Freezing tuition sounds easy, but wouldn't be

Parents, politicians and pundits calling for freezing or capping college tuition to control costs, make college more affordable, and reduce the need for student loan debt is not new.

State legislators have often frozen or capped public institution tuition as part of the budget process in response to public pressure. In rare cases, private universities have frozen tuition as an enrollment strategy.

What is new is the federal government's call for institutions of higher education to freeze tuition for five years in exchange for access to certain federal funding, among other requirements. The Trump administration proposed its "compact" to nine schools across the country Oct. 1, but so far none have signed on, The Associated Press has reported. This is a bad bargain. Freezing the major revenue source while not limiting the costs of government compliance would make universities even more vulnerable to the vagaries of political interference.

Putting that shadow aside, with cost of living top of mind, is such a tuition freeze viable?

The average annual cost for tuition and fees at a ranked public university is $11,371 for in-state students and $25,415 for out-of-state, according to U.S. News & World Report. The average for ranked private colleges is $44,961, about the cost of a Ford Explorer.

Boards of trustees set tuition and fees using some combination of considerations, including: the political; the market, being alert to what families can afford; campus needs; the competition; and the philosophical, wanting to be affordable to students from a range of incomes. I recall agonizing discussions with the board at Adelphi University when it was time to set tuition, balancing campus needs and family budgets while at the same time knowing that SUNY tuition was lower and wondering what Hofstra and LIU would do.

One way to mostly accomplish a five-year freeze is to keep the tuition rate the same for the eight semesters a first-year student is expected to stay enrolled, then increase it for the next entering class. Or you could guarantee a rate for eight semesters, but new students who enter each semester after that would get their own reset rate. As an alternative to an outright freeze, you could limit tuition increases to a cap of say 2%.

While the motivation to provide cost certainty is noteworthy, the eight-semester commitment is a gamble. It assumes that enrollment will remain stable or increase — ignoring the projected enrollment cliff coming from the decline in high school graduates and changing attitudes about the need for higher education.

There are more risks. Proposals to freeze tuition ignore possibly lower admissions yields for colleges and poor retention rates, and assume that extraordinary expenses will not arise. (Think back to the impact of the Great Recession.)

If any of these possibilities occur, experience shows that budgets will be cut and institutional financial aid reduced, thus increasing costs for the students who were the intended beneficiaries of freezing tuition. And the quality, breadth and depth of academic programs and services may be reduced due to lower net revenue. Full-pay students will benefit from the reduced sticker price, though.

By committing to such a freeze, colleges and universities would limit their options for years to come.

Instead of starting with a vote to freeze tuition, legislators and campuses should budget for affordability based on the student body, closely watch spending and revenue, and forecast tuition rates for a three-year horizon, with assumptions, giving families more assurance and stability. 

Despite its allure to some at first glance, freezing or capping tuition is not the best way to promote college affordability and transparency.

This guest essay reflects the views of Robert A. Scott, president emeritus of Adelphi University and Ramapo College of New Jersey.