THE RISING PRICE OF A QUALITY 

POSTSECONDARY EDUCATION:

FACT OR FICTION? 

HEARING

BEFORE THE 

COMMITTEE ON EDUCATION AND 

THE WORKFORCE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

HEARING HELD IN WASHINGTON, DC, OCTOBER 3, 2002 

Serial No. 107-83 

Printed for the use of the Committee on Education 

and the Workforce

82-592 pdf 

For sale by the Superintendent of Documents, U.S. Government Printing Office 

Internet: bookstore.gpo.gov Phone: (866) 512-1800; DC area (202) 512-1800 

 FAX: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
ii

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN A. BOEHNER, Ohio, Chairman 

THOMAS E. PETRI, Wisconsin GEORGE MILLER, California 

MARGE ROUKEMA, New Jersey DALE E. KILDEE, Michigan 

CASS BALLENGER, North Carolina MAJOR R. OWENS, New York 

PETER HOEKSTRA, Michigan DONALD M. PAYNE, New Jersey 

HOWARD P. “BUCK” McKEON, California ROBERT E. ANDREWS, New Jersey 

MICHAEL N. CASTLE, Delaware TIM ROEMER, Indiana 

SAM JOHNSON, Texas ROBERT C. “BOBBY” SCOTT, Virginia 

JAMES C. GREENWOOD, Pennsylvania LYNN C. WOOLSEY, California 

LINDSEY O. GRAHAM, South Carolina LYNN N. RIVERS, Michigan 

MARK E. SOUDER, Indiana RUBEN HINOJOSA, Texas 

CHARLIE W. NORWOOD, JR., Georgia CAROLYN McCARTHY, New York 

BOB SCHAFFER, Colorado JOHN F. TIERNEY, Massachusetts 

FRED UPTON, Michigan RON KIND, Wisconsin 

VAN HILLEARY, Tennessee LORETTA SANCHEZ, California 

VERNON J. EHLERS, Michigan HAROLD E. FORD, JR., Tennessee 

THOMAS G. TANCREDO, Colorado DENNIS KUCINICH, Ohio 

JIM DeMINT, South Carolina DAVID WU, Oregon 

JOHNNY ISAKSON, Georgia RUSH D. HOLT, New Jersey 

BOB GOODLATTE, Virginia HILDA L. SOLIS, California 

JUDY BIGGERT, Illinois SUSAN DAVIS, California 

TODD RUSSELL PLATTS, Pennsylvania BETTY McCOLLUM, Minnesota 

PATRICK J. TIBERI, Ohio VACANCY 

RIC KELLER, Florida 

TOM OSBORNE, Nebraska 

JOHN ABNEY CULBERSON, Texas 

JOE WILSON, South Carolina 

 Paula Nowakowski, Chief of Staff 

 John Lawrence, Minority Staff Director 
iii

TABLE OF CONTENTS 

TABLE OF CONTENTS................................................................................................................. i 

OPENING STATEMENT OF CHAIRMAN JOHN A. BOEHNER, COMMITTEE ON 

EDUCATION AND THE WORKFORCE, U.S. HOUSE OF REPRESENTATIVES, 

WASHINGTON, D.C..................................................................................................................... 1 

OPENING STATEMENT OF RANKING MINORITY MEMBER GEORGE MILLER, 

COMMITTEE ON EDUCATION AND THE WORKFORCE, U.S. HOUSE OF 

REPRESENTATIVES, WASHINGTON, D.C. ............................................................................. 3 

STATEMENT OF DR. ROBERT A. CORRIGAN, PRESIDENT, SAN FRANCISCO STATE 

UNIVERSITY, SAN FRANCISCO, CALIFORNIA..................................................................... 5 

STATEMENT OF C.D. MOTE, JR., PRESIDENT, UNIVERSITY OF MARYLAND AND 

PROFESSOR OF ENGINEERING, GLENN L. MARTIN INSTITUTE, COLLEGE PARK, 

MARYLAND ................................................................................................................................. 7 

STATEMENT OF DR. RICHARD M. FREELAND, PRESIDENT, NORTHEASTERN 

UNIVERSITY, BOSTON, MASSACHUSETTS .......................................................................... 9 

STATEMENT OF DR. GORDON WINSTON, PROFESSOR OF ECONOMICS, WILLIAMS 

COLLEGE, WILLIAMSTOWN, MASSACHUSETTS .............................................................. 11 

APPENDIX A -- WRITTEN OPENING STATEMENT OF CHAIRMAN JOHN A. BOEHNER, 

COMMITTEE ON EDUCATION AND THE WORKFORCE, U.S. HOUSE OF 

REPRESENTATIVES, WASHINGTON, D.C. ........................................................................... 31 

APPENDIX B -- WRITTEN STATEMENT OF DR. ROBERT A. CORRIGAN, PRESIDENT, 

SAN FRANCISCO STATE UNIVERSITY, SAN FRANCISCO, CALIFORNIA..................... 37 

APPENDIX C -- WRITTEN STATEMENT OF C.D. MOTE, JR., PRESIDENT, UNIVERSITY 

OF MARYLAND AND PROFESSOR OF ENGINEERING, GLENN L. MARTIN INSTITUTE, 

COLLEGE PARK, MARYLAND ............................................................................................... 49 

APPENDIX D -- WRITTEN STATEMENT OF DR. RICHARD M. FREELAND, PRESIDENT, 

NORTHEASTERN UNIVERSITY, BOSTON, MASSACHUSETTS........................................ 59 

APPENDIX E -- WRITTEN STATEMENT OF DR. GORDON WINSTON, PROFESSOR OF 

ECONOMICS, WILLIAMS COLLEGE, WILLIAMSTOWN, MASSACHUSETTS................ 91 

APPENDIX F -- WASHINGTON POST ARTICLE SUBMITTED FOR THE RECORD BY 

REPRESENTATIVE ROBERT C. “BOBBY” SCOTT, COMMITTEE ON EDUCATION AND 

THE WORKFORCE, U.S. HOUSE OF REPRESENTATIVES, WASHINGTON, D.C.......... 105 
iv

APPENDIX G – WRITTEN STATEMENT SUBMITTED FOR THE RECORD BY 

REPRESENTATIVE PETER HOEKSTRA, COMMITTEE ON EDUCATION AND THE 

WORKFORCE, U.S. HOUSE OF REPRESENTATIVES, WASHINGTON, D.C. ................. 109 

APPENDIX H – WRITTEN STATEMENT SUBMITTED FOR THE RECORD BY 

REPRESENTATIVE HAROLD FORD, JR., COMMITTEE ON EDUCATION AND THE 

WORKFORCE, U.S. HOUSE OF REPRESENTATIVES, WASHINGTON, D.C. ................. 113 

APPENDIX I – WRITTEN STATEMENT SUBMITTED FOR THE RECORD BY 

REPRESENTATIVE DENNIS J. KUCINICH, COMMITTEE ON EDUCATION AND THE 

WORKFORCE, U.S. HOUSE OF REPRESENTATIVES, WASHINGTON, D.C. ................. 117 

TABLE OF INDEXES ............................................................................................................... 121
1

HEARING ON THE RISING PRICE OF A QUALITY 

POSTSECONDARY EDUCATION: FACT OR FICTION? 

_____________________________

THURSDAY OCTOBER 3, 2002 

COMMITTEE ON EDUCATION AND THE WORKFORCE, 

U.S. HOUSE OF REPRESENTATIVES 

WASHINGTON, D.C. 

 The committee met, pursuant to notice, at 9:37 a.m., in Room 2175, Rayburn House Office 

Building, Hon. John A. Boehner [chairman of the committee] presiding. 

 Present: Representatives Boehner, McKeon, Castle, Johnson, Ehlers, Biggert, Tiberi, 

Wilson, Miller, Roemer, Scott, Woolsey, Rivers, Tierney, Kind, Solis, and Davis. 

 Staff present: George Conant, Professional Staff Member; Patrick Lyden, Professional 

Staff Member; Deborah L. Samantar, Committee Clerk/Intern Coordinator; Kathleen Smith, Senior 

Communications Counselor; Jo-Marie St. Martin, General Counsel; Holli Traud, Legislative 

Assistant; Heather Valentine, Press Secretary; John Lawrence, Minority Staff Director; Charles 

Barone, Minority Deputy Staff Director; Mark Zuckerman, Minority General Counsel; James 

Kvaal, Minority Legislative Associate/Education; Maggie McDow, Minority Legislative 

Associate/Education; Alex Nock, Minority Legislative Associate/Education; Joe Novotny, 

Minority Staff Assistant/Education; Ann Owens, Minority Clerk; Suzanne Palmer, Minority 

Legislative Associate/Education; and Peter Rutledge, Minority Senior Legislative Associate/Labor. 

OPENING STATEMENT OF CHAIRMAN JOHN A. BOEHNER, COMMITTEE ON 

EDUCATION AND THE WORKFORCE, U.S. HOUSE OF REPRESENTATIVES, 

WASHINGTON, D.C. 

Chairman Boehner. A quorum being present, the Committee on Education and the Workforce 

will come to order. We are meeting today to hear testimony on the rising costs of postsecondary 

education. Under Committee Rule 12(b), opening statements are limited to the Chairman and 

ranking member. 

