Testing tuition's limits.

Byline: The Register-Guard

If higher education is a product and students are its consumers, Oregon universities have long been underpriced. The University of Oregon and its sister institutions have been able to raise their prices steadily, and the customers just keep on coming.

The UO's report on fall enrollment, however, could mean that the price of higher education has reached the point at which buyers begin to show resistance: Enrollment is down slightly from last year. That should be a sign to legislators that they have reached the limits of a decade-long policy of shifting higher education expenses from the taxpayers to students. It should also be an occasion to re-examine the wisdom of charging whatever amount students are willing to pay.

In 1989-90, the state general fund provided 34 percent of the budgets for the Oregon University System, while tuition and fees provided 18 percent. The system's seven public universities had a combined enrollment of 65,167. Today, the state provides 28 percent of the schools' budgets, and tuition and fees cover 21 percent. Despite the shift, enrollment in the system climbed to 101,920 in 2000-01.

The financial shift at the UO has been even more dramatic. In February, UO President Dave Frohnmayer told the Portland City Club that the state's share of his school's budget has dropped to 17 percent from 32 percent a decade ago. Yet at the time he spoke, the UO had enrolled the largest freshman class in its history, and those freshmen had better average high school academic records than any class that came before it.

A legislator might reasonably conclude that higher tuition has not deterred students from seeking a college education - if anything, the result of tuition increases has been more and better-qualified students. And indeed, legislative decision-making since Frohnmayer's speech might as well have been based on the notion that the higher tuition goes, the better off Oregon's universities will be.

Part of the explanation for Oregon's ability to increase the financial burden on students without breaking their backs is that other states have also been raising tuition. The UO fares poorly in cost comparisons with other Western universities. But among the 34 public universities that are members of the American Association of Universities - an organization representing the leading research institutions in the United States and Canada - the UO's tuition ranks 27th.

Another part of the explanation lies in the fact that if higher education is a product, it's a product unlike any other. After the AAU held its meeting in Eugene last week, John Casteen, president of the University of Virginia and chairman of the organization, said that many people will save money by staying at a Motel 6 rather than the Four Seasons Hotel, even if they can afford both places. But no one, he said, goes looking for the cheapest, worst college they can find.

Students understand that whatever they invest in their higher education will be repaid in future income and in their quality of life. With that understanding, students make a rational decision to attend the best college that will admit them, despite the availability of less expensive options. As tuition rises, some students will be priced out, but many more will take on ever-larger debts or do whatever else it takes to obtain all the advantages in life that a college education brings.

Legislators will be making a mistake if they conclude that there's no ceiling on tuition. The UO may be bumping up against that ceiling already. But far more important, the advantages that students obtain from higher education are broadly shared. The state and the country are enriched as well. State support for higher education is not a gift to students who might be able to afford college on their own. It's an investment - indeed, the best investment in economic development and civic betterment that a society can make.

The leveling off of UO enrollment could mean that the UO is finally charging close to what the market will bear. But legislators who think that getting a college degree should cost one dollar less than the total future increased earnings it brings are missing the big picture. The state would still be making a good investment if higher education were wholly supported by the general fund, and tuition were reduced to zero. The benefits of higher education flow to everyone, and so, too, should the costs.