in the country. The campus has been extraordinarily efficient, providing a valuable undergraduate degree for among the lowest costs to the state and Colorado students of any college in the country — but this is fast becoming unsustainable.

The Future of State Funding

The state of Colorado currently provides a $3,150 subsidy per resident student, down from over $5,000 a few years ago. Further, the new College Opportunity Fund will set this subsidy at $2,400 beginning in July 2005 — over $7,500 below the national average. Tuition at CU-Boulder is $3,500 a year, also several thousand dollars below the national average. There has been no funding support from the state for capital construction for three years and running. At the same time, the state of Colorado ranks as the 7th highest in per capita income in the United States.

As a long-time resident of Colorado and the father of two children approaching college-age, part of me delights in this bargain — but can it last? The numbers just don't add up anymore, and all the efficiency in the world cannot sustain a quality education at this level of funding support. In six years, when my children are ready for college, will there be a quality education available for them at a Colorado state-supported university, or will they be forced out of state or to a private university to find one? This is our collective challenge. Both tuition and state funding need to be increased in order to sustain excellence in our universities and value in our degrees. Even a doubling of both would have us below the national average in funding available for educating our students, and would still be a bargain relative to the value received by the students, and to the state in the form of economic development.

Everyone, including me, likes a good bargain. However, I believe that if Coloradans understood the long-term results of an under-funded system of higher education — diminished quality, lower value, and stalled economic development — they would say that's no bargain. I believe they would gladly pay a fair price to have a more highly valued education available here in Colorado.

It simply is not possible to expect a high-quality education at a bargain-basement tuition price, particularly without a comparable state subsidy. As a parent, the choice is straight-forward; support increases to bring us to the average of other state universities or start saving a lot more to send my kids to Michigan or Virginia. I vote for "Go CU."

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