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Increases in tuition at public institutions linked to a decrease in student diversity: RPT

Michael B. Poliakoff, Ph.D., President of American Council of Trustees and Alumni, joins Yahoo Finance to discuss the rising higher education costs impairing student diversity and raising student debt levels.

Video Transcript

JULIA LAROCHE: We want to bring your attention to a new report from the American Council of Trustees and Alumni that finds that rising higher education tuition and student services cost has actually led to a decline in student diversity. And it's having little to no effect on graduation rates. For more on this, we want to bring in our next guest, Michael Poliakoff, PhD and President of the American Council of Trustees and Alumni.

Dr. Poliakoff, great to have you on the program here. And we want to dig into this report. But help our viewers understand and quantify the situation as it relates to the higher tuition cost and some of the effects, the impacts, that you all have found, especially on lower diversity.

MICHAEL POLIAKOFF: Julia, thank you. It's a great honor to be with you today. Yes, the spending habits of higher education have gotten us very poor results. On the one hand, they are the driver of higher and higher tuition, which is something that tends to discourage students from completing their college education.

And on the other hand, they have very limited impact on completion, on getting that degree, that prepares the student for the workforce and for engaged informed citizenship. All together, we are taking a system of higher education that has been called the envy of the world into a situation in which it seems to be engineering its own meltdown. One of the things that we discovered in this report is that it's not so much the cutbacks in state and federal funding, as it is the investment in bloated administration and student services programs that keep ratcheting up the price of tuition, while not increasing that most important outcome, which is completion of the degree.

If there's a single takeaway, I think we have to say that when a school wants to buy the farm, it's got to be cognizant of the fact that there's going to be a mortgage on that farm that's going to be paid largely by students with now a $1.7 trillion burden on their backs in debt. And those colleges and universities need to really ask, are they buying something of value. What we're finding is their investment in teaching and learning has been, in fact, a lower priority, a lower spending priority, than the burgeoning in administration and student services programs.

BRIAN CHEUNG: So let's talk about what's at stake here because the money quote to me in this report was that $1,000 increase in tuition and fees causes the racial and ethnic diversity of first-time full-time freshmen to decline by 4.5%. First of all, how did you arrive at that figure? And then, secondly, what is the ultimate impact of that, if there are communities who are entirely boxed out from being able to attend these programs because they can't afford it?

MICHAEL POLIAKOFF: Thank you for that question, Brian. The worst possible outcome is for us to be boxing out communities that really need to be in higher education, which has been both the engine of our nation's progress and the real vehicle for advancement into all the promise of American life. And what we find is misplaced investment. That's to say when, for example, a school-- let me take for example-- wants to build a very expensive building, it might have some-- some donation from alumni or other sources.

But it is a gift that will keep on taking because its maintenance costs will be almost the same as the construction costs. And those things are going to go into mandatory student fees or tuition. So for the communities that are struggling, instead of getting the kind of institutional support, the scholarships they need, they're seeing that money going into things that will not help them stay in college and advance.

JULIA LAROCHE: You know, you bring up the point of these kind of bloated administrations and student services, and sometimes you go see a Student Union and it's completely empty, and you're talking about the funds not really going toward the scholarships. Do you think these administrations will wake up and realize, wow, we're-- all the funds are going toward us versus the students? And have you noticed any universities actually wake up to this and do something about it? Do you think there will be meaningful change here?

MICHAEL POLIAKOFF: I-- I'm so glad you asked that question, Julia. There are very positive examples that other institutions should follow. Purdue has kept its tuition frozen for 10 years. It has lowered administrative costs under the leadership of President Mitch Daniels.

Arizona State University is way below its peers in its expenditure on administration per student. Florida State University is a leader. Christopher Newport here nearby in Virginia has shown that all of this can be done. So what the impact of this large regression study is is that, in the aggregate, our colleges and universities are not doing it right.

They need to look towards those positive examples, and their trustees have to be absolutely meticulous and ask those hard questions. It's wonderful to spend money on programs and to have new offices. But they have to ask, what will be the impact of this cost.

JULIA LAROCHE: Well, Dr. Michael Poliakoff, President of the American Council of Trustees and Alumni. We thank you so much for your time today.