Tuition was “relatively modest” when David H. Feldman arrived at Kenyon, and when he left with the Class of 1978 he was debt-free.

His parents were public schoolteachers and savers. The cost to them in 1974 was $4,438, and young David took not a penny of financial aid. Feldman, now a professor of economics at the College of William and Mary, specializes in the economics of higher education, and he feels the tidal pull of controversy.

Critics, pundits, and scholars have stormed higher education, targeted accelerating tuition, and lampooned comfy residence halls and trendy recreation facilities. Professors have been nicked for light classroom workloads and doing research of dubious value to undergraduates.

Even the core value of higher education has come under attack. Money Magazine wondered, “Is college still worth the price?” New York magazine noted the fashionable idea that a college degree is “essentially worthless.” The co-founder of PayPal, Peter Thiel, established the Thiel Fellowship—a $100,000 grant for entrepreneurial grooming on the condition that those who receive it steer clear of college for two years. A number of books have piled on, including Higher Education?, which described the Kenyon Athletic Center (KAC) as “a Taj Mahal.”

A 2011 Pew Research Center survey showed that 57 percent of Americans believed higher education did not provide good value for the money, and 75 percent said college was too expensive. In that same survey, 38 percent of 1,055 college presidents said higher education was “headed in the wrong direction.”

Just follow the money.

The average student-loan debt hit $24,000 by the time the 2009 class graduated from nonprofit colleges and universities, a 27-percent increase from 2004, according to the nonprofit Institute for College Access and Success. Easily outstripping inflation over the last quarter century, tuition and fees have risen more sharply at public institutions than at private colleges. But media attention seems to gather around the $50,000 a year charged by the most selective private colleges. The sticker price for a student attending Kenyon in 2011-12 is $52,650, with tuition and fees at $42,630. Yet tuition and fees, according to the College Board, cover only about 60 percent of national education costs.

At a time of economic malaise, changing priorities in government funding, and steep personal debt, higher education has become something of a fatted calf in line for sacrifice on the altar of public opinion. Why does college cost so much, and so much more than in the past?

A Service Industry
Into the breach step Feldman and his colleague, Robert B. Archibald, also a professor of economics at William and Mary. Their 2011 book Why Does College Cost So Much? takes a self-described aerial view of the economics of higher education, explaining increased costs in the context of economic trends. They reject the damning “magnifying glass” look applied by some critics who, for example, equate the rising number of administrators with wayward inefficiency, and the variety of dining hall food choices with wretched excess. One of their goals is to cool down the raging rhetoric.

An embrace from higher education “is not why we wrote the book,” Feldman said. “I have been thinking about these issues for a very long time now. We were surprised by the audience we got for our papers.” Not everyone is a fan. Those who criticize higher education also criticize Feldman and Archibald. “We're picking darts out of our various body parts,” he said.

Paying for the “big ticket item” of a college education is a “family decision … an ethical decision.” In his view, a college education is the best way to transfer wealth to children. The financial advantage is inarguable. In 2008, median annual earnings of men with a college degree reached $55,000; for men with just a high school diploma, that number was $32,000.

And regardless of the public view about the expense of a college education, the Pew Research Center poll found that 94 percent of parents expect their children to attend college and 86 percent of college graduates believe their education was a good investment.

Kenyon President S. Georgia Nugent pondered the paradox. “That's the mood of the nation at the moment,” she said. “ ‘Higher education is doing a terrible job, and we want more access to it.'”

Feldman believes a vocal minority has unleashed the aggression against higher education—those people “willing and able to scream the loudest,” including those who are paying the most at very expensive schools. He noted that half of the country's college students face a tuition list price of less than $10,000 a year. And stories about some graduates leaving school with six-figure debt may be true but are, in fact, rare. “Making public policy on the basis of outliers is bad,” he said.

The rising cost of higher education, Feldman said, can be attributed to the requirements of the digital age and accelerating technology; the growth of financial aid in the zeal to attract an accomplished and diverse enrollment; and the fact that colleges must maintain a highly educated work force.

Improvements in technology have reduced costs for manufacturers but do not have the same effect in a “service industry” like higher education. Yet colleges must keep pace with technology, both in teaching and in the services that students expect. Science labs must be state-of-the-art. Colleges that wired campuses for the Internet have moved on to wireless technology. And, given the ubiquity of mobile telephones, land-line phones installed in residence-hall rooms face a phase-out.

“We react to technology very differently than Ford or General Motors,” Feldman said. “We don't adopt new technologies to lower cost. We have to shape the world our students are moving into.” When something new comes out, students expect it.

The ramping up of financial aid, called discounting by Feldman, is a “big problem,” triggering an arms race among schools to attract the best and most diverse students. Higher tuition, along with a reliance on endowment revenue and philanthropy, helps cover the cost of financial aid. “I don't know where the discounting is going to stop with the private [colleges].”

The size of a college budget, Feldman said, is largely based on the quality of the program. If a college believes in the “supreme importance” of a diverse student body and is determined to provide discounts to reach that goal, the school may decide to hold the line on faculty salaries or not replace or hire a high-profile professor. “The alternative is to raise the list price,” Feldman said. “People look at the list price and see it soaring.”

