Page 37 - Crisis in Higher Education

12 • Crisis in Higher Education

tuition, special fees, books, room and board, and miscellaneous expenses
such as entertainment and smartphone access. Some of these payments go
to the institution, whereas others go elsewhere. Revenues to the institutions
are used to assemble resources including faculty, facilities, technology,
administrators, support services such as financial aid and advising, and
ancillary services including on-campus housing and sports programs.
There is a competition among institutions for the best students, which can
lead to extensive discounting of costs through scholarships offered by the
institutions. These aspects of higher education are similar to ways other
organizations produce and sell their goods and services.
However, a close examination of the framework in Figure 1.1 shows
key differences between higher education and other organizations. These
items are discussed in the following sections.

1. Two demand–supply relationships: There is one demand–supply rela-
tionship with applicants who desire to attend institutions of higher
learning and another with organizations who want to hire their
graduates.
2. Multiple payers: These relationships are confounded by the fact that
higher education has multiple payers: students, parents, other fam-
ily members, friends, and governments, as well as scholarships from
various sources and donations from foundations and other entities.

Environment: Government subsidy and regulation plus accreditation standards
Institutions of higher learning
Demand and Expenses Resources Demand and
supply #1 Tuition Faculty and tenure supply #2
Special fees Facilities
Books and Learning Technology
materials Administration
Room and board Support services e.g. Organizations
Applicants Miscellaneous e.g. • Financial aid that hire
• Entertainment • Advising graduates
• Phone Ancillary services e.g.
• On campus housing
• Sports

Multiple payers:
Students Parents, other family members, and friends
State and local subsidies (public institutions) Federal subsidies
Scholarships (various sources) Foundations

FIGURE 1.1
Framework for higher education.