 With that, I ask unanimous consent for the hearing record to remain open for 14 days to 

allow member statements and other extraneous material referenced during the hearing today to be 

submitted for the official record. Without objection, so ordered. 
2

 Let me just apologize for the normal course of action around here. Yesterday afternoon we 

were called to the floor for votes. Unfortunately, today we are likely to have something similar, but 

we are going to try to get through all of the testimony. 

 I do understand that several witnesses have to leave at 10 o'clock. I do appreciate your 

willingness to come back today. We are going to try to move this as quickly as we can today. 

 We are here today to examine the increasing costs of postsecondary education and the effect 

it has on students and families. 

 As we approach the upcoming reauthorization of the Higher Education Act, I think it is 

important for every member of this committee to understand what is really happening with tuition 

prices and what factors influence tuition increases, and what we can do at the federal level to try to 

keep college costs affordable for students across the country. 

 Since the early 1980s, tuition and fees of postsecondary institutions have outpaced increases 

in the rate of inflation and family incomes. Each year, these cost hikes have been two to three 

times the rate of inflation. And while we have continued to increase student financial assistance 

significantly every year, tuition spikes have outpaced our best efforts to stem this trend. 

 When we return to our districts, many of us hear from parents, students, and others about 

their worries over funding of a postsecondary education. It concerns me that at a time when we 

make available far in excess of $50 billion a year in student financial assistance, not to mention the 

billion dollars spent by states, philanthropies, colleges, and universities themselves, parents and 

students are afraid they won't be able to pay for college. 

 Last year, under the rate cut formula negotiated by Chairman McKeon as part of the 1998 

Higher Education Act reauthorization, the federal student loan rate fell to its lowest level in history. 

Since 1995, we have significantly increased our aid for postsecondary education. 

 More students are receiving more federal support than ever, and we have increased the 

maximum Pell to historic highs. The Pell Grant Program is our highest priority for postsecondary 

education. Since 1998, the maximum grant has increased by 33 percent. 

 The CEOG program, which provides supplemental grant aid, is also at an all time high of 

$918 million. College work- study, which helps needy students earn while they learn, has been 

increased to $1.2 billion per year, and the list goes on. 

 These programs are often the only hope for low-income students to achieve their dream of 

obtaining a higher education. Unfortunately, tuition increases have exceeded even these significant 

gains. Since 1981, the average tuition at public and private nonprofit institutions has more than 

doubled, even after taking inflation into account. 

 During that same time, family incomes have only increased some 27 percent, in real terms. 

Given these statistics, it is easy to understand why families have real concerns about how they are 
3

going to pay for college. 

 Let me, at this time, yield to my colleague from California, Mr. Miller. 

WRITTEN OPENING STATEMENT OF CHAIRMAN JOHN A. BOEHNER, COMMITTEE ON 

EDUCATION AND THE WORKFORCE, U.S. HOUSE OF REPRESENTATIVES, 

WASHINGTON, D.C. – APPENDIX A 

OPENING STATEMENT OF RANKING MINORITY MEMBER GEORGE MILLER, 

COMMITTEE ON EDUCATION AND THE WORKFORCE, U.S. HOUSE OF 

REPRESENTATIVES, WASHINGTON, D.C. 

Mr. Miller. Mr. Chairman, in the interest of time, I would like to associate myself with your 

remarks, and just thank you for holding this hearing. I cannot think of a more important hearing 

that this committee can conduct. I hope this is not the last hearing on this subject. 

 Somehow, we have got to figure out how to keep our pledge to make sure that every young 

person has the option and can properly make the decision of whether or not they can or should 

attend college without the financial considerations being a barrier to or thwarting the process by 

which they would make the decision of whether or not college made sense for them. 

I thank you again for holding the hearing. 

Chairman Boehner. Let me recognize you, Mr. Miller, to introduce our first witness. 

Mr. Miller. Well, we have a wonderful panel here, Mr. Chairman. I would like to introduce to the 

members of the committee Dr. Robert Corrigan, who is the president of San Francisco State 

University, my alma mater. He has been president since 1988. Before that, he was at the 

University of Massachusetts. 

 He has also been deeply involved in our California community, and specifically in the San 

Francisco community. He probably has among the best records in the nation of having work-study 

students participate in public service within the community. 

 He has been deeply involved and chaired the effort of the ``America Reads'' challenge, and 

has also worked very hard along with his colleagues in trying to figure out how you keep these 

tuition costs down. 

 I think tuition at San Francisco State is now $1900, which is among the lowest in the nation, 

somewhat higher than the $45 a quarter when I went there. But we could return to yesteryear. It 

was $95 when I went to law school, and we shut the law school down because of the increase. 

 But, anyway, we are delighted to have you, President Corrigan, and look forward to your 

testimony, along with the other members of the panel. 
4

Chairman Boehner. Our second witness today will be Dr. C.D. Mote, Jr. Dr. Mote became 

president of the University of Maryland and a professor of engineering at the Glenn Martin 

Institute in September of 1988. Prior to assuming the presidency at Maryland, Dr. Mote served for 

31 years on the faculty of the University of California at Berkeley. 

 Let me recognize my colleague from Massachusetts, Mr. Tierney, to introduce our next 

witness.

Mr. Tierney. Thank you, Mr. Chairman, for the privilege to introduce Richard Freeland, who is 

the president of Northeastern University. 

 Northeastern University is a private university with a strong research program, and offers a 

comprehensive range of undergraduate and graduate degree programs. It emphasizes the link 

between classroom learning and workplace experience. The main campus is located in Boston. 

 But I am happy to say one of the satellite campuses is firmly entrenched in my district. 

Both my district office and Washington office have benefited from Northeastern interns who have 

given their time and energy. 

Dr. Freeland began his service as president of Northeastern University in September of 

1996. Although he has been president for six years, he spent his entire academic career in higher 

education. Under his stewardship, Northeastern has striven to achieve excellence as a national 

research university that is student-centered, practice-oriented, and urban. 

Dr. Freeland has built upon Northeastern's practice-oriented education and tradition, and its 

strength in ties between the classroom and the workplace. I want to note that the university has 

increased its investment in student financial aid by 123 percent over the last five years. 

 This is indicative of the commitment to increase financial aid for deserving low-income 

students. In addition, the university provides a tuition discount in the form of reduced tuition 

charge.

 I think we will all be interested in hearing more. I would like to thank Dr. Freeland for 

joining the committee today, and look forward to hearing your testimony. 

Chairman Boehner. Thank you, Mr. Tierney. Our last witness today will be Dr. Gordon Winston. 

Dr. Winston has served as professor of economics for the Williams Project on the Economics of 

Higher Education since 1990, and is a leading researcher on cost and price issues as they affect 

postsecondary education. 

Dr. Winston served as the director of the Williams Project from 1995 to 2001. Prior to that, 

he served as the provost of Williams College. He is also a member of the Institute for Advanced 

Study in Princeton, New Jersey, and was there from 1978 through 1979. 
5

 He has offered numerous reports on the factors that affect tuition prices for the National 

Center for Educational Statistics and the National Commission on the Cost of Higher Education. 

 Before our witnesses begin, members will ask questions when the witnesses are finished. 

You will each have five minutes to summarize your statement. 

 With that, Dr. Corrigan, you can begin. 

STATEMENT OF DR. ROBERT A. CORRIGAN, PRESIDENT, SAN FRANCISCO 

STATE UNIVERSITY, SAN FRANCISCO, CALIFORNIA 

Mr. Corrigan. Chairman Boehner, Ranking Member Miller, and Representative McKeon, and 

distinguished members of the committee, my name is Robert Corrigan, and I am the president of 

San Francisco State University, a 28,000-student public urban university that is part of a 23 

California State campus system that enrolls over 370,000 students right now. 

 The mission of San Francisco State University, like that of the CSU system itself, is to 

provide a high quality, accessible education to the students of a very diverse state. To ensure 

access, the California State University has made a commitment to keep student fees as low as 

possible while maintaining academic quality. 

 This commitment has enabled us to attract and to graduate a very diverse student 

population. For example, at San Francisco State, almost 70 percent of our undergraduate students 

are students of color. Their average age is 24; 80 percent of them work, many full-time, and almost 

half receive financial aid. 

 For the current academic year, as Congressman Miller has suggested, the California State 

University charges $1428 per year in what you would call tuition. And added to this are campus 

space fees for local services such as student health facilities and student activities. 

 At San Francisco State, those fees total $398 annually, which means that our students pay a 

total of $1826. That is less than $2000 for a full year of university study. I would argue that this is 

an extraordinary educational bargain. Moreover, our tuition has not increased in eight years. In 

fact, it was decreased by 5 percent in 1998/99, and by another 5 percent the following year. 

 However, it costs the California State University roughly $10,000 per year to educate a 

student--considerably in excess of the roughly 2,000 that that student pays. Though the price of a 

CSU education has held steady over the past eight years, its costs have continued to rise. 

 Moreover, CSU is in a period of rapid enrollment growth exceeding its state-funded target 

this year by over 6,000 students; 25 percent of those unfunded students happen to be at San 

Francisco State this year. 

