Dealing with the High Cost of Higher Education

New York Governor recently announced plans for free college tuition in New York. His announcement brought the cost of higher education into the headlines again and reinforced its position as a hot topic. The cost of higher education is a matter of concern for students, colleges, politicians and the country as a whole.

Most people agree with Gov. Cuomo that “a college education is not a luxury – it is an absolute necessity for any chance at economic mobility.” If not a necessity, at least it seems to be the best chance at economic mobility. The question comes with how to make this best chance possible for people.

Plans for free tuition fall into two categories: “Last-dollar plans,” such as Gov. Cuomo’s, cover the difference between tuition costs and students existing financial aid. These plans don’t provide funds for expenses such as books, fees, transportation or living costs. “First-dollar plans” make funds available in addition to existing financial aid to cover expenses.

The cost of higher education is a continual issue, one that impacts many people, including adult students. In fact, cost is the number one challenge facing today’s non-traditional students who also have work and family responsibilities. Because many of these students are older, they also face challenges finding financial aid. The Center for Postsecondary and Economic Success reports that 29 of the largest state aid programs fund only full-time students, 33 of them are strictly merit-based. A few states also limit eligibility for grants based on time from high school graduation, which eliminates non-traditional students because of age.

The cost of higher education impacts many other stakeholders in addition to students. Businesses that need qualified workers and face workers shortages experience the end-result of high cost of higher education. Without qualified workers, businesses will not be able to expand and successfully compete in global markets. Without business productivity, the standard of living for American workers cannot increase and they cannot be full participants in the marketplace. Business investment in tuition assistance programs is an effective way to turn this cycle.

Two employment forces are creating a need for businesses to invest in their workforce and support their education needs. First, businesses face baby boomer retirements that create job vacancies. Current and new workers can effectively fill these positions, and businesses can educate against worker shortages by providing tuition assistance programs for their workers. Second, American workers are projected to remain in the workforce longer than in the past. The Bureau of labor Statistics projects:
• By 2022, 31.9% of people age 65-74 will still be working, compared to 20.4% of that age bracket in 2002 and 26.8% in 2012.
• By 2022, 67.5% of people age 55-64 will still be working compared to 61.9% in 2002 and 64.5% in 2012.

All of these workers will need continual education to develop new skills they will need for technological advancements and changes in the workplace. John Seely Brown, Independent Co-chairman of the Deloitte Center for the Edge says, “The half-life of a learned skill is five years.” Businesses can guard against short-lived skills with tuition assistance. “Modern economies require that people invest in the acquisition of knowledge, skills and information not only when young but throughout most of their lives,” says Gary S. Becker, Nobel Laureate in Economic Sciences.

For many adult workers the high cost of investing in these skills requires assistance from employer TAP. Georgetown Center of Employment and the Workforce believes that not only is tuition assistance the most important support for adult students, it benefits businesses also. “Over the past 20 years, businesses have begun to rethink their position on tuition assistance programs (TAPs) for employees. While TAPs may be beneficial for working learners, they also benefit employers. Workers who make full use of tuition assistance may demonstrate productivity above the market level.”