A Real Plan to Reduce Penn State’s Sky-High Tuition

If anyone tells you tuition cannot be reduced, don’t believe them.

Penn State has, by far, the highest in-state tuition of any of her Big10 conference peers.  We are well aware of the administration and Board’s inability to rein in these charges, and seem to have become numb to the excuses about why these crippling costs cannot be brought under control.

But they can. In fact, Penn State’s tuition costs can be reduced by at least 20%, starting today.  And without the slightest bit of hardship to any of Penn State’s missions. Here’s how:

1) Proper management of the Penn State Endowment:  Sufficient savings to reduce tuition costs by at least 10%

As I have discussed before, Penn State squanders over $50 million per year in fees paid to investment managers.  No one knows where this money goes, but the most reasonable conclusion is that they support underperforming hedge fund managers.  These wasted funds can be immediately redirected to reducing tuition costs, as they are intended to be used.

Just as importantly, the overall investment returns of the Endowment have consistently underperformed, costing the University more than $1 billion over recent years.  Simplifying and optimizing the management of the Endowment would not only reduce the downside risks but also increase funds available for supporting the University’s missions.  The likely result, based on past history: enough funding to reduce tuition by at least another 5%.

2)  Restoring responsible oversight to Penn State’s capital projects:  Sufficient savings to reduce tuition costs by at least 10% per year.

For many years, a large number of Penn State’s capital projects have fallen under one or more of the following criteria:

a) Projects that may be congruent with Penn State’s missions but are inexplicably over-priced.  The $500,000 per unit costs of the Abington dormitory construction and the Fenske Laboratory replacement are two that jump to mind.  These are projects that could certainly be justified as being critical to Penn State’s missions but whose price was grossly distorted when compared to similar non-Penn State managed projects.   It is not a matter of “getting by with less”, it is an issue of not paying significantly more than what the building should cost.

b) Projects where a tremendously expensive building is constructed to replace a building that (according to Penn State administration) has fallen into disrepair due to neglect.   Proper ongoing maintenance, at a fraction of the cost, would have precluded the need to raze the old structure and incur huge expenses to rebuild.  Asset maintenance isn’t as glamorous as a ribbon-cutting ceremony, but it is a lot more cost effective.

c) Projects which do not further Penn State’s critical missions, such as building a new art museum.  The existing Palmer Museum of Art may not have rivaled the Metropolitan Museum in New York City, but it was more than adequate for serving the educational missions of Penn State’s College of Arts and Architecture without a $100 million price tag.

3) Budgetary Control: Sufficient savings to reduce tuition by at least 5% per year.

Penn State operates with tremendously bloated administrative overhead.  A recent study by the Chronicle of Higher Education showed that Penn State spends $364 million of tuition money each year on non-educational administration and overhead.    That is, by far, more than any of her Big10 peers.  Penn State also rewards administrators far differently than it does those who are directly involved in Penn State’s mission–her faculty and staff.

Beginning to bring the administrative bloat to a more reasonable level would realize a savings equal to 5-10% or more of tuition.  These savings can not only reduce tuition significantly, but can also improve Penn State’s flagging academic standing by re-directing those funds to mission-critical areas.

4) Becoming a true Partner with the Commonwealth of Pennsylvania:  Tuition reductions realized would vary based on the long-term success of the partnership.

The Penn State administration and Board often bemoan a lack of state funding.  And increased funding from the Commonwealth could, if properly utilized by Penn State, reduce tuition expenses.  But a partnership requires something more than Penn State Administrators going hat-in-hand to beg more money from the Commonwealth.  More money that, to be fair, the Commonwealth might be very concerned about Penn State spending efficiently. 

That is why I have proposed several objectives, including the introduction of in-state scholarships that would show a commitment to restore University Park’s in-state admissions to at least 60% (as opposed to the most recent entering class, which was only 52% in-state students), This will help halt Pennsylvania’s brain drain, and make sure Penn State is providing a high-quality education to Pennsylvania’s best and brightest minds.