Special Commission Calls Inflation Greatest Danger to Country's Colleges, Universities

Many colleges are now considering increasing their tuition after this year. Excerpts are printed below from a report on "The Impact of Inflation upon Higher Education," issued by the Commission on Financing Higher Education on which Provost Buck serves.

In the last twenty years institutions of higher education have been required to adjust to various external forces--depression, war, and post-war expansion. To be sure, this has been true of all aspects of national life. But higher education has been unique in that each adjustment has meant financial stringency.

In depression years higher education enrolled more students than during the 1920's, while necessary income lagged. In war time student enrollments were cut almost in half, maintenance and development were halted, and educational programs were disrupted. After the war, colleges and universities faced greatly increased demands in teaching and research.

Aggravating the post-war adjustment, inflation forced higher education to cope with continuing price increases. Retail prices are more than 70 per cent higher than before World War II; wholesale prices have doubled.

Now colleges and universities face the threat of even more precipitous price rises. These may well bring disaster.

SOURCES OF INCOME

The four principal sources of income for institutions of higher education are student fees, government appropriations, endowment earnings, and current gifts.

Student instructional fees are the most important single source of educational income for privately supported colleges and universities. Even in the academic year 1939-40 these fees provided 52.9 per cent of the income for private institutions; in 1947-48 student charges accounted for 63.5 per cent of their educational income. On the average private universities increased their student charges 51 per cent in the last 10 years; private liberal arts colleges increased their charges 61 per cent...

In general, student charges have been the most available source of income to meet the rising costs of higher education. Even so, student charges have not increased as much as other prices. Yet the veterans educational program, which facilitated higher student charges, is now coming to an end. In 1947, the President's Commission on Higher Education recommended on social grounds that "the time has come to reverse a present tendency of increasing tuition and other student fees."...

If costs continue to rise, however, the experience of recent years indicates that colleges and universities will be forced to increase student charges further. Higher fees may reverse the trend toward equality of educational opportunity in this country, and make ability to pay a more important condition of admission than ability to think...

The third source of educational income, endowment earnings, is of major importance to private colleges and universities, and of appreciable importance to some public institutions. Whereas in 1940 endowment earnings provided 23.4 per cent of total educational income for private institutions, in 1948 they provided 11.8 per cent. The plight of persons receiving fixed incomes during inflation is well known...

Annual gifts are a fourth source of income to meet regular operating costs. Such gifts to public institutions almost tripled between 1940 and 1948, but were still only 2 per cent of their total educational income. Partly in response to vigorous campaigns which may be difficult to maintain, gifts to private institutions doubled. Nevertheless, the proportion of these gifts to total income declined from 13 per cent in 1940 to 11 per cent in 1948...

EXPENDITURES

The largest single item of educational expenditure in both public and private institutions is for costs of instruction, which means principally faculty salaries. Because of the many increased demands for services made upon them, and because of other rising costs, colleges and universities in the last decade have been able to raise faculty salaries only 40 to 50 per cent.

With a 70 per cent increase in price levels, average faculty salaries in terms of the goods and services they buy have actually been reduced some 10 or 20 per cent since 1940. Such faculty salary raises as have occurred have been made at the sacrifice of educational quality, through the use of larger classes and the employment of more faculty members at lower ranks...

FEDERAL SUBSIDY

Rising educational costs will bring proposals for some kind of general federal government subsidy to higher education. Fiscal policies to halt inflationary trends would constitute a major contribution by the federal government to the welfare of higher education. If inflation continues, a federal subsidy would not catch up with or adequately alleviate the dire effects of inflation upon our colleges and universities..