 As you know, California faces a major budget crisis. This state's $24 billion current budget 

deficit has already caused a CSU budget cut, and the fear is that there is more to come before the 
6

year is out. If the state is no longer able to support the costs of education, California State 

University may have to look to other strategies to fund increased costs in enrollment growth, and 

that could in fact include fee increases. 

 Let me assure the committee, however, that CSU and its campuses are in fact working hard 

and imaginatively to cut costs and to increase efficiency while maintaining academic quality and 

access.

 One major very successful undertaking, for example, has been the system's move to yearround operation. By greatly expanding summer course offerings, actually creating a summer 

semester, we are able to increase our enrollment capacity significantly without the huge capital 

costs that are associated with new buildings or new campuses. This also helps our students 

accelerate their time to a degree, a fiscal benefit both to them and, I would argue, to the state of 

California.

 Another successful new approach is partnering with local community colleges in joint use 

projects, sharing facilities, while offering community college students the chance to earn selected 

four-year degrees at a site that might be convenient to them. For example, again, San Francisco 

State's ``Pathways'' project with Canada College in San Mateo County is a venture of this kind. 

 Early intervention programs that reduce the need for university level remediation are 

another California State University cost saver, and, I might add, quality enhancement. It frees up 

academic resources that would otherwise go into extensive remediation and brings us, as a bonus, 

better prepared students. 

 However, despite low fees, financial aid remains a critical component of the CSU's ability 

to serve a diverse student population. Financial barriers continue, as the chairman has indicated, to 

be a very real obstacle to a college education for many of our students. 

 The problem is particularly acute in San Francisco, which is one of the nation's most 

expensive cities in which to live, or in a city like San Francisco. At San Francisco State, the 

amount of unmet need, that is, expenses that students must face even after financial aid is factored 

in, total over $30 million per year. 

 Our average financial aid award falls far below the actual costs of student attendance, and 

this is money that students must find. They will do so by borrowing heavily from private loan 

programs by working longer hours than they should, by enrolling part-time rather than full-time, or 

by running up credit card debt. 

 I say this to highlight the need for the Federal Government to continue increasing financial 

aid, as well as its investments in other higher education programs. We urge you to increase the Pell 

Grant maximums, award levels; to increase funding for SEOG and federal work-study; and would 

also like to see increased funding for GEARUP and TRIO programs. 

 Finally, Mr. Chairman, I would like to extend an invitation to the committee to visit our 

campus in San Francisco, and consider the possibility of holding a field hearing there. That would 
7

enable you to see for yourselves firsthand the challenges that our students face and the sacrifices 

that they make on a daily basis to realize their educational goals. 

Mr. Chairman, members of the committee, I thank you for taking the time to consider my 

testimony this morning. I will be pleased to respond to questions later. 

WRITTEN STATEMENT OF DR. ROBERT A. CORRIGAN, PRESIDENT, SAN FRANCISCO 

STATE UNIVERSITY, SAN FRANCISCO, CALIFORNIA – APPENDIX B 

Chairman Boehner. Dr. Mote. 

STATEMENT OF C.D. MOTE, JR., PRESIDENT, UNIVERSITY OF MARYLAND AND 

PROFESSOR OF ENGINEERING, GLENN L. MARTIN INSTITUTE, COLLEGE PARK, 

MARYLAND 

Mr. Mote. Chairman Boehner, members of the committee, thank you very much for this 

opportunity to testify today. My name is Dan Mote. I am the president of the University of 

Maryland at College Park. I am also the stand-in for William Kirwan, the chancellor of the 

University System of Maryland, who could not be with you today. His written statement has been 

submitted for the record. 

 As way of my background, Mr. Chairman, I have been at the University of Maryland for 

four years. I came in September 1998, after 31 years at Berkeley, once a Bear, and now a Terp. 

Mr. Chairman, all of us here today, indeed, thank you very much, and your committee very 

much for taking on this most important agenda. Nothing could be more important to the future of 

our nation than higher education. It has become the hallmark of our nation. 

 While there are many benefits of a university degree that we could go on for quite awhile 

about, we should just point out the economic benefit. I just realized, after looking at an economic 

study from the year 2000, that 1986 graduates of the University of Maryland currently earn 

$52,000 on average. 

 That is about double what is earned by a high school diploma in that year. I think similar 

statistics are available from other states. We very much want to do everything in our power to 

ensure that this higher education and the prosperity that it brings to our nation and to our citizens 

remains available. 

 I would like to mention five points today very briefly. First, no one, not college presidents, 

boards, or certainly parents and legislators want to see tuition increased. Tuition is one critical 

revenue source among many. 

 State appropriations for public universities, especially payouts from endowments, gifts, and 

other contracts are other, and frankly much more preferred, revenue sources for covering the cost of 
8

education. State policies balance the state appropriations and tuition costs. 

 Some states by policy have high tuition and low state appropriations; others have low 

tuition, high state appropriations; and others are sort of in the middle. I think Maryland would fall 

in the middle. 

 The second point I want to make is that families and students often don't pay the sticker 

price of tuition. In fact, many people overestimate the real tuition costs. When asked people's 

assessment of tuition costs, they usually are assessed at much higher than actual costs. 

 In 2001, for example, 40 percent of the students in the country paid less than $4,000 in 

tuition fees. This, of course, is not as low as at San Francisco State, which is quite remarkable. 

Third, of all of the factors that drive tuition decisions in the public institutions, the single most 

important one, of course, is state appropriation. 

 Over the last 40 years, the states’ share of costs for higher education has systematically 

declined. As a result, tuition has increased. State funds now comprise less than half of the 

operating budget for public, four-year institutions. That figures about 33 percent in Maryland, and 

actually about 33 percent in California as well, and this trend will probably continue. 

 What has happened, in my personal view, is that higher education is no longer seen as a 

public good. It's seen more as a personal benefit. When it's a personal benefit, the beneficiaries 

seem to need to bear more of the costs. 

 There is an important point to be made here. For example, in Maryland, if the state 

appropriation to higher education were flat this year, it would take a 10 percent tuition increase to 

produce a four percent increase in overall expenditures. 

 That is because basically 20 percent of the operating budget comes from tuition; 33 percent 

comes from the state. As a result, if the state cuts its appropriation by 6 percent, it would take a 10 

percent tuition increase just to produce a flat expenditure into the next year. 

 My fourth point is that the institution is especially sensitive to the impact on that increasing 

tuition costs has on the lowest income level students. A recent report of the U.S. Department of 

Education points out that the effective tuition costs for the lowest income students, after all the 

need-based scholarships are put into place, is the same now as it was in 1992. 

 So, in effect, these tuition increases have not affected this population. However, the middle 

income and the higher income students have been significantly affected. Possibly, the middleincome students especially deserve more of our attention, in terms of tuition problems. 

 Finally, understanding who actually makes the tuition decisions is important. In Maryland, 

there is a 17 member Board of Regents that is appointed by the governor and sets the tuition for the 

11 degree granting institutions in the University System of Maryland. 
9

 In addition, and as a practical matter, the governor and the general assembly of the state 

also have to approve the tuition because they consider the tuition as part of state appropriation. So 

it basically is part of the law of the state. 

 While this decision making process I am sure varies from state-to-state, I think it would be 

the rare public institution that can actually set its own tuition based on its own decisions. 

Mr. Chairman, I suggest that we are very much in agreement in our goal to provide high 

quality, affordable education. Our students certainly expect and look for high quality, affordable 

education. I think we can achieve these goals collectively. 

 Our institution, our governing boards, our states, and the federal government, as well, but 

we really have to work together and try to look at a collective funding base that would include state 

appropriations, federal resources, parental incomes, and, of course, all of the scholarships and 

workload.

 My final comment would be that the shift of financial aid from students to work and loan 

rather than scholarship is a negative one for our country; too much loan, too many students 

graduating with too much loan. Thank you very much. 

WRITTEN STATEMENT OF C.D. MOTE, JR., PRESIDENT, UNIVERSITY OF MARYLAND 

AND PROFESSOR OF ENGINEERING, GLENN L. MARTIN INSTITUTE, COLLEGE PARK, 

MARYLAND – APPENDIX C

Chairman Boehner. Dr. Freeland. 

STATEMENT OF DR. RICHARD M. FREELAND, PRESIDENT, NORTHEASTERN 

UNIVERSITY, BOSTON, MASSACHUSETTS 

Mr. Freeland. Chairman Boehner, Congressman Miller, committee members. 

Chairman Boehner. You might want to turn on your microphone. 

Mr. Freeland. Is that better? Chairman Boehner, Congressman Miller, committee members, I am 

pleased to testify on a subject of great importance. I will focus my remarks on my own institution, 

Northeastern University, which is a national research university located in the heart of Boston, an 

urban setting which I believe is typical of many private universities nationally. 

 Northeastern enrolls 16,500 students in a range of programs, with special emphasis on 

professional work in fields like engineering, business, and the health sciences. We are widely 

known for our program of cooperative education, through which students alternate full-time study 

and full-time paid employment. 

 I will say one other thing about our institutional character. We were founded to provide 

opportunity for students who were unable to afford other private colleges in the area. We have 
10

always worked to keep Northeastern accessible. 

