Universities' Path Seems Unsustainable
Lately, former University of North Carolina system President Erskine Bowles has been going around the country trying to sell the public and public officialdom on the idea that the nation's current fiscal course is unsustainable.
"I think we face the most predictable economic crisis in history," Bowles recently told The Wall Street Journal. "The economics is very clear - the politics, very difficult."
Bowles was speaking in his role as co-chair of President Obama's deficit reduction commission, which came up with a set of unpopular, painful and so far unacted-upon budget cuts and tax hikes.
He went on to tell the newspaper how every single dollar spent last year by the U.S. government on discretionary programs could be seen as being borrowed.
"That's a formula for failure in anybody's book," he said.
Funny thing is, he could have used similar words, speaking in his previous role as UNC system president, about the current unsustainable path of our public universities.
The universities themselves may not be borrowing the money. But they are living on borrowed money. It's just that the borrowing is by students and their families.
Consider that the average college student in North Carolina graduated with $25,250 of debt in 2010. Among the 16 public UNC system schools, tuition and fees for resident undergraduates will average $5,275 this year.
So, for an average resident student who takes five years to graduate, almost all of their tuition payments could be seen as coming from student loans.
That's not the unsustainable trend, though.
Like the country's rising entitlement costs weighed against borrowing and revenue, it's the rate of tuition increases weighed against debt and the ability of students to pay off that debt that can't be sustained down the road.
Over the past decade, tuition at UNC system schools more than doubled, rising 119 percent. That's an average annual increase of 11.9 percent. At UNC-Chapel Hill, tuition and fees jumped from $3,219 in the 2001-02 school year to $7,008 this year.
Meanwhile, the average student is graduating with about 50 percent more debt than a decade ago.
While college administrators engage in some hand-wringing about rising tuition and declining state support, they don't seem to acknowledge the obvious: Another doubling of tuition over the next decade - combined with rising debt, rising student loan defaults and a questionable job market - is untenable.
Something will have to give. At some point, a university financing crisis becomes predictable.
University administrators can pretend that's not the case. They can keep on with their plans for more double-digit tuition increases.
Or they can begin to recognize that their huge, complex institutions require significant reform to cut costs.
University officials may believe they have a problem with legislators and taxpayers right now. Down the road, their bigger problem is going to be with their customers - the students.
It would be nice to hear one of those former UNC officials come home to do a little preaching about that unsustainable road.
Scott Mooneyham writes for Capitol Press Association in Raleigh. Contact him at firstname.lastname@example.org.
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