It is possible to control college costs—and I did it

(Editor’s note: Robert Iosue is president emeritus of York College of Pennsylvania.)

Many college leaders speak as though the upward cost spiral is permanent and unavoidable. From experience, I can say that’s not true.

Tuition increases at American colleges began in earnest in the 1960s and ’70s, when I was a mathematics professor and later dean at C.W. Post College. The first changes driving the increases were the reductions in teaching loads.

In the 1960s, 15 hours per semester (five classes) was not unusual, but it soon was reduced to 12 hours, which had become normal for many colleges. However, in conducting a study of costs at public universities, I found their teaching loads had already been reduced to only six hours per semester.

This resulted in my first article on the subject of cost-containment, published in Newsday in 1974. It showed that low-tuition public universities in the state of New York were easily as expensive as private institutions once tax subsidies were added.

As the years passed, costs continued to rise at twice the rate of inflation at both public and private schools. Three factors besides the reduction in teaching were responsible: first, a variety of increasing government subsidies; second, burgeoning administrative and other non-teaching staff; and third, the building of costly, non-educational structures from athletic hippodromes to special dining facilities (along with costly menus) to please the students.

When I became president of York College of Pennsylvania in 1976, our tuition was slightly lower than nearby colleges, but the exaggerated increases had already started, led by the Ivy League schools. For a score or two of our approximately 3,500 colleges, extravagant increases year after year were possible because of the “Chivas Regal” effect. The product is fine, but the name alone can command a large premium.

York College was not going to play that game. I was determined to keep costs down without any reduction in quality.

Early on, we created a “cost/income” system for the entire college, including administrative offices. This was a new idea of cost containment. It began with a five-year retrospective of each department or unit, resulting in a base ratio of the student tuition it brought in divided by the total cost of the professors’ salaries. Just two numbers mattered: cost (salaries) over tuition (tuition brought in by that department or unit).

Some examples using arbitrary numbers should make this clearer. The business administration department might have a total of $1,000,000 in salary for a semester, while the tuition it brought in for the same semester might be $3,000,000. Its cost/income ratio would be 33 percent, which is another way of saying that for every dollar brought in by tuition, the staff earned 33 cents in salary.

The chemistry department, which in many colleges is both small and expensive (forget for now the equipment), might have salaries of $1,000,000, but bring in tuition of only $2,000,000, resulting in a higher cost/income ratio of 50 percent.

Doing this for all departments produced a cost/income ratio of 42 percent for the entire college. With that historical knowledge, we set a goal of reducing the percentage for each department by two points. The business department’s goal would be 31 percent, the chemistry department’s goal 48 percent, the entire college’s 40 percent.

Improved efficiency would bring departments more money. It didn’t take long for department heads to realize that class scheduling was an easy first step. For example, the English department held classes for hundreds of freshmen, perhaps 40 introductory sections, each having a limit of 20 students. But many of the classes had only 15 or 16 students in them. Optimal scheduling would require every class to have 20. If the department could improve by cutting a few sections that would lower its cost/income.

They soon caught on that if they met and maintained their cost/income, they’d have more negotiating power to get what they needed. For example, they had leverage in adding new faculty as the college grew if they had a record of lower cost/income ratios. As cost containment began to work, resistance faded away.

Cost containment extended to the administration; no more assistant deans, and no mini-bureaucracies were allowed to develop.

The benefits were immeasurable. In my 15 years as president, not once did we have to raise tuition more than the Consumer Price Index. We were able to raise salaries and benefits, rising from the low tier for four-year colleges to the top tier. We paid off all federal loans, which produced excellent bottom lines. Fund raising became easier because everyone knew we wasted nothing. All new buildings were funded in advance.

And as York’s recognition grew, we were able to recruit better prepared students; our average SAT score rose to 100 points above the national average.

There was, however, one headache to deal with and for a few years I did not have an answer.

Many parents were wary of our low tuition as compared to the ever-increasing prices at so many other colleges. Could we really be a good college for their kid if we charged so much less than other colleges? In other words, the Chivas Regal effect was hurting us.

That question had to be turned around. We were not the problem, but instead we had the solution. We told parents that they should really be asking the other colleges their kids applied to, “Why do you charge so much?”

The tide turned dramatically for us. Publicity appeared in newspapers, journals, and on TV comparing us to very expensive colleges. Cost containment worked.

How can other colleges that haven’t shown financial stewardship for decades turn around?

First, presidents and boards of trustees must reduce the large non-teaching bureaucracies that have developed almost in retaliation for the declining teaching load of professors.

Second, all professors should have a 12-credit teaching load, sometimes accompanied by an agreed-upon departmental reduction in number of credits. That is, the department would award those credits to individual professors who they deem are doing seminal research. Once the research is completed, the professor goes back to 12 credits of teaching.

Third, the president and the board should project budgets each year from a different starting point. The common practice today is to request financial needs from all departments and units, pare them down as best as possible, then raise tuition and fees, along with any other source of income, to match expenditures. In other words, the spending determines the income needed.

Colleges must reverse that process if they ever hope to curtail costs. They should estimate the size of the incoming class, set a reasonable tuition and fees schedule (CPI or lower), then decide on the spending plan. That is, fit spending to income.

College costs are not uncontrollable as so many college leaders and educational lobbyists want you to believe. For literally hundreds of years, college costs were reasonable, even among the prestigious institutions, before the educational lobby existed. That ended in the early 1970s.

If the present situation continues whereby countless numbers of colleges follow the handful of elites as they continue their arbitrary increases, many will fall in stature, many in standards, and others by the wayside.