The audience’s discontent was palpable inside Tishman Auditorium on the evening of December 8 as New School President David Van Zandt made his introductory remarks at The Future of Higher Education conference’s keynote panel discussion. As Van Zandt began to introduce a panel that included CUNY Chancellor Matthew Goldstein and Cooper Union President Jamshed Bharucha, he was suddenly interrupted by waves of loud coughs, as members of the audience attempted to prevent the president from being heard.

CUNY, Cooper Union, and The New School are all considering increases to their cost of attendance, but it was Goldstein who targeted the most ire. The CUNY Board of Trustees recently voted in favor of an annual $300 increase in tuition until 2015. The vote, passed on November 28, resulted in furious protests by the public institution’s students and faculty. But the unrest among CUNY students and faculty is only one aspect of a economic reality affecting students across the nation.

As millions of Americans deal with the fallout from the global financial crisis, the cost of higher education in the United States has continued to rise. The Occupy Wall Street protests have brought the gravity of students’ financial hardships to the fore — the dreary future of a fumbling job market only worsened by the extreme burden of student debt. According to College Board, the non-profit educational membership organization, tuition for a four-year college has inflated four times faster than the cost of living since 1978, which has contributed to an explosive growth in student loan debt. The Federal Reserve Bank of New York reported in October that student debt was on pace to reach a trillion dollars, outstripping credit card debt for the first time. Student loans are the only kind of personal debt that has grown since the economic collapse in 2008.

The egregious problem of tuition across all sectors of higher education, in combination with the stagnant economy, is clearly a stark reality for college students. What is less clear is what has caused tuition to become so impossibly high. At The New School, students, professors, and administrators were asked to weigh in on this question.

An examination of the financial state of higher education does not reveal a malevolent plot by rapacious trustees swimming in cash —there is no particular person or institution to blame. Nor is there one singular reason for the exorbitant cost of tuition. But there is widespread frustration with a system that lacks regulation and has no prospect of changing as long as students continue to pay up. In classic American fashion, institutes for higher education are in a race to be the best, and students who want to achieve economic prosperity are willing to take on debt and decades of ramen noodles in hopes of eventually getting the career that will provide them with such success.

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Substantially less regulated by the federal government than their counterparts abroad, universities in the United States have a remarkable amount of budgetary freedom. Before coming to The New School, Provost Tim Marshall served as an administrator at the University of Western Sydney in Australia. Marshall explained that in most other countries, the amount universities spend on faculty salaries, resources, and facilities is set by the government, which creates a set standard for their quality. America’s unregulated higher education system has helped create a high degree of quality compared to universities in other countries, but it has also led to an rapid growth in the cost of a college education.

“In the U.S., the institutions are competing on all of these different levels — quality of space, quality of faculty, quality of service,” Marshall said. “And if you keep ramping that up as you compete, then it just becomes exponential — there’s no break on it.”

Marshall said there were both advantages and disadvantages to the way universities in the United States are run.

“The unregulated environment has enabled people to innovate and get the best people and use the whole world as a kind of talent pool, which has been remarkably successful in many ways,” he said. “It’s allowed the U.S. to lead higher education. But there are system issues that have resulted from that, which are leading to [rising tuition] — because then you set up this competitive race.”

Andrew Gillen, the research director from the Center for College Affordability and Productivity, described what is known as Bowen’s Law as the central reason for tuition increase. The law, named after economist and university administrator Howard Bowen, states that universities will spend all of their revenue in order to gain prestige.

“Schools always need more money because they’re always trying to climb the quality ladder,” Gillen said. “Schools have an insatiable need for money, and tuition being one of the [primary] sources for money means that schools will pretty much always raise their tuition as much as they can get away with.”

As opposed to universities with sizable endowments, private not-for-profit schools with tuition-based revenue like The New School rely almost entirely upon tuition and fees paid by students. Because of this reliance, enrollment is a top priority.

The New School’s enrollment has increased over 45 percent since the beginning of the decade, with most of that increase coming in the form of undergraduates. Enrollment was flat for the first time this year, with only 22 more people attending The New School than last year. Such stagnation has the capacity to put a financial squeeze on the institution.

President David Van Zandt said the university indeed feels pressure to compete with other universities in order to increase enrollment.

“The way universities compete is they take the extra money they get from tuition increases and they compete by having better facilities,” Van Zandt said. “And because tuition has gone up, they have had more money to compete for top quality faculty. That has driven up the cost tremendously.”

At The New School, faculty salaries and departmental research accounted for the greatest percentage of school’s annual expenses —about 37 percent in the 2010 fiscal year, according to the university’s financial report. The second greatest factor was institutional support, buildings, and admissions operations — which attributed to almost 25 percent of expenses.

Gillen said that the cost of faculty salaries will continue to rise annually as long as the cost of living increases, describing this as Baumol’s cost disease.

“You have to pay professors and staff more every year so their standard of living doesn’t decline,” he said. “If you don’t pay them more then they’ll go elsewhere.”

At The New School, the student to faculty ratio is minimal; there are 9.3 professors to each student, according to the 2010 Fact Book, which is released by the provost’s office every year. For many students, a close relationship with faculty ranks among most valuable aspects of their education.

“I think the reason why tuition is so expensive is because of the personal connection and interaction with our professors and classmates,” said Lang freshman Marissa Alberts, who pays her own tuition with the help of financial aid. “The small seminar classes have benefited me so much.”

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