US college trustees must push back on tuition fee increases

Too many trustees misunderstand or forget their fiduciary responsibilities and become co-opted by institutional presidents, says James Koch

March 1, 2021
Wrestlers locked together symbolising pushback on university boards
Source: iStock

Who has not heard complaints about the skyrocketing cost of attending US colleges? Between autumn 2006 and autumn 2020, the net cost of attending a four-year college, after taking scholarships and grants into account, rose 16.6 per cent faster than the consumer price index for public institutions and 10.9 per cent for private ones, according to College Board figures.

The impacts of this inflation have been somewhat predictable. Headcount college enrolments have now fallen nine years in a row and this trend is unlikely to reverse itself in autumn 2021 because the number of prospective college students filling out the Free Application for Federal Student Aid (popularly known as the FAFSA) are down by about 10 per cent year over year as of January 2021.

Meanwhile, the Federal Reserve Bank of New York reports that total student debt has ballooned to $1.55 trillion (£1.1 trillion). This is problematic from an economic standpoint because numerous reputable empirical studies demonstrate that individuals burdened with student debt do not buy as many automobiles and houses, live more often with their mums and dads, and are even less likely than the general population to get married.

These circumstances have resulted in an abundance of finger pointing. However, what has nearly always been overlooked in this blame game is the dysfunctional, sometimes unknowing role played by members of college governing boards (often referred to as trustees). No cost increase of any significance occurs on any American campus without the approval of the trustees, who are legally responsible for the institution. They are the financial gatekeepers, but often have failed in this role. Our research reveals that trustees at public institutions approve 98 per cent of cost-increasing proposals placed in front of them – and they usually do so unanimously.

We thought when we began our study that significant numbers of trustees, especially those who are alumni of the institutions they govern and are close to its students, would lament any proposed cost increases and therefore some would vote no. We found very little evidence of this. Over time, many trustees end up being co-opted by the institution’s president and its senior administrators, developing a “get along and go along” mindset.

Much of our recently published book, Runaway College Costs, focuses on explaining why college cost increases have been so high and why trustees vote the way they do. We show, for example, that the larger the board, the more likely it is to vote for larger cost increases – presumably because many members of large boards do not become really immersed in their institution. We also found that a requirement to get cost proposals approved by an overarching, statewide governing board results in more moderate cost increases.

The very word “trustee” indicates that members of college boards hold a trust. As fiduciaries, they should be representing the best interests of students and citizens – which implies keeping a tight grip on the costs that those stakeholders are asked to bear. However, many trustees either do not comprehend or else forget these responsibilities and become uncritical advocates for the institution, its president and faculty, and its glossy narrative about what it hopes to be.

Trustees begin to fixate on rankings and exult when their institution rises a few places. This “we must do better than our competition” approach to governance also manifests itself in the construction of grandiose student residence halls complete with lazy rivers and the nurturing of intercollegiate athletic programmes that require fees of $70 per semester to make them viable – not to mention reduced faculty teaching loads, graduate programmes that enrol impressively few students and general mission creep. Too often, trustees fail to ask critical questions as these “improvements” are placed in front of them.

Universities do not replicate the businesses and organisations that many trustees operate or work for in their day-to-day lives. It takes time and effort for a trustee to understand the inner workings of an institution with many funding sources, public-private partnerships, foundation ties and alumni support organisations.

Hence, we hope that our book will prompt state governors and legislators to both underline in the law the fiduciary responsibilities of trustees and to require board members to undergo specific training and in-service learning experiences. That way, we can start to impose real checks and balances on university leaders’ “more is better” approach to cost management.

James V. Koch is a Board of Visitors professor of economics emeritus and president emeritus at Old Dominion University. His latest book, Runaway College Costs (2020), co-written with Richard J. Cebula, is published by Johns Hopkins University Press. He will be speaking at THE Live US, a free virtual event on 30 March-1 April.

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