US faces cash crisis by 2015

July 25, 1997

AN EDUCATION doomsday clock is ticking away in the United States, with the prospect of a yawning funding gap and millions of students turned away, a panel of top educators and corporate chiefs has warned.

Education spending will be $38 billion short by 2015 if costs continue to rise and state support continues to fall, their report says. Six or seven million adults, about half the potential student population, could be priced out of higher education, with dire consequences for the economic and social health of the country.

The message is simple for academics and politicians: "Business as usual is not an option," said Stephen Carroll, a senior economist with the Rand Corporation. "You will be forced to change."

The report, issued by the Council for Aid to Education, a Rand affiliate, is not the first to warn of an impending crunch as student numbers and tuition rates swell while government spending is swallowed by health, social security, and prisons.

Following a two-year study, it distills the thinking of 18 influential figures including John Zeglis, AT&T's chief executive. Backers hope it will spur corporate interest in funding and reshaping higher education.

Higher education is a critical meal ticket, the report says. The gap between rich and poor is widening and those who only complete school are on the bottom rungs of the economic ladder, where real incomes have been slipping for 20 years.

Student enrolment has grown by a factor of seven since the war but costs have risen ahead of inflation, government funding has stayed flat, and tuition rates have doubled in real terms in 20 years. Extrapolating these trends, the US by 2015 will need to spend $151 billion educating about the equivalent of 13 million full-time students, but will only have $47 billion in government funding and $66 billion from fees, grants and endowments.

The answer, it says, is to make education a "national priority" and increase funding by $19 million. President Bill Clinton's initiative to make the first two years of college open to all who qualify helps but does not bridge the gap.

Colleges must aim to save the other $19 billion. Courses that do not attract students could face pruning.

"Mission creep" is identified as one of the worst sins in US education. Instead of specialising on teacher training, undergraduate education, research, or vocational studies, colleges are diversifying and duplicating functions. Community colleges want to issue university degrees. Research universities are carrying out remedial training of under-qualified entrants.

Dwindling research dollars are spread among 800 colleges rather than funnelled to a few high-flying institutions. "There has always been this mission creep," said Barry Munitz, chancellor of the California State University system. "We have to stop this endless expansion of everybody trying to be the same."

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