 Against that background, let me summarize recent trends in costs and prices, beginning 

with costs. Over the past five years, costs have increased by 46 percent, to $416 million. Because 

of growth, this translates into a 22 percent cost increase per student, and a current annual cost per 

student of $22,000. 

 Four factors account for theses increases: First, personnel costs are up by 33 percent for 

salaries, and 20 percent for benefits reflecting a tight labor market in scientific and technical fields, 

and the high cost of living in Boston. 

 Second, investments in technology have doubled, chiefly to assure that our students learn 

the state-of-the-art technology that will make them job ready graduates for the 21st century 

economy. 

 The third driver of costs has been construction. We have added $360 million in buildings 

and doubled our debt service and depreciation, chiefly, to provide residential facilities for out-ofstate students. 

 The final pressure on costs has been financial aid, mostly in the form of tuition discounts. 

Over the past five years, as Congressman Tierney noted, our financial aid budget has grown by 123 

percent, reflecting our commitment to the affordability of a Northeastern education. So costs are 

up, and they would be up by more without a strong effort of cost control. 

 We have eliminated weak programs, increased use of non-tenure track and part-time 

faculty, focused on energy savings, and participated in consortium-based purchasing. At the same 

time, we have increased non-tuition sources of revenue through fundraising and sponsored projects 

to minimize the effects of cost increases on tuition prices. 

 Against that background regarding costs, we must then consider prices. 

 Over the past five years, our nominal tuition, the so-called sticker price, has risen by 30 

percent, to $18,000. This increase is close to the national five-year pattern among private 

universities.

 As you know, however, and as the National Commission on College Costs stressed, many 

students do not pay the sticker price because of financial aid in the form of tuition discounts or 

funded scholarships. At Northeastern, we have increased the discount rate from 19 to 25 percent 

over this same five-year period. 

 Taking these discounts into consideration, the tuition actually paid by our students has risen 

by only 20 percent, to $13,500. And so, briefly stated, this is a story of costs and prices at 

Northeastern. Today, the annual cost of educating a student is $22,000. The price that students 

actually pay is only 60 percent of that number, $13,500. 
11

 The difference between our costs and price is a subsidy provided to all of our students.

That number has increased over the past five years. Over that same period, our costs have risen 

somewhat more rapidly than our price. 

 Let me close with two thoughts. Despite our efforts to restrain costs, we worry, like this 

committee, about the burdens that attending college impose on students and families. We will 

continue to control costs, restrain price, and increase financial aid. 

 Most important, we deeply believe, given the extraordinary importance of a college degree 

to lifetime earning power, that the education we offer, despite the costs, is a solid value. Thank 

you, Mr. Chairman. 

WRITTEN STATEMENT OF DR. RICHARD M. FREELAND, PRESIDENT, 

NORTHEASTERN UNIVERSITY, BOSTON, MASSACHUSETTS – APPENDIX D 

Chairman Boehner. Dr. Winston. 

STATEMENT OF DR. GORDON WINSTON, PROFESSOR OF ECONOMICS, 

WILLIAMS COLLEGE, WILLIAMSTOWN, MASSACHUSETTS 

Mr. Winston. Mr. Chairman, members of the committee, staff, fellow witnesses, my written 

statement focused on a single point, and I want to emphasize it in my remarks this afternoon. 

 Higher education is economically a very unusual industry with very unusual firms. So our 

economic intuition and common sense, and our economic theory, based on a lifetime with 

experience with ordinary business firms, can really mislead us in very important ways. 

 Now, for an economist, that is great. It offers an opportunity for studies, and papers, and 

books. For a policymaker, it offers an opportunity to make good policy or bad policy depending on 

how alert you are to those differences. 

 Let me try in my five minutes to sketch out the main reasons colleges are not like firms, and 

what difference it makes. I hope there will be questions. You can appreciate the deep frustration 

of a professor being forced to stick to five minutes. 

 Most basic and most odd is that colleges--and it has come up three times before--sell their 

product, higher education services, to their student customers for a price that does not come close 

to covering the cost of its production. 

 Let me give you some numbers. In the table in the written statement, it costs the average 

student at the average college in the U.S.--and, unfortunately, 1995/6 is the most recent data we 

have--$12,400 to produce a year of education, which was sold for a price of $4,000. 
12

 Every student got a subsidy of $8400 a year. Now that is as if your Ford dealer sold you the 

Taurus that cost $20,000 to put on the showroom floor for a price of less than $7,000. 

 He would clearly go out of business. Colleges can do it and stay healthy because the 

difference, the student subsidy, is made up by what can broadly be called charitable contributions; 

donations, past and present; public and private gifts; appropriations; and earnings on wealth. 

 But the bottom line is that the students only pay a fraction of their costs, in sharp contrast to 

familiar businesses. This has several implications. A major one is that the usual link between cost 

and price is broken. If you are searching for why prices are going up, they might go up because 

costs go up; but they might go up because these donated resources are going down. 

 Certainly, the testimony of my fellow witnesses indicates, as do the facts, that this decrease 

is a major part of what has been going on. It is what has been happening to public sector schools, 

as states have withdrawn their per student support leaving more to be covered by tuition. 

 Second, those charitable donations are very unevenly distributed among colleges and 

universities in the U.S., and that creates a highly differentiated hierarchy among schools. In the top 

decile of U.S. schools, the average student gets a subsidy of $21,000 a year. In the bottom decile, it 

is $1,700. 

 The implication of this unevenly distributed wealth is that colleges and universities live in 

very different economic worlds, producing education at very different costs and quality, and 

charging prices that are very different. The one size fits all policy can be terribly dangerous. 

 The third fundamental fact, fundamental economic fact, let me underline, is that college 

education is made by a very strange production process. Students educate students. As a result, 

schools care to whom they sell their product. 

 High quality education simply cannot be produced without high quality students--not as 

passive recipients of the educational services the school is selling, but as active producers of it.

The fiercest competition among colleges is for the best students. 

 Finally, there is pricing, which can be described as costs to your constituents. Price 

discounts are often given by colleges and universities for the familiar business reason of inducing 

students to buy more of it, or to increase quality. But price discounts are more often given for the 

quite idealistic reasons of equality of opportunity. 

 To make it possible for qualified low-income kid, who cannot afford even that subsidized 

sticker price, need-based financial aid is necessary. We ran some numbers at Williams a few 

months ago, and I was hoping I would be able to get to on our financial aid records. 

 Matching what kids actually paid to their family incomes, we found, gratifyingly, that the 

kid in the lowest 20 percent of the income distribution, with a family making less than $25,000 a 

year, paid just $1,783 for a year at Williams, room, board, tuition, and fees, with a sticker price of 

$33,000 and more. Clearly, a message is beware of sticker prices. Look at the net prices people 
13

actually pay. 

 In my remarks in my written statement, I expressed a real concern about our abandonment 

of the really low-income ordinary kid. The high kid, the superstar, is fine, as the Williams numbers 

suggest. I worry about what public policy is doing to the low-income kids. 

 Thank you. I hope there will be questions. I will be happy to try to answer them as they 

come up. 

WRITTEN STATEMENT OF DR. GORDON WINSTON, PROFESSOR OF ECONOMICS, 

WILLIAMS COLLEGE, WILLIAMSTOWN, MASSACHUSETTS – APPENDIX E 

Chairman Boehner. We thank all of our witnesses for your endurance, and again, for the delay 

from yesterday. For the members and the witnesses, we have a vote on the floor, just one vote. Mr. 

McKeon has gone to vote. When he gets back, I will go vote. We want to keep the hearing rolling 

this morning. Dr. Corrigan, if you are going to go, we certainly understand. 

 Well, Dr. Winston, let's just pick up on where you left off, because I think that is really the 

point of this hearing is that we have this plethora of programs, whether they be loan programs, 

grant programs, aimed at trying to provide more access to postsecondary education for more of our 

students.

 It appears to some of us that the more that we do on the federal government, the less 

support comes to universities from other avenues. We know about the states. Now there are states 

that have had some fiscal woes here for about a year. 

 But if you look at state support of higher education during the '90s, there is no stellar 

record, at a time when all states were spending at record levels. As we begin to look forward to the 

Higher Education Act next year, our concern is that we have our own budget issues that we are 

going to deal with. 

 But as we try to continue to provide means and better access for the poorest of our students, 

I think we are losing the race. Even with the tremendous increases we have made over the last five 

or six years, I think we are still slipping behind in terms of access for the lowest income students. 

 Let's take the bottom 20 percentile that you talked about, and look at the last five or six 

years. Were those students better off five or six years ago, or are they better off today? I will let 

you answer the question. 

Mr. Winston. I wish I knew the answer. One of the things that surprised and encouraged me was 

looking carefully at what had been happening in the '90s. This fundamental phenomenon of states 

withdrawing support for colleges and shifting it, forcing it into higher tuition, lower quality, or 

both, strikes me as a driving phenomenon in this general question of why sticker prices are rising. 

 One of the encouraging things was that in the data the two-year college was apparently 

being protected in significant measure from those reductions in per-student appropriations. The 
14

two-year colleges--and this is national data because I know essentially nothing about the 

particulars--appeared not to be taking the burden of adjustment through reduced quality or 

increased sticker price that the rest of public higher education was taking. 

