Sunday, December 31, 2006

2007 In Higher Education

By Richard Vedder

When the Democrats clobbered the GOP in November, many higher ed establishment types breathed a sigh of relief. To them, 2007 looks pretty good --rising state revenues, more liberal politicians in control, and a new Congress that is sympathetic to increasing funding for Pell Grants, student loans, etc. Moreover, with the Dems controlling Congress, the annoying calls for reform brought about by the Spellings Commission and its report will be muted, or so it is hoped.

These establishment types probably are at least partially right. My prediction is that 2007 will not bring much change to higher ed in America, and few if any of the fundamental problems will be addressed in any major way. However, the colleges will likely be disappointed because Congressional largess will not increase markedly. On the reform front, I suspect the Spellings Commission recommendations will be heeded some around the margins. We might find accrediting bodies pushing harder for greater tranaparency and evidence of student outcomes, for example. We might see the FAFSA form simplified a bit. We will not see a radical streamlining of the hodgepodge of federal student assistance programs however. And the universities will do little to deal with deficiencies in curriculum and low student expectations until extreme pressure is mounted, which probably won't be in 2007. Tuition increases will probably moderate a tad, but still be greater than inflation. In many states awash with rising revenues, there will be an increase in scholarship programs designed to increase higher education participation and success, with predictably poor results. By the way, because of rising real unit labor costs in the general economy which likely will be aggravated by new minimum wage legislation, I see the possibility of some economic slowdown, which might put a damper on some of these new higher education spending initiatives such I previously discussed with respect to Indiana and Michigan.

One good thing: I am an economist, and we as a group are not overly good forecasters. So maybe my mildly pessimistic prediction will prove wrong. Maybe we will see some schools engage in cost cutting and freezing tuition. Maybe we will see the development of an alternative to the US News & World Report rankings that have aggravated the rise in costs. Maybe colleges will reduce barriers to entry by easing student ability to transfer between institutions. Maybe some states will decide some kids do not belong in college until they have demonstrated they have a reasonably high probability of success. Maybe, but I am not optimistic.

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