Dispel the tuition black hole

Tuition rates at Duke have been rising steadily for a decade, averaging around a 4.5 percent increase annually. Along with similar tuition increases at peer universities, this phenomenon marks a tuition arms race among elite American universities. Michael Schoenfeld, vice president of public affairs and government relations, has claimed increases in tuition reflect increases in real costs. However, since tuition hikes outpace the inflation rate, there seems to be more to this story. Duke should provide explanations for tuition increases that are as specific and quantifiable as possible.

Given tuition is increasing faster than the rate of inflation, it follows that Duke is either purchasing absolutely more goods or goods whose prices are especially skyrocketing. It is not clear what sectors of the University consume the most resources, so we cannot know whether increased tuition is actually improving a student’s college experience. On the consumer side, students are willing to pay more for what they perceive as greater prestige. The demand for elite higher education is almost inelastic: Duke can exploit its position by charging ever-higher prices for an intangible prestige quotient without producing better educational outcomes.

Tuition increases are too dramatic for a responsible administration to ignore. Duke must address this issue honestly—preferably by informing students what particular costs drive up tuition the most. Although Schoenfeld cites energy, salaries and technological improvements as rising expenses, he does not provide enough detail for students and parents to make rigorous value judgments about what is and is not worth spending an extra $6,000—roughly the amount Duke tuition has grown over the last four years. The categories themselves, other than being too broad, are also suspect. For example, the pay freeze for Duke faculty and staff ended last March, yet costs still increased substantially during that period.

Greater transparency would not only help students and their families make informed college decisions. It would also benefit the University as a whole. Theories about a possible higher education bubble, espoused most famously by PayPal co-founder Peter Thiel, contend that eventually students will not be convinced that the quality of their university degrees justifies surging tuition costs. There is already a push to encourage middle-income students to consider community colleges and state institutions. The demand for a Duke degree seems inelastic now, but if traditional higher education goes bust, that will quickly change.

Of course, there remains the intractable affordability issue. The University’s financial aid system strives to increase grants by at least 4 to 5 percent each year to offset tuition increases. However, while this helps students already receiving grants, the percentage of students receiving any aid at all may stagnate. In the face of rising costs, the percentage of Duke students on financial aid must also steadily increase.

Greater transparency surrounding tuition hikes seems justified given the sheer amount of money a Duke degree seems to cost. We are not asking for a dollar-for-dollar breakdown but a clear budget that indicates where tuition markups are going within broad categories, such as energy and technology. Amid soaring prices, a barely recovering economy and whispers of overvalued degrees, Duke would be wise to have a frank conversation about costs.