 In that, I find something encouraging. I also, frankly, find something encouraging for the 

highly qualified, the Horatio Alger, the poor kid who does smashingly well. They can go to 

Princeton, or Williams, or Harvard, or Amherst, for a remarkably low price. 

 Now that is equality of opportunity. It is tough in that most kids are not going to get into 

those schools. But it is encouraging in that those who can, are able to afford it. 

Chairman Boehner. How do we ensure access for the poorest of our students, as we look toward 

the Higher Education Act reauthorization? 

 I would look for comments from any of the three. 

Dr. Corrigan. 

Mr. Corrigan. You know, Mr. Chairman, 98 percent of our students do not have the opportunity to 

go to Amherst, or Princeton, or Harvard, or Williams. Northeastern and San Francisco State are 

examples of institutions that are trying to deal with that other 98 percent of the population. 

 The issue I think is that was really pointed out so well by Dr. Winston is the interface 

between quality and access. In California, the issue has been pushed on access. I gave you the 

figures; almost 70 percent of our students are students of color. They are first time college-goers. 

They are working class, blue-collar students. 

 The issue that I see is that we are in danger of providing access, but to a low quality 

education, because the resources are not there. When Mr. Miller was a student at San Francisco 

State, we would brag about the fact that he would be in a classroom with a full-time faculty 

member, doctorally prepared, with probably no more than 20 students, 25 students, in my class. 

 Now we are loading those students into large classes. We are using more and more 

adjuncts. We do not have the library books, the computer support, et cetera, that we need. What I 

am suggesting to you is that interface between access and quality for the people from the lowest 

incomes is really at stake here. That is why I think your questions are very, very well put. 

Mr. Freeland. Mr. Chairman, if I might just add a word from the perspective of a private 

university. It is clearly the glory of American higher education that we have a public sector 

represented here by Bob Corrigan that provides such wide access to so many students from modest 

backgrounds. The private sector would not be able to meet this need were it not also for a very 

strong public sector. 

 However, there is a significant private sector role here also in assuring access to low income 

students, and I just tell you one fact about Northeastern University. Over this period of the last five 

years, which I was describing, in which tuition has increased, and costs have increased, and so on, 
15

our number of Pell grant recipients has remained absolutely constant in the Northeastern student 

body.

 So we have been able to find a way through these tuition subsidies to maintain a significant 

role for Northeastern University in serving low-income students. I did also want to comment on 

your question about the relationship between the pattern of federal policy toward student aid, and 

state policy, or indeed the policy of private institutions. 

 There have been studies done. The ACE could certainly make these available to the 

committee, if that would be helpful, tracking the relationship between federal student aid policy, 

and state, and private tuition policies over the long periods of time. These studies essentially show 

no clear relationship. 

 During the '90s, for example, as you may know, in Massachusetts, we were actually in the 

public sector reducing the price of tuition in order to maintain accessibility. Lamentably, that 

pattern has reversed itself now with the budget cuts in the state. 

 I can also tell you, from a private perspective, that in all of the discussions of tuition 

increases that I have been part of in my seven years as president of Northeastern, the question of 

federal aid policy has simply never come up. It is not a point of discussion. 

 The reason for that is quite simple. I think it would not be rational for us, and I think for 

other private universities to decrease our financial aid or adjust our price in relation to federal 

policy because we give much more institutional aid than we receive in federal aid. If we adjusted 

price for that reason, we would actually end up paying more in our own institutional grants. 

Chairman Boehner. We are going to have to recess. Has the gentlelady voted? 

 Why don't I recognize the gentleman? Would you like to ask questions? 

 I will tell you what I will do. I would like to ask the gentleman from Virginia to come and 

take the chair until Mr. McKeon comes back. I know you are shocked. 

Mr. Scott. [presiding] I will entertain a motion from the gentlelady. I will recognize the 

gentlelady for questions. 

Ms. Solis. Thank you. I apologize for coming in late. But this is obviously a very important and 

timely hearing for many of us because of the crisis that we are seeing. I represent the state of 

California in the Los Angeles and East Los Angeles area, where we have a high number of 

minority students that typically do not have an opportunity to go into higher education. 

 Many that do go, attend local community colleges, but are not able to make that transition. 

This is partly, because of a lack of financial assistance. Many are working part-time jobs to 

maintain any kind of semblance of being able to afford to go to college. 
16

 I would be very interested in hearing what kinds of ideas you might have in helping to 

concentrate or focus on those populations that, for lack of a better term, are almost stuck at the two 

year community college level. Many also are not getting information about transferring and that 

path to matriculation, whether it be to a public or private institution. 

 I think over the last few years there has been a decrease in terms of percentage of financial 

aid dollars that should be made available, not so much in terms of loan, but Pell grant, work study, 

any other kinds of assistance, forgiveness loans, things of that nature, that I think are very 

important. I would be happy to hear from any of the speakers. 

Mr. Winston. May I weigh in on that? This is not an area that I have paid a great deal of attention 

to, but close friends have and done it with a respect for facts and data that I respect. 

 Their deep worry is the shift in state and federal policy from exactly the students you are 

talking about, below income students who have been highly dependent on things like Pell grants to 

middle income programs like tuition, tax credits, the Hope scholarships, and the rest. 

 Now, to the extent that their feeling is informed, it is a criticism of what has been happening 

in federal and state policy in a shift of support withdrawing it from those people in favor of the 

middle class. Having made that bold statement, now I can duck behind the fact that it is they who 

have the data and not I. 

Ms. Solis. I tend to agree with that comment because I have heard that in the state of California, 

some of our institutions have done some studies of merit scholarships that have been given over the 

last year years. 

 Those scholarships have increased and rewarded students that do academically well, but 

may not represent the underrepresented student populations that also need that assistance.

Obviously, this is having an impact also in terms of their enrollment availability. 

Mr. Freeland. I would also just add a word on this, Congresswoman, since I spent a good part of 

my time in the public sector, where I think many of these issues come up. I think one of the things 

that our system, national system of higher education does very well is serve students well at the two 

year level, serve them well at the four year level, serve them well at graduate school. 

 We do not do as well at working across the seams of those different levels. Many of us for 

years have argued that we needed to think of education in this country as a K through 16 system, 

with much more emphasis on helping students across the seam between high school and college, 

and between two year and four year institutions. 

 It is an unfortunate fact that the type of students that you mentioned have a much greater 

likelihood of completing a four year degree if they start at a four year public school than if they 

start at a community college, and then try to transfer. 

 So I think what we need to encourage--and there may be a federal role here--is the kinds of 

programs that Bob Corrigan talked about where colleges are connecting with high schools and 
17

reaching out to pre-college kids, kid who do not necessarily think about college around the 

breakfast table with their parents because that has not been in their history. We need to encourage 

those kinds of patterns, and then encourage four year and two year institutions to work across that 

scene, so that two-year students are encouraged and helped and facilitated to get to the four-year 

level.

Mr. Corrigan. You know, I am not sure to what extent this is a federal problem, as opposed, at 

least in California, to a state problem. For the 14 years that I have been president of San Francisco 

State University, of the students that we graduate in May or June, at least 65 percent of them had 

started at a community college. 

 I think the brilliance of the California system is that there is a place for everyone. The 

whole notion was to do two years at a community college, and then go to the four-year institution 

and graduate. We have been doing that. 

 The problem in California right now is that the state has not kept pace with this population 

explosion. Before you came in, I was making the point that the intersection for me is between 

quality and access. The funds are there. For the underrepresented student to attend an institution in 

California, it is the space that we are lacking. 

 We are likely to grow--I said we were at 370,000 students. We are likely to go to 400,000 

students in higher education in California. We have not built a new campus at the University of 

California since, who knows when. We have not been building new campuses of the CSU. 

 We have not increased the number of community colleges. I am not sure there is a role for 

the federal government there, but what we were saying earlier is that when the states do not provide 

the support, there is a tendency to look at the federal government. 

 I wanted to make another point, if I could, very quickly. Dr. Freeland made a very, very 

strong point about there not being a relationship between increases in federal financial aid and fees 

or tuition. I think that is absolutely the case. 

 I do not know of any institutions that sit around figuring out how much more federal money 

is going to become available, and then they can raise their tuition accordingly. That certainly is not 

true in California. Whereas, I pointed out, we have actually decreased our fees two years, each at 5 

percent. We are charging less now than we were charging ten years ago in the California State 

University.

Ms. Solis. Mr. Chairman, I know the red light is on, but I just want to follow up with that question 

there.

 Because, yes, in the state of California, we have done a really good job with community 

colleges, keeping all of the fees and tuition very low. In fact, they are probably the lowest than in 

any other part of the country. 
18

 But other costs, books, affordability to find housing, all those other incidentals have 

actually increased by, you know, who knows how much percentage points. And we are not making 

up for that compensation. Therefore, then the students need to go get a part-time job, or maybe two 

part- time jobs because financial aid is not sufficient. 

 I think that sometimes we do not think realistically, as well, in terms of planning for that. 

And that is just something else that I think should be addressed because those are questions that we 

get all of the time from our constituents about the lack of affordability to be able to go to college. 