The list price includes meeting the quality-of-life expectations of the consumer. Apartment-style residences, good food choices, and well-equipped recreation centers are in demand. “Why expect people today to be satisfied with Spartan conditions of living? The standard of living is three times as high as it was in the 1960s,” Feldman said. “It's a nostalgic conceit to rebuke the young for how tough older people had it. That's not serious.”

The growth of college administrations runs parallel to the growth of administrations in business and industry, according to Feldman. “Why aren't you screaming at private industry? We are hiring more administrators. It's a fact, but it's not proof of waste.” Administrators not seen in great numbers by previous generations include those working in information technology, health and career counseling, writing resources, and other student services.

Higher education is a business that charges its customers less than the cost of the service provided. Crucial support, then, comes through gifts, and colleges anticipate that students will contribute some of their future income. “It's a deferred payment until you are established in your profession and then you contribute according to your means,” he said. “It's not a particularly bad model.”

The system is sustainable “as long as the families who are paying full price think that they're still getting value for the money,” he said.

Into the Real World
Joanna “Jo” Hayes '10 treasures her Kenyon education, and her parents paid the bill without financial help from the College. Now the managing director of Hudson Dance & Movement in her hometown of Hoboken, New Jersey, Hayes was an anthropology major who graduated magna cum laude.

“The education I received was amazing,” she said. “It fulfilled everything I wanted in a college—small classes and professors who cared about their students. I couldn't ask for better teachers. I love the liberal arts and the emphasis on cognitive reasoning. I wouldn't trade my time at Kenyon or my education for anything in the world.”

The family sacrificed so Hayes and her younger brother could attend private secondary schools. They sold a 2,400-square-foot brownstone home and moved into a condominium about half the size. Jo lives happily with her parents in the same condo and is considering a master's in business administration.

“My parents are wonderful, generous people,” she said. “We talked about this before going to college. I knew the sacrifices they had made for me to go to high school. The sticker price at Kenyon is pretty big, but my parents said they wanted me to go where I would be happy.”

If Hayes has a suggestion for Kenyon, it's to improve career-development services. “I just didn't know where an anthropology major who worked as a [restaurant] hostess over the summers was supposed to start. It was kind of like just throwing you out of the Gates of Hell into the real world.”

Her father, Steven R. Hayes, is a corporate lawyer who knows his way around higher education; he has a son in college and his father is a former president of Marshall University. “I'm very fond of Kenyon,” he said. “I really like what they do. My daughter loved it.”

Like his daughter, he wonders why Kenyon does not provide more help in finding internships and developing career choices. “One would have expected, given the price of Kenyon, strong, active support,” he said. He also thinks the College should do more to help club sports, such as providing the women's rugby team with a trainer. Women's rugby is one of fourteen club sports at the College.
The services advocated by Jo Hayes and her father are typical of those expected by many of today's college consumers.

Kenyon does have a Career Development Office, with a staff of five. The number of full-time employees at Kenyon has grown to 574, from 455 in 2000. The roll call in that time includes, among others, new staff for multicultural affairs, student activities, and financial-aid assistance; a women's lacrosse coach; a crew of about nine to run the KAC; and about nine new professors added during the period 2001-03 as the annual teaching load was reduced to five courses a year, from six. And the curriculum continues to grow, adding, for example, courses in Arabic, environmental studies, and neuroscience. A film major was added as well.

“There's always new knowledge, and the consumer is going to demand access to new knowledge,” said Joseph G. Nelson, Kenyon vice president for finance. Nelson likes to add that knowledge multiplies—there is always more to learn. He's seen the budget grow about tenfold since he arrived at Kenyon in 1978. “The College's entrance qualifications are dramatically different than they were then. That's because the College has something to offer to that sector of the market. The College wants to improve the quality to attract a higher level of consumer.”

The faculty course load was reduced before Nugent arrived— “and, indeed, it does add costs,” she said. One reason for the switch was to enhance research opportunities that are attractive to faculty. Nugent believes teaching should be the highest priority at a liberal arts college and that the shift has enabled more time for course preparation, advising, and grading.

“One reason why some parents are willing to spend $50,000 is they want excellent teaching,” she said.

What You Get
Excellent teaching at Kenyon is defined partly by the ten-to-one student-faculty ratio and ready access to top-notch professors. Provost Nayef Samhat believes the “intimate learning environment” pays off in a strong academic community. In “the pursuit of research and scholarship,” moreover, faculty members deepen their knowledge, expand their contacts with colleagues worldwide, and familiarize themselves with new tools, trends, and methodologies—all of which translate into more challenging classes and more opportunities for students.

“I think we have a vibrant faculty, an outstanding faculty, deeply engaged in their professional fields,” he said. “We have a fine understanding of where this engagement fits in terms of our primary mission, which is to teach students. You want these teachers of young men and women to embrace the practice of learning, knowing, and understanding. It's what we do.”

And that's not all the College does.

