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Traditionally, public higher education was not completely free of charge, but the cost was nominal. Average tuition and room and board for in-state students at public four-year schools was less than $1,000 until 1966; tuition alone was less than $1,000 until 1985. The understanding was that states would charge a student only about a tenth of the actual cost of educating him or her in a public university. State universities were fantastically good politics: pork-barrel construction projects and middle-class entitlement programs rolled into one. Most states committed large portions of their budgets to subsidizing their universities.
In the late 1970s, two foundation-sponsored blue-ribbon commissions recommended that the states ratchet up what students paid for a public university education to a third of the actual cost. Nothing happened right away, but afterward the states got into the habit of increasing the cost of higher education whenever a recession would hit--even though recessions are exactly the times when families are least able to absorb higher bills. (Later, of course, when the recession ended, the cost would not be ratcheted back down.) In most states, rising Medicaid costs and tough-on-crime legislation that required the construction of new prisons also cut into the funds that were available for higher education.
The worst increases came during the "Bush recession" of the early '90s. Between 1991 and 1994, the average state-university tuition went up at least 10% a year. Since 1980, the cost in most states has tripled or quadrupled. Today the price of a state university education is distinctly not nominal. The average total cost for a year of public higher education is $9,285. At the world-class, "flagship" state universities, costs are approaching the private-university level. Next year the University of California at Berkeley will cost more than $13,818 and the University of Virginia an estimated $10,620.
It is amazing that greater attention has not focused on what amounts to a real shift in the operating principles of schools that together serve 9 million students. Rising tuitions at such institutions as Stanford and Harvard generate national discussion because their costs are the highest and because they are the schools on the minds of the opinion-making classes. But prices at the handful of most prestigious private schools do not affect very many people and are not a clear public issue. Across-the-board increases at state schools amount to a major change in government policy, yet they remain mysteriously underdiscussed.
The main federal student-loan program, created in 1965, is interest-free while the student is in college. Because of the run-up in the cost of public higher education, loan demand was rising so rapidly that the program was in danger of becoming ruinously expensive. So Congress started a second student-loan program, in which the recipients pay interest even during their school years. This program, rolled out in 1992, now has 2 million borrowers and a loan volume of $7.6 billion. The effect has been that of a one-two punch: as tuitions and fees have risen, so has the cost to the borrower of a student loan. Loan interest adds a few hundred dollars a year to the cost of a college education.