 I mean they certainly enroll at a local community college, but then they cannot afford the 

$300 or $400 costs for each book, or each class that they have to take a course. And that is 

astronomical. So I think that we are not being realistic in terms of what we are actually providing 

students. Thank you. 

Mr. McKeon. [presiding] Just before you leave--were you saying you are leaving? I have another 

hearing to go to, but I can stay. This question will be very brief. 

 What about Monterey Bay and San Marcos? Aren't those new schools? 

Mr. Corrigan. Yes, Monterey Bay is new. It will not ever be able to enroll the number of students 

that they had anticipated in San Marcos as a new campus. But that is two new campuses of the 

CSU. We could easily use another four. 

Mr. McKeon. I see. Santa Toledo would be a good spot. 

Mr. Corrigan. I would like to emphasize your mentioning of Monterey Bay. Monterey Bay was 

the first campus in our system to actually contract with the local community colleges in a single 

admissions statement. 

 In other words, if you apply to the community college at the same time as you apply to 

Monterey Bay, you are guaranteed admission at the end of your two years, if you are admissible 

under Monterey Bay's admission criteria. You could make the seamless move. 

 We are trying to do the same thing in San Francisco. We actually have over 1,000 students 

who are concurrently enrolled at our local community college and at our institution. They are 

taking classes at both places. 

 We have students at Canada College down in San Mateo County that, in fact, are taking a 

full teacher education program down there, under our auspices. They do not have to travel to San 

Francisco to do it. They are doing it at community college fee rates, and not at the higher rate of 

the CSU. So there are examples, Mr. Chairman. 

Mr. McKeon. That is what we have going on at the College of the Canyons. They have started 

their university center, where you stay on the same campus and they are raising the money now to 

build the building. 
19

 But they have already contracted with Cal State, Bakersfield, and some other schools. You 

can stay at the community college, but graduate with a university degree. You just move to a 

different part of the campus. There are a lot of creative things being done. 

 One of the things that disturbs me is what I hear from a lot of students. It is that colleges 

and universities used to take four years. Now it is taking five or more, and one of the reasons is 

that the students cannot get the classes they need. 

 What are you doing at the school level to address this problem? If it takes five years, it is 

going to cost more. If it takes six years, it is going to cost more. If it takes a week to register and 

you are the sixth day, and everything you need is already taken, it is a tough thing. 

Mr. Winston. Can I jump in on that one? I think it is just inordinately important that if support per 

student goes down in a state, tuition has to go up, or costs have to go down. You have identified 

one of the most fundamental ways costs go down. 

 You cut costs by cutting the classes, by making bigger classes, by using T.V. and TA's 

instead of professors. These are the ways colleges and universities had first showed up eloquently 

with UCLA back in the early '90s, when there was a draconian cut. 

 All of a sudden kids could not graduate because they could not get the courses, because the 

courses were not offered, and because it was too expensive. You have identified one of the 

fundamental ways that a college under pressure, in addition to raising tuition, cuts costs by cutting 

courses. It is important to underline that. 

Mr. McKeon. One of the things they are doing is cutting core classes and keeping some of the 

fringe classes. You can get classes, but you cannot get the ones you need to graduate. I hope that 

will be addressed. I am sure that is something that will be talked about. 

 Let me bring up another subject. Do you think loan limits for students should be increased? 

We have a limit now on how much a student can borrow through the government programs. 

Should that be increased? 

Mr. Freeland. I can tell you that the loan limit, as I understand it right now, and I am not a 

financial aid expert, but my understanding is it is $23,000, in terms of federally subsidized loans.

Many students in private institutions end up going to alternative loan sources and borrowing 

beyond that subsidized limit. 

Mr. McKeon. Generally, they have higher interest rates. 

Mr. Freeland. Yes, they are at higher interest rates. That is right. So I would think there is that 

strong prima facie case for considering increasing that $23,000 limit. 

Mr. McKeon. Dr. Freeland, you raised tuition rate by 10 percent this year, by 21 percent over the 

last three years. How do you explain that to parents and students? 
20

Mr. Freeland. That 10 percent number is not accurate. I know there has been some confusion 

about this. We actually raised tuition this past year 6.5 percent. 

Mr. McKeon. Is the 21 percent over the last three years accurate? 

Mr. Freeland. It is 30 percent over the last five years, in terms of sticker price--20 percent over the 

last three. It is a little high. 

Mr. McKeon. But that number is much higher than inflation. How do you address that to students 

and parents? 

Mr. Freeland. I think two things, Mr. Chairman. One is that the rate of inflation, as you know, is 

set by the Bureau of Labor Statistics. I believe it is based on a mix of costs that are very different 

than the mix of costs you have in college. 

 I mentioned the chief cost drivers and our cost increases over the last five years. They are 

salaries which are in the high tech-oriented field, scientific engineering, health science fields, have 

themselves gone up much more rapidly than the rate of inflation. 

Mr. McKeon. What percent have the salaries gone up? 

Mr. Freeland. I can tell you, for example, that to recruit an electrical engineer today, or to recruit 

someone in computer science, or to recruit someone in accounting or finance is difficult. These are 

high demand fields where faculty members have corporate alternatives. People with Ph.D.’s in 

these fields do not need to go into higher education, the way people like myself in history do.

Those salaries have gone up by factors of 50 percent. 

Mr. McKeon. In five years? 

Mr. Freeland. Over the last five years. And those salaries remain well below their corporate 

counterparts. So we have trouble recruiting talent, even with those kinds of increases in those 

fields. Those happen to be fields in which Northeastern is concentrated. 

Mr. McKeon. Is that one of the areas you commented about using part-time instructors? Is this 

how you have offset some of that? 

Mr. Freeland. We have what we call non-tenure track faculty, which is maybe a term of art here, 

but what that describes is faculty members who are hired full-time primarily to teach. They do not 

have the full range of scholarly responsibilities of other faculty members. 

 There has been a shift at Northeastern, and at many other institutions, toward those kinds of 

faculty members because the salaries are somewhat lower and they teach more. In addition to that, 

there has been more use of part-time. 

Mr. McKeon. How long does it take? 
21

Mr. Freeland. Pardon me? 

Mr. McKeon. How long does it take to get tenure? 

Mr. Freeland. Typically, six years. A tenure decision is typically made in the sixth year. This 

increased reliance on part-time faculty and non-tenure track faculty really is a compromise between 

quality and cost. If it goes too far, it is going to erode quality throughout the system. It is not 

something we would want to make as a core solution to the cost issue. 

 Another big driver of our cost, I should mention, is technology. I think the committee is 

well aware of what has been happening with technology prices. A three-year-old computer on a 

faculty member's desktop is starting to be an obsolete computer. 

Mr. McKeon. Three years? 

Mr. Freeland. Three years. 

Mr. McKeon. I was thinking about two. 

Mr. Freeland. Yes, fair enough. These cost cycles are really very different than what drives the 

general cost of living. 

Mr. McKeon. Thank you. My time is up. Mr. Scott. 

Mr. Scott. Thank you, Mr. Chairman. We have heard a lot about the importance of K through 6. I 

think we have to make sure these opportunities are available. 

Dr. Freeland, you mentioned the importance of getting people in the pre-college years.

Have TRIO and GEARUP been helpful? 

Mr. Freeland. We have had a good experience with GEARUP. My understanding around the 

country is that GEARUP has had somewhat mixed reviews nationally, but Northeastern is heavily 

involved with that program. We are deeply committed to what it represents, and we have had 

generally good experience with it. 

Mr. Scott. Upward bound? 

Mr. Freeland. It is similar. You understand, and I am sure committee members do, that there are 

so many young people who do not grow up with the notion of college as an option. Unlike the 

kinds of young people who go to Williams, for example, who probably never think about not going 

to college, for many young people this is an alien world. 

 It is a somewhat frightening and forbidding world to their parents. It remains frightening 

unless institutions of higher education reach out and break down that forbidding barrier, bring the 

students onto campus, give them pre-college experiences, run summer programs, and help them 

understand that they can do it. So many of them can. They will never get there themselves 
22

psychologically.

Mr. Scott. Now what impact would a $400 reduction in Pell grants have at Northeastern? 

Mr. Freeland. Northeastern, I think, like many private institutions, does not have a large number 

of Pell grant recipients. I mentioned the number. It is about 2400 Pell grant recipients in our 

13,000 undergraduate student body. 

 A $400 reduction for those kinds of students would probably mean, quite honestly, that we 

would increase institutional aid to have them because these are students that we very much want. 

Mr. Scott. Many people at Northeastern work their way through college. How many hours a week 

do they have to work? 

Mr. Freeland. There are two things about work at Northeastern. One is that our students alternate 

periods of full- time paid employment with full-time study. It is a five-year program. In their four 

upper class years, they spend 50 percent of their time, two of four quarters, in full-time paid 

employment. But most of our students are working, in addition to those co-op salaries. 

Mr. Scott. When you are not on co-op, how many hours a week do they end up working? 

Mr. Freeland. These would be very rough estimates. But I think the numbers show that most 

students work between 20 and 30 hours a week, and many work more than that. 

Mr. Scott. Is there considered a limit to the number of hours a week someone ought to work before 

it starts eroding his or her academic standards? 

