A new documentary, “The Ivory Tower,” hit theaters recently and is fueling debate about the rising cost and value of higher education.
The film uses examples that highlight the increasing cost and asks how this is compatible with the goal of providing access to as many students as possible. That’s a good question, but the film fails to tackle the more difficult question: How do we create a financially sustainable framework that enables us to achieve this goal?
The debate must fundamentally change and be anchored in reality. This is not a one-size-fits-all proposition. The enormous differences among colleges and universities matter financially. Medical schools, research institutions, undergraduate colleges, for-profit schools all operate under very different funding models.
For-profit colleges account for nearly half of all student loan defaults, even though only one in 10 students attends them. Contrast that with UC Berkeley, where most students graduate with debt lower than the national average and where debt hasn’t increased in real terms over the past decade. Furthermore, in-state tuition at Berkeley is $12,834 a year compared to $40,000-plus at similarly ranked private institutions. Families who earn less than $80,000 annually receive financial aid, which exceeds tuition, and those who earn less than $150,000 are protected from tuition increases.
With 37 percent of undergraduates’ families earning less than $45,000 a year and more than 30 percent of enrollees being transfer students, Berkeley is one of the most successful engines of social mobility in America. It educates nearly as many Pell Grant recipients as all Ivy League schools combined. This narrative is drastically different from the one dominating the national debate.
Despite UC Berkeley’s performance, state funding has been cut more than half in real terms over the past decade. Consequently, “public” funding now accounts for only about 13 percent of our total operating budget. While this year’s state budget reflects a 5 percent increase, this results in a 0.6 percent increase in Berkeley’s total revenue. At this pace, it will take us until 2026 to reach the same level of state funding, in nominal dollars, we received in 2003.
The case for confronting these difficult issues isn’t limited to helping individuals realize their potential. We’ve heard the argument that those who benefit should bear the costs. However, the University of California system provides the state with far-reaching benefits by attracting huge amounts of federal and private research dollars. These dollars create jobs, start businesses and provide an educated workforce. The Bay Area Council Economic Institute estimates that firms started by Berkeley graduates have created at least 1.2 million jobs and $238 billion in economic output. While 55 percent of companies started by Berkeley grads are in the Bay Area, our economic contributions extend across the nation and globe. Federal, state and local tax revenue from these firms and their ripple effect totaled $27.3 billion in 2012.
Critics suggest we simply need to cut costs. We accept part of the criticism and are implementing one of the furthest-reaching efficiency programs of any university in the nation. We’ve also launched an ambitious revenue generation program and are forging ahead with comprehensive and adaptive programs for reaping the benefits of the ongoing revolution in digital education. But only those not actually engaged in this field believe it’s a panacea.
It is simply not feasible to achieve financial equilibrium by acting on the cost side alone – not without a massive decline in quality and student services. This doesn’t mean building “climbing walls” as the film suggests, but investing in basic student needs – career advice, course selection, mental and physical health. We are adapting, but there’s a limit on our capacity when an estimated 70 percent of our revenue opportunities are constrained by decision-makers who aren’t directly associated with Berkeley.
Affordable, high-quality public higher education affects everyone. It creates businesses and jobs, and strengthens our workforce. It’s our nation’s most successful engine of social mobility – more important than ever in today’s environment of increasing income disparities. The UC system is a tremendous accomplishment that other states and countries envy and try to emulate. We are in this together, and time is not on our side. We should all take up this cause now, before it is too late.
John Wilton is vice chancellor for administration and finance at the University of California, Berkeley.