Samhat believes rising costs can be traced to the growth of consumer expectations in the classroom and out. “Let's look at what you're getting,” he said. “You're getting an education in a small-classroom environment with a highly motivated scholar. You're getting an education with some of the latest technological instruments, some of the most advanced lab equipment. You have a health club. You have a park-like setting. You have housing. You're getting food. You have security. You have health benefits. You have counseling. You have art shows, concerts, and speakers. That's a lot of services and they are all costly in and of themselves.

“And we are in a competitive environment. All of these other institutions are doing the same, and we're outbidding each other at times.”

Let the bidding begin with the $70 million KAC, which opened in January 2006. “Keeping up with the Kenyons is definitely one factor pumping up college costs,” according to the book Higher Education?

Left unsaid, according to Nelson, is the “very unique situation” that led to the KAC's construction. What some critics saw under a magnifying glass as an example of lavish collegiate one-upmanship was, instead, a long-view focus on careful spending for value. Or, as Nelson put it, “There are lots of people who write things that they don't know anything about.”

Kenyon had no equity investment in its aging and outmoded recreation facilities when the KAC was planned. The Wertheimer Field House was a pre-World World II military drill hall rebuilt at Kenyon over a dirt floor. It was remodeled in 1980, when the Ernst Center was built. Ernst went up without air conditioning and had chronic ventilation problems. Remodeling the recreation hall was not practical in the twenty-first century.

“Everybody else already had what we have now,” Nelson said. “We had the luxury of starting over, and we did. What we did made perfect financial sense and absolutely perfect long-term sense.

“We were in a very unusual circumstance, and … we had a single donor pay for half the cost, so add that on. On a net cost-per-square-foot basis and given the number of people who use it, I say it's the cheapest building we ever built.”

An Extraordinary Physical Plant
The KAC, an important piece of the campus puzzle, is just one of many buildings and improvements undertaken since 1998. The Brown Family Environmental Center, the Eaton Center, the Graham Gund Gallery, Lentz House, O'Connor House, the science quad, and Storer Hall also joined the mix. Peirce Hall was completely renovated. Five new townhouse student residences opened in 2011 and more are on the way. Horvitz Hall (for studio art) is under construction. Kenyon includes 128 buildings, with an insurance-replacement value of $238,759,000, housing $23,402,000 worth of equipment, furnishings, instruments, and the like. “You have an extraordinary physical plant that does not necessarily generate the sort of revenue that can support itself,” Samhat said.

The lion's share of revenue for the 2010-11 budget ($102,916,000) came from tuition and fees (74.6 percent). Endowment income chipped in 7.7 percent, and the rest arrived from a mix of support from reserves, gifts, and miscellaneous sources.

Teri Blanchard, associate vice president for finance, said the heavy reliance on tuition and fees promotes efficiency and careful planning. The College has run for forty-one years without a deficit. “Because about 75 cents of every buck we spend comes from tuition and fees, we have to be very careful about what we add,” Blanchard said.

Financial aid ($22,095,000) gobbled up 21.5 percent of the budget. “And it will probably continue to grow more rapidly,” Nelson said, “simply because we're trying to provide greater access year after year after year, greater diversity year after year after year.”

Blanchard sees the growth in financial aid as the cost of doing business, “a reflection of all of the other costs that you have,” she said. “If we were a much less expensive place, we'd see less financial aid, but we wouldn't be who we are.”

Changing Expectations
Can Kenyon and other liberal arts institutions continue to be who they are?

Samhat questions the long-term viability of the economic model. “Greater burdens are being placed on families,” he said. “You're told to save for higher education, and save for health care, and then save for retirement.

“We know that public funding for higher education is eroding, and so more demand will fall on families. The pressure will really be great on the private institutions. You can raise tuition as much as you want, but nowadays you're raising tuition and you're compensating that raise with financial aid. There's no net gain. The model will have to change.”

Nugent anticipates change. “A part of me thinks the current system is not sustainable,” she said. “The current financial aid system implies a social contract, where the wealthy assume a greater share of the cost. And I think the social contract has broken down in recent years.”

The financial aid system must be streamlined and simplified, Feldman said, starting with the Free Application for Federal Student Aid form. Beyond that, he envisions a sort of college-education Social Security program that begins on the front end. With a “public investment” by taxpayers, the government would establish a savings account for each child at birth, providing enough income for a basic college education at age eighteen. “The point would be that you would begin, from the earliest age, to change the entire expectations of a family,” he said.

“The United States used to be the world leader in having an educated work force. Quite a number of countries have surpassed us. The rest of the world is not stupid. They see that the investment in education has a payoff.”

The payoff can be tallied in more than a payday.

“I think we devote too much attention to simply dollars,” Nugent said. “The ability to live a full life as a participant in society, as a person who can take a delight in the arts and in your cultural surroundings, a person capable of making judgments, a person with confidence—I think those are undoubtedly components of a good life. And, by and large, if you are ending your education at seventeen, you are probably not well equipped to enjoy those good things in your life.”

Ronald K. Griggs, vice president for library and information services, finds the value of a Kenyon education in the classroom. “In every class you're going to be exposed to something new. There's not a dud in the bunch,” Griggs said. “That's the richness of the environment.”

What results is the “incredible confidence” that Griggs sees in the eyes of graduating seniors. “They can pretty much tackle anything.”