This week the University of Virginia’s Miller Center for Public Affairs sponsored a public debate of higher education leaders from across the country in Washington D.C.

The debate focused on the current higher education business model, defined within the context of the debate as:

Since the mid-1980s, the costs of higher education in America have steadily shifted from the taxpayer to the student and family. As state funding has dwindled, colleges and universities have sought to fill these gaps through a variety of avenues, including philanthropy and research support, but the area of highest growth has been tuition. The share of institutional budgets provided by tuition increased from 22% in 1985 to 36% in 2005. As state budgets slip further into structural deficit, there is no reason to think this trend will reverse itself.

These costs are rapidly outstripping the ability to pay. Residential students are now looking at an annual cost of roughly $20,000 per year for a public institution, and nearly $40,000 per year for a private institution. While median family income between 1982 and 2006 rose by 147%, college tuition and fees soared by 439%. Even with financial aid, the concern is that these trends will discourage many low and middle income young people from considering college a realistic option, thereby lowering our national educational level, reducing future economic growth, and undermining the promise of equal educational opportunity. Is this the natural evolution of the educational marketplace, or is the business model of higher education broken?

Proponents of this statement, including Gail Mellow, President of LaGuardia Community College and William Kirwan, Chancellor of the University System of Maryland, argued that higher education financing is indeed fractured.  Higher education institutions, in other words, though technically solvent, are not meeting the public purposes of access, opportunity, affordability, completion, and international competitiveness required of them.

According to Chancellor Kirwan, “…state budget cuts are harming many colleges and universities…that the nation’s production of college graduates will remain flat without an extensive re-engineering across higher education.”

Those who oppose this statement, including Richard Levin, President of Yale University and Daniel Hamburger, President and Chief Executive of DeVry Inc., strongly suggested that the existing higher education business model is working. Both higher education leaders cited current enrollment levels.

Both leaders noted that China and India look at the U.S. with envy with regard to the diversity and flexibility of the nation’s higher education system. “The strength of our system is its diversity and its flexibility,” stated Hamburger.

The debate was followed by a question and answer period. The questions ranged in scope from college costs to the achievement gap.