Mr. Freeland. It is something we agonize about in higher education. I think most faculty 

members, most educators would say being a student is a full-time job. To work more than a 

modest number of hours a week--work-study students might work 10 hours a week or so, that can 

be fine. 

 But when you are working 20, 30 hours a week and trying to be a full-time student, you are 

not having the kind of full educational experience that produces the best result. I think, particularly 

in public commuting institutions serving low-income student bodies, which most educators regret 

very much that the amount that students have to work creates a serious compromise in the quality 

of their experience. 

Mr. Scott. You mentioned professor pay. Did I understand you to say that the mix of faculty tends 

to be growing in the high demand areas, and that the English professor's salary may not be going up 

as much? But you have more of the high tech employees that start at $50,000 and more. 

Mr. Freeland. I think that is fair to say, and I believe it is true at many institutions. It is 

particularly true at Northeastern, which is heavily focused in science and technology. But all over 

the country, the life sciences are growing, driven by the revolution of molecular biology. 
23

 Students want to take courses that lead, one way or another, into the health care system. 

The competition for talent in that world is fierce. We compete with the pharmaceutical industry for 

molecular biologists. That is driving it up. We compete with the high tech industry for computer 

scientists and electrical engineers. 

 These patterns are not confined to a place like Northeastern University. There is a huge 

difference between the pressures on fields that students are flooding into where they see job 

opportunities, and fields that are the more traditional academic fields where faculty members do 

not have other choices. 

Mr. Scott. Thank you. Mr. Chairman, I had a question for the gentleman from the public colleges. 

But since they have both left, I would like to ask unanimous consent to enter into the record a copy 

of the Washington Post article from this morning that outlines budget cuts in the Commonwealth of 

Virginia, many of which will fall upon the colleges and universities. 

WASHINGTON POST ARTICLE SUBMITTED FOR THE RECORD BY REPRESENTATIVE 

ROBERT C. “BOBBY” SCOTT, COMMITTEE ON EDUCATION AND THE WORKFORCE, 

U.S. HOUSE OF REPRESENTATIVES, WASHINGTON, D.C. – APPENDIX F 

Mr. McKeon. No objection, so ordered. 

Mr. Scott. Yield back. 

Mr. McKeon. Mr. Tierney. 

Mr. Tierney. Thank you, Mr. Chairman. I was wondering if each of you gentlemen would address 

this fact. We have talked about the ways that we are financing education, such as endowments, 

earnings and investments, tuitions in the public schools, some public resources, and then all across 

the board some federal and state scholarship aid, and a lot of financial aid. 

 How might we change the way that we finance higher education, so that the sticker price 

more accurately reflects the actual price? 

Mr. Winston. Do we want to do that? 

Mr. Tierney. I do not know. You tell me. 

Mr. Winston. I would think that one of the last things we would want to do in interest of access 

would be to make the sticker price reflect the actual cost. My figures for national figures way back 

in '95/6, that it costs $12,400 a year to create an education for which a student now pays $4,000. It 

is not at all clear to me that we would like to raise that price the student pays from $4,000 to 

$12,400. In general, I am reluctant. 

Mr. Tierney. I am looking at it the other way. Why wouldn't you lower it so that a student going 

in would not face the $36,000 number up there so that they actually looked at what the actual cost 
24

of it was going to be to them, the $4,000 number. 

 In other words, students apply to college and all they look at is that their parents need 

$37,000 a year to go to such-and-such an institution. You are going to tell me that is not really 

what the price is, and that in the end it is a whole lot less? 

Mr. Winston. I think it is terribly important to sort out what we are talking about. If we are 

talking about the cost of producing a year of education, let me use Williams because I know the 

numbers. 

 It costs $75,000 per year, per student, to produce that education. These are a rarified 

atmosphere, but it is not different from a whole lot of very, very high quality private schools. The 

student paying the sticker price for that education pays $33,000. The average student pays 

$24,000.

 Now I am not sure which of two questions you are asking. Why don't we charge them 

$75,000 a year? I think that would be a disaster. Is the question, why don't we make it clear to 

them that they on average are going to pay $24,000? 

Mr. Tierney. That is the question. Right.

Mr. Winston. That is exactly why we did the study that I alluded to, looking not just at the general 

question, what does the average Williams student pay, but what does the Williams student pay who 

comes from the bottom 20 percent of the income distribution, whose family makes less than 

$24,000 a year? We came up with the, I think, gratifying number of $1,683. 

 Now one of the things we want to do is publicize this as well as we can--not for Williams. 

That is obviously not the point. But publicize the fact that these highly selective, highly expensive 

colleges are in fact dirt cheap to the kid who can qualify, and who comes from a low-income 

family. I think it is a terribly important fact. 

Mr. Tierney. I do not think we are doing that, do you? 

Mr. Winston. No. Well, to be quite honest, and there is a little sort of self-congratulation to this, 

and I am sorry, but I do not think we knew it. The press loves to take Harvard's sticker price and 

divide it by the median family income, which, of course, is silly because no one making the median 

family income pays the full price at Harvard. 

 If Harvard costs $35,000 a year, the actual price that kid, coming from a family with a 

median income, is going to pay will be $15,000, or something similar? I do not know Harvard's 

numbers. 

Yes, there is a great deal of misinformation because in no small part we all focus on sticker 

price. That is the only thing we see, ignoring the fact that massively, relatively very few kids pay 

the sticker price. This occurs for one reason or another, either because of access and low-income 

charity, or because of trying to induce better students to go to the school. 
25

Mr. Tierney. Thank you. 

Mr. Freeland. If I might just add a word, because this as you know was a major theme of the 

National Commission on College Costs that the general public just did not understand this 

distinction between sticker price and actual paid price. It probably sets up barriers to higher 

education, which simply do not need to be there. It is purely a matter of information. 

 The thing the committee might well think about, and maybe in some way partnering with an 

organization like the ACE, would be some sort of national campaign to make people aware of what 

is actually out there, in terms of opportunity to go to college because it is far greater than people 

generally realize, even at private institutions. 

 The other point I would make, Congressman, is in terms of the relationship between the 

sticker price and the net price. A thing which would somewhat narrow that gap--maybe not so 

much in places like Williams, which are heavily endowed, but for most private universities, would 

be to give financial aid in the form of tuition discounts. 

 Institutions like Northeastern that want to maintain access to low income students end up 

doing it through tuition discounts. What that means is that there is a cross-subsidy between 

students who can pay the full amount and students who cannot. 

 The more support the Federal Government provides for low income students through Pell 

grants, and guaranteed loans, and others to have access, the less that pattern of cross- subsidy 

becomes necessary to maintain access to private institutions. 

Mr. Tierney. Thank you. 

Mr. McKeon. Ms. Woolsey. We did not have it down that way, but that is fine. Ms. Rivers. 

Ms. Rivers. In the time that I have been here, I have served on the Science Committee, the 

Education and Labor Committee, and the Budget Committee. The issue of college tuition comes up 

often. As someone who represents a district with three universities, I have a pretty good 

understanding of how the whole system operates. I am always shocked by, first, the sort of antiintellectualism that exists in Congress as a decision making body. 

 Secondly, I am shocked by this idea that the cost associated with getting an education is 

way out of line; that colleges and universities are gauging, and that professional staff at universities 

are slackers who are not working very hard and get very high salaries. This idea has gone on for a 

very long time. 

 My question is two-fold: First, what can supportive members of congress do? Secondly, 

what can colleges and universities do to help decision makers understand what it actually costs? 

 I think most people are unaware that $75,000 is spent per student at a top university each 

year. I am very concerned that a lot of decisions are being made out of ignorance. In all of my 
26

time in public office, I have heard a lot of hollering, and have seen a lot of table pounding that 

somehow tuition rates have to be dropped, tuition rates have to be constrained. They are always 

predicated on this idea that there is something illegitimate about what people are being asked to pay 

for an education. 

Mr. Winston. Let me address that question because I think it is a critically important point, and it 

goes to where we are as economists trying to understand this exceedingly odd industry. The basic 

answer to your question, ``why wasn't this widely known?'' is we did not know it. 

 Ten years ago, people--economists were only beginning to study carefully higher education.

It was like studying the economics of a church. It just was not being done. Now it is being done.

Maybe my 10 years is selling people short who were working very hard 15 years ago. 

 One of the most fundamental discoveries is how much it actually does cost to produce this 

education. Personally, I found it stunning to move from a single college that spends a lot, to 

national data, and find these numbers are way, way more than I expected. I am an economist who 

has lived in higher education for more years than I will admit. 

 I would like to congratulate the committee for creating, prodding the National Commission 

because that was one of the vehicles through which this kind of fact first really became widely 

recognized--that is too optimistic--became widely publicized. I do not think people have yet 

absorbed it, and I think it is critically important. 

Mr. Freeland. I would just maybe repeat again that I think that is actually an excellent case and 

point because the National Commission did a careful study of this, and ended up focusing 

tremendously on this distinction between sticker price and net price. The Commission pointed out 

that the actual price of attending college was far, far below what most people thought it was. 

 If you did polls asking people what they thought it was going to cost, they would give an 

egregiously wrong number. Yet, despite that emphasis in the National Commission Report, we 

have not seen the kind of broad public information program that could make people aware of this, 

or start to influence people who do not have wide access to this information, such as in the district 

that the congresswoman from Los Angeles talked about. 

