How Could Your Grocery Bill Affect the Price of College?

This week, as part of his debt-free college plan, presidential candidate Martin O’Malley called for “reducing the cost of tuition to no more than 10 percent of state median income at four-year public universities, and to no more than five percent of median income at two-year public colleges.” This type of affordability rule of thumb, tied to macroeconomic factors, offers an appealing way to define how much tuition families should be charged for college. And makes it easier for state authorities to then peg tuition to that level. Some states have already implemented or are trying to create similar metrics to control growth in tuition. In coming years, what you pay at the grocery store could reflect the price you pay for college.

A Texas bill that failed to pass this legislative session would have limited tuition increases to the annual rate of inflation if colleges didn’t meet certain benchmarks. If schools did meet the performance goals they would be allowed to raise tuition by a maximum of three percent. The bill passed the Senate but never came up for a vote in the House. The legislation may come up again next session.

While the use of economic benchmarks to set tuition may primarily be intended to make college more affordable, it could  also be an attempt to take politics out of the process. But setting tuition in some contexts is inherently political.  In Florida for example, tying tuition to the rate of inflation was actually law for a time. Between 2007 and 2014, if the legislature did not increase tuition, colleges in Florida received an automatic increase at the rate of inflation. This makes some sense. Perhaps tuition should increase to preserve its purchasing power from year to year. But here is where the politics comes in. In 2014, the Governor was in a close election race and wanted to freeze tuition. This provision made that tricky and the legislature ended up taking it out of the law.

Now Washington is experimenting with this type of metric. Along with a substantial cut in tuition, the budget just passed in Washington also has a built in index for how much institutions can raise tuition going forward. The metric is based on the median hourly wage for the past 14 years in Washington. In any given year, tuition cannot rise faster than the average percent increase during the prior year to this median 14 year historic hourly wage. So contrary to our previous post on the Washington law, a decrease in family wages wouldn’t force schools to cut tuition in bad times.

But the legislature knows that this may not be the best measure to control  tuition increases. In response, they mandated that the Washington State Institute for Public Policy conduct a study on other tuition growth metrics such as median wage, average wage, median household income, consumer price index, and student affordability metrics. The report is due to the legislature in December of 2015, and it should help inform state policy on possible affordability metrics.

All of these measures are wrestling with a similar problem. What does affordability look like for families? And how can policymakers ensure that public colleges keep tuition in line with that level of affordability? Deep middle class voter anxiety about college costs has spurred lawmakers to focus on this problem. As the federal conversation on debt-free college moves forward, states will continue to experiment with ways to ensure public college tuition is affordable. Tying tuition to economic factors may be a first step in bringing college prices back within reach for that anxious middle class."