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Financial transparency bill looks to pass in Ohio

An increasing focus on the cost of higher education may soon have some colleges and universities looking for cover. In Ohio, a bill making its way through the state legislature in the name of financial transparency would require higher education institutions to provide a disclosure notice to all students that includes:

  • Tuition, room and board costs, special fees and mandatory fees
  • Grants, scholarships, loans, and work study funds, as well as information about whether and how these funds can be lost
  • The salary range of the institution’s graduates in the second and third quartiles immediately following graduation
  • The salary range of the institution’s graduates in the second and third quartiles five years after graduation

This “Higher Education Return on Investment Act” is likely to pass. It’s also likely to spur other states to demand that colleges and universities provide similar information to their higher education students.

The growing movement toward financial transparency will not end there. State laws may soon require educational institutions to explain what all fees and charges are used for, regardless of what they are called. In this environment, WCC would either be required to spend the proceeds of its new “technology infrastructure fee” on the school’s technology infrastructure (only), or it would be required to refrain from mislabeling money destined for the general fund as anything else.

Politicians know a winner when they see one, and pounding on the frivolous expenditures of colleges and universities is just too good to pass up. This “transparency” could be extended to how much of each credit hour goes to pay for college and university executives, versus how much goes to pay for direct instructional costs. Or how large the university’s maintenance backlog is and whether the school’s enrollment is rising or falling.

Financial transparency won’t stop with simple disclosures

I say the bill is likely to pass because no one in their right mind is going to argue for less financial transparency from institutions that have been historically opaque about how they arrive at the cost of tuition, room and board, and fees.

For a while, colleges and universities have disguised tuition increases as “fees” to avoid saying that the cost of attendance was going up again. And since students can use most financial aid and private scholarships to pay for fees, the ever increasing fees have become an indispensable source of cash for colleges and universities that want to play semantic games about whether they’ve raised the cost of their tuition. Eastern Michigan University played this game until the cost of their fees each semester rose to nearly the same level as a credit hour of tuition. Once the fees get that high, it becomes uncomfortably hard to explain what all the extra money is for, especially when most of it goes directly to the General Fund.

In a political environment that is growing increasingly hostile toward higher education, institutions would do well to start taking a critical look at their expenditures. It will not be long before the state legislature starts demanding answers in the name of increased financial transparency.

Photo Credit: SilvisionA , via Flickr