 I would say again there is tremendous importance of using the federal pulpit, the federal 

leverage, to make people aware of this fact. 

Ms. Rivers. Well, I think it is not just an issue for decision makers. I think it is really an issue for 

colleges and universities. 

 One of the very frustrating things for me as I operate on my campuses, is that I have people 

associated with the university, who live on NSF grants or NIH grants, who tell me they are much 

too busy to explain to the public what they do. They are much too busy to vote. 

 They are much too busy in their labs doing all kinds of things, and then they wonder why 

they are being vilified or their research is being depicted on Rush Limbaugh or somewhere else as 
27

being irrelevant, and stupid, and a waste of money. 

 It strikes me that the university communities are going to have to take some responsibility 

for this, explaining what it really costs, what is really going on university campuses, exploding 

some of the myths. The best one is that students are somehow subsidizing research, and they are 

being gauged to keep people working out of the classrooms, which is not true. 

 But there are lots of problems that just seem to continue and to fester over time, and the 

universities are not addressing them. I think they have to. 

Mr. Freeland. I think that is a fair point. We work very hard through our admissions outreach and 

other public information programs to make people aware of this. We would not have the kind of 

Pell grant recipients in our applicant pool that I described if we did not make it clear that the sticker 

price is different from what you are actually going to pay. 

 But there is no question that we could do a better job in interesting faculty members in 

participating in this discussion as a challenge. I share that. One of the things that is most 

interesting in the context of your comment is that it is a little bit like medical care. 

 Most people would say they are pretty well satisfied with their own doctor, and they are 

pretty well satisfied with the college they went to, and they think they got a good deal. Somehow 

elsewhere, the system is not working properly. We need to do a much better job of reaching out in 

the way you have described. 

Mr. Winston. Can I weigh in just briefly on that? In my written remarks and when I opened, I 

really underlined the degree to which common sense and economic intuition mislead us in this 

very, very odd industry. In a way, I was kind of lecturing that you all should shape up and realize 

this difference. 

 Only recently are we shaping up and realizing the difference. This is complicated material. 

We cannot map over from the local Ford dealer to talk about a university. It is just a fundamentally 

economically different animal, and we are only now figuring it out. 

 So I guess I am asking a little patience, and a little support for us while we are learning. I 

think that process is going rather well, but it is slow. 

Mr. McKeon. Actually, it is kind of like going to the local Ford dealer. There is a sticker price; 

and then, depending on how you can negotiate, there are different prices. There are more 

similarities probably than differences. 

 Yes? 

Mr. Winston. In my written remarks, I had three different automobile dealer illustrations, and I 

cut them out in the interest of five minutes. But it is comparable to going to a Ford dealer if the 

Ford dealer took that car that was worth $20,000 on the showroom floor, and sold it routinely for 
28

$7,000.

Mr. McKeon. Right. 

Mr. Winston. Then you have got a car dealer parallel. 

Mr. McKeon. You mentioned that in your statement. What I was getting at is that there are lots of 

different airlines. You board the airplane and you sit next to somebody that paid more or less, but 

nobody knows. It is all different. 

 We have lots of schools in this country, and there are lots of differences. If we had 1,000 

representatives from schools, we would have a lot of differences. This is not my time. Excuse me. 

Ms. Woolsey. 

Ms. Woolsey. It is my time, Mr. Chairman. 

Mr. McKeon. You have four minutes left. 

Ms. Woolsey. Believe me he means it. Thank you. I am so sorry I have not been here for this 

entire discussion, but you already have all of my thoughts going in my head. I hope I am not 

asking a question somebody already has. 

 My question is about community colleges. Community colleges are considerably less 

expensive as a way to fulfill the first two years of an education to enter a four-year university or 

college. 

 So do you recommend that young people attend two-year colleges, get their degree, and 

then go forward, or not. Is there a stigma attached? 

Mr. Freeland. Although I am president of a private university now, as I mentioned earlier, 

perhaps before you came in, Congresswoman, I have spent a lot of years in the public sector. I 

would encourage many young people to go to community colleges first. 

 Community colleges have a superb record of working with young people who did not have 

a lot of advantages in their background, and really focusing in on helping them maximize their 

academic potential. 

 By and large, community colleges are really better at that than four-year schools. It is not 

good public policy for four-year, public universities to be spending a lot of resources on that job, 

which can really be done better at the community college. I would very much encourage many 

students to start there. 

 That being said, many resist it. They resist it for rational reasons, for another fact that I 

mentioned, which is that it is not always so easy to make the transfer from community college to 

four-year college. We have what we call articulation agreements. 
29

 President Corrigan mentioned some of them, where students who graduate with satisfactory 

records from two-year colleges are guaranteed admission to four-year schools. We have such 

articulation agreements with community colleges as a private university. 

 But there exists within the system, and I think it is a fair point, and it exists within the 

faculty, quite honestly, some bias on this question that students who start at community colleges 

may not be quite as strong as our own students. 

 I found this even in public four-year institutions. That is why I am very strong on the point 

that we need to think about a K through 16 system in which students move across these scenes with 

much less difficulty, and much greater collaboration between faculty and administrators at the 

different levels. 

Ms. Woolsey. Well, does it make a difference which community college? 

 I know I represent the two counties north of San Francisco across the Golden Gate Bridge. 

We also have Marin Community College in Marin County, and we Santa Rosa Community College 

in Sonoma County. 

 Santa Rosa Community College has one of the best reputations, if not the best, in the state 

of California. I think the four-year colleges gobble them up. Marin is a great community college.

But because it is such a high-income area, so many of their students go immediately from high 

school to a four-year or a private university that people look at it differently. 

 So does the reputation of the college matter? 

Mr. Freeland. Of course it does, because admission counselors know these things. 

Ms. Woolsey. Okay. 

Mr. Freeland. They know good high schools. They know good community colleges. They know 

the ones where students come out well prepared. They know the students who do well in the fouryear programs. They make these kinds of judgments absolutely. That needs to factor in, of course, 

to the advice you would give to a young person as to where they would attend. 

Ms. Woolsey. I want the other gentleman to answer it too. We have to factor in support for 

community colleges; so that they actually can fill that gap in a meaningful way, so it is a lot less 

expensive for the students and their families. You, sir. 

Mr. Winston. When Dr. Corrigan was here he put in a highly justified part for the California 

system in having levels that assure a broad range of access rather than just running a flagship fouryear university, research university, and letting it go at that. 

 I think that has proved out over the 45 years since the California master plan? 
30

 I think you are quite right that the support at each level is very important to access and to 

access to quality. 

Ms. Woolsey. I am sorry I missed him. I preceded him on another committee, and he is now a 

witness following me on the same subject that we are supporting. Two of my four children 

graduated from his college. 

 I also have Sonoma State University. In California we do not have colleges anymore other 

than community colleges because of the stigma. Our state colleges now are state universities 

because there is a stigma in not having a college, not being called a college. 

 For the life of me, I think that is going backwards. But we had a college, that now is a 

university, that has gone from Sonoma State University, called the--no surprise here, Mr. 

Chairman--the Granola College, and where everybody supposedly majored in frisbee throwing to 

now one of the best colleges or universities in California on environmental issues and on high tech 

and economic issues and subjects. 

 So the pressure of the community, and the needs of the community, if the college or 

university will listen, if that entity will meet those needs, then everybody wins. 

Mr. Freeland. One of the beauties of American higher education is that it is, at the end of the day, 

a competitive system, even in the public sector. So, for institutions to survive and to flourish they 

are compelled to match what they want to be with what the communities around them need and 

will support. 

 I think that does end up producing just the kind of evolution that you described, in which 

ultimately the requirements and opportunities in the external environment drive institutions to try to 

match their commitments and resources to that. 

Ms. Woolsey. Right. Thank you, Mr. Chairman. I over-spoke. I am sorry. 

Mr. McKeon. We all do. Anyway, thank you. I want to thank the witnesses. I want to thank the 

members for participating today, especially thank you for staying over an extra day. I apologize for 

what happened yesterday, but appreciate your doing that. 

 As we move forward in reauthorization, this will be an important subject. I hope you will 

stay close and make your expertise available to us. If there is no further business now, the 

committee stands adjourned. 

 [Whereupon, at 11:02 a.m., the committee was adjourned.] 
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TABLE OF INDEXES 

Chairman Boehner, 1, 3, 4, 7, 9, 11, 13, 14, 15 

Mr. Corrigan, 5, 14, 17, 18 

Mr. Freeland, 9, 14, 16, 19, 20, 21, 22, 25, 26, 27, 28, 29, 30 

Mr. McKeon, 13, 18, 19, 20, 21, 23, 25, 27, 28, 30 

Mr. Miller, 3 

Mr. Mote, 7 

Mr. Scott, 15, 21, 22, 23 

Mr. Tierney, 4, 23, 24, 25 

Mr. Winston, 11, 13, 16, 19, 23, 24, 26, 27, 28, 29 

Ms. Rivers, 25, 26 

Ms. Solis, 15, 16, 17 

Ms. Woolsey, 28, 29, 30