6 Ways Colleges Are Trying to Lower the Cost of a Higher Education

Higher education institutions are hitting the books -- their financial books, that is. With many facing lower enrollment and revenue, and more students needing aid, colleges and universities desperately need to improve their bottom lines. The institutions, their students and their parents, and employers all stand to gain if the cost of getting a college education and earning a sheepskin becomes more affordable.

To shape up, schools are trying to lower the cost and time of conferring a degree. But shaking up schools’ stock and trade -- academics -- is challenging. “Change is difficult in higher education,” says William “Brit” Kirwan, the chancellor for the University System of Maryland. “Despite their reputation as liberal, educational institutions are among the most conservative organizations.” Among the productivity boosters they’re trying:

•Expanded student counseling, to help undergraduates choose classes and majors more carefully and avoid taking time-consuming detours. The hope is that students will graduate sooner and spend less of their money, as well as use fewer university resources.

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•A cap on how many credits academic departments can require for graduation in their major. In recent years, credit creep has pushed requirements for some majors to more than a full-time student would typically earn in four years of college. The University System of Maryland, for example, has decreed that no major can require more than 120 credits.

•Increased faculty time commitments, boosting the number of classes professors teach and the number of office hours they’re available to provide students with guidance. The Maryland system has mandated a 10% increase in teacher availability. That means the system can hire fewer adjunct, or temporary, teachers.

•Partnerships with community colleges, to make it easier for students to start off at less-costly two-year schools, then transfer for a four-year degree.

•Classes shared with other schools via audio and videoconferencing. Schools can hire fewer faculty members but still educate the same number of students by distributing teaching responsibilities across campuses. Pennsylvania’s higher-education system is among those experimenting with technology to allow faculty to interact live with students in multiple locations. The collaboration is a big change, says John Cavanaugh, the chancellor of the Pennsylvania State System for Higher Education. “It gets into some long-held traditions that each institution is unique and does its own thing,” he says. But advances in high-end conferencing are making the transition easier. Technological advances will also spur the adoption of more online classes at all schools.

•And different class sizes and structures. Schools are experimenting to find the most efficient way to teach, with the hope of producing better results at a lower cost. One study showed that having slightly larger classes that met less frequently worked better, thanks to more interactive learning and less lecturing -- and the practice was lower cost, to boot.

It’s not all slash and burn: Schools are tracking down new revenue streams, too. Raising tuition can only get schools so far. For example, the College of New Jersey is renting out empty housing and other space during the summer. The school is also partnering with outside developers to expand its bookstore, add student housing and build a gym -- a project that would have cost the college $90 million on its own. The college will collect land lease revenues for 30 years and still improve offerings for its students.

And, of course, educational institutions are taking the same cost-cutting steps as other businesses -- including shifting more health care costs to employees, paring administrative staff and so on. Energy savings across sprawling campuses are a major priority. Some of the approaches are straightforward: The College of New Jersey last year adopted a conservation program that shuts down administrative offices and most academic departments on Fridays during the summer. Meanwhile, Pennsylvania school administrators are taking advantage of the natural resources surrounding their campuses statewide. Some academic buildings and all of the new residence halls at West Chester University, for example, use geothermal energy.

Public and private institutions alike are feeling the budgetary pain. State budget cuts are slashing funding for public schools across the nation: Pennsylvania, Virginia, New York, Florida and California, for example, have cut their overall budgets by 15%-20%. And the future looks grim, with 46 states dealing with budget shortfalls for fiscal 2011 and 39 forecasting gaps for 2012. Not to mention that billions of dollars in stimulus funds to higher education are set to run out in mid-2011.

At private schools, fall enrollments are down, reducing tuition revenues. More students are requiring financial aid. Benefactors are donating less. In particular, they’re giving fewer of the long-term endowment gifts that schools can plan on using a few decades from now, according to Kent John Chabotar, the president of Guilford College in Greensboro, N.C.

Moreover, this downturn seems to be more than temporary. Public schools, especially, see a continuing decline in state budgets and know they must make permanent changes. In previous economic recessions, “a chunk of money would drop out and there’d be a zigzag in revenues,” says Jane Wellman, the executive director of the Delta Project, which studies postsecondary education costs and spending. Schools would muddle through by slashing budgets and raising tuition. “Now we’ve got a triple whammy,” she says: Revenues and spending at unsustainable levels and a president who wants to increase the number of postsecondary degrees attained each year. To meet Obama’s goal for the population aged 24 to 35 alone would require 15 million degrees above what’s likely at the current pace.