affordability

The affordability trap: How to use tuition to frame IT projects


The excitement of college acceptances is now past for the Class of 2021 and their parents. Conversations have now moved from “Where will I go to college?” to “How are we going to pay for college?” College affordability dominates both discussions on campus and in the general public. With the price tag for four years at an elite private institution approaching a half million dollars, how can it not?

Affordability, however, is only one-half of the equation that should be driving family decision making. The value of the degree is the other half of the equation. Sandy Baum, senior fellow at the Urban Institute, states this reality bluntly—“The amount you can and should pay [for college] depends on what it is that you’re paying for and what you get for that investment.” The value of the investment should not be seen in a limited fashion. Not only should it include the lifetime earnings potential that a particular degree or major imparts, but also it should reflect the knowledge and skills that the student acquires allowing him or her to be a happy and productive member of society.

An Administrative Dilemma

Administratively, we often fall into the same trap of focusing solely on the price of a college degree. If our only goal is to hold the price down, we are led to actions that will reduce costs at the university. In reality, such actions may have the effect of reducing the quality and value of the degree.

If class sizes are increased, class offerings reduced, support services reduced, etc., we may be able to hold down tuition but the value of the degree may fall. In some cases, the result could actually be a tuition increase if the actions increase the number of years required for a student to graduate.

Private universities frequently market against large state universities emphasizing that student at the privates are able to graduate in four years whereas those at the publics cannot. For some universities, raising tuition and fees to fund investments that increase the value of their degrees and to expedite graduation may be a more effective strategy than cost cutting.

A similarly counter-intuitive argument can be made on the student side. Settersten and Ray argued several years ago in their book Not Quite Adults that students are not borrowing too much money for college but rather too little. They reason that students spread college out over six or more years working large numbers of hours to help pay tuition bills. A more effective strategy would be to borrow enough to graduate in four years or earlier thereby entering the job market sooner where a premium is paid for the college degree.

(Next page: Framing IT projects for affordability)

A New Way to Frame IT Projects

What does this mean to the campus IT division? It suggests a new way to frame projects. Many IT projects are justified on their ability to reduce institutional costs in the long run. This should remain an important focus.

IT leaders should also be thinking about projects with positive ROI’s for the student—projects that may increase costs to the student but will result in measurable increases in the value of the degree or potentially reduce time to graduation.

Business Schools often operate in this mindset charging premiums for an MBA even at public universities realizing that the MBA will lead to higher paying jobs than degrees in other areas of study. Since pursuing an MBA is primarily an investment decision, students have been willing to pay this premium.

While not increasing business school tuition, my university recently invested over $100,000 setting up a lab equipped with 12 Bloomberg Terminals. These terminals connect to the database that has become the “coin of the realm” for investment and financial decision-making.

Our students now have the opportunity to complete a multi-hour proprietary online course to become “Bloomberg Certified.” One student reported to me that after completing his certification he resubmitted an online application for a job where previously he had been rejected almost immediately. With the only change in his resume being the addition of “Bloomberg Certified,” he not only got an interview but also made it to the finalist pool.

IT divisions should be working with academic and student services divisions to find other “Bloomberg” opportunities where increasing costs can increase value.

Not every project that increases value, however, justifies funding. Return on investment applies to increases in value just as it does for decreases in costs. Thus, it is incumbent on IT managers to develop effective metrics for these projects allowing for sound ROI decision making.

There is no question that increasing college tuition is frightening. On the other hand, if our perspectives at the university are solely focused on reducing costs, we could end up making the situation worse for students and their parents.

IT has a long history of in-depth analysis of projects weighing costs and outcomes in a rigorous fashion. Broadening the overall university model to look at both the affordability and the value sides of the equation will increase the impact of IT on the university and benefit parents, students and the university in the long run.

[Editor’s note: This post was originally published on Optimal-Partners blog.]

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