Scott Fitzgerald Details Recent Rising Higher Education Costs, Shrinking Class Sizes

Forbes Breaking News

During a House Judiciary Committee hearing on Wednesday, Rep. Scott Fitzgerald (R-WI) spoke about the rising cost of college tuition.

Transcript

00:00Time. We welcome everyone to today's hearing on collusion in higher education.

00:05Without objection, I ask unanimous consent for Mr. Nails to be permitted to participate in this

00:11hearing to question the witnesses if a member yields him time for that purpose, of which

00:17I will yield him five minutes. I'll now recognize myself for an opening statement.

00:24According to the National Center for Education Statistics, U.S. colleges and universities

00:30are a $700 billion industry. Harvard endowment alone, which stood north of $50 billion as

00:41of 2023, is larger than the GDP of 120 nations. Six of the eight Ivy League schools have endowments

00:49exceeding $10 billion. Ivy League schools should be competing to offer the best product at

00:55the best price possible. Instead, they collude to raise prices and spend their inflated cartel

01:01earnings on administrative bloat. According to the Bureau of Labor Statistics, while products

01:09like cars, clothing, and TVs have become more affordable as businesses reduce costs to attract

01:15buyers, the cost of college tuition and textbooks has risen by more than 180% and respectively continues

01:24to go higher. Today, the cost to attend an Ivy League school can exceed $100,000 per school year.

01:31Ever since the Ivy League was established in the 1950s, these schools have been focused on exclusivity,

01:39maximizing profits, and artificially inflated prestige rather than expanding access to education and

01:45serving students. In 1950, Harvard charged $600 a year for tuition. Today, that number is nearly $60,000.

01:56Not only has tuition skyrocketed, but these schools are also deliberately keeping class sizes small

02:03to maintain exclusivity and inflate their perceived prestige. Between 1978 and 2023, while the U.S.

02:11population grew by just 50% and the number of applicants increased by 450%, Harvard reduced its class

02:19sizes by 258 seats. Across all Ivy League schools, demand is steadily increased, yet admissions remain flat. As you

02:30can see from the graph displayed, although each Ivy League school on average receives more than 50,000

02:37applications, it accepts less than 2,000 students per year. These price increases and shrinking class

02:45sizes are not coincidental. Ivy League schools have a history of coordinating pricing practices to avoid

02:52competing on cost. In 1958, MIT and the eight Ivy League schools formed what is widely known as the

03:01quote, Ivy Overlap Group, a cartel to fix prices. These schools agreed to use a shared formula for calculating

03:10financial aid, ensuring students admitted to multiple schools would pay the same price no matter where they

03:17went. In 1989, the Department of Justice began investigating these practices and ultimately filed an

03:24antitrust lawsuit. By 1993, all nine schools had settled. In response, Congress adopted Section 568 of the

03:33Improving America's Schools Act of 1994, granting colleges an antitrust exemption, provided they did not

03:41consider a student's ability to pay while making admissions decisions. In 1999, elite schools formed a new

03:49cartel, the 568 President's Working Group. The goal was the same, to create a shared financial aid formula

03:57and not compete for students based on price. Even with a legal exemption, these elite schools still chose

04:05profit and prestige over access and fairness. In 2022, former students sued many of the Ivy League schools

04:13for colluding on financial aid formulas that favored wealthy applicants. In one internal document

04:20uncovered through Discovery, a college administrator complained about not being able to find enough

04:25qualified students with well-off parents to pay the high sticker prices. She said, quote,

04:32sure hope the wealthy next year raise a few more smart kids. Ivy League schools can maximize the price paid

04:41by each student using detailed financial data collected through the college scholarship services profile

04:48or the CSS profile. It is a comprehensive financial aid form that most colleges do not require. The CSS profile

04:57gives these schools access to sensitive information including family home ownership, savings and retirement

05:04accounts, and more. With that information, they can determine how much a prospective student's family

05:11can apparently afford to pay and then charge them that amount. Despite valuing their degrees,

05:18at nearly $400,000 having multi-billion dollar endowments and receiving billions more in taxpayer funding,

05:27these schools don't prioritize accessibility or quality of education. They prioritize profit and prestige.

05:35And even though the Ivy League schools no longer have an antitrust exemption to coordinate on pricing,

05:41tuition continues to skyrocket. By setting the industry standard for tuition,

05:46the Ivy League creates an umbrella effect that allows other colleges to charge more than they could

05:52in a competitive market. Today, we are starting an overdue conversation about how the Ivy League's

05:59anti-competitive practices may harm students, taxpayers, and ultimately our country's future. I want to thank the

06:06witnesses again for appearing before us today and I look forward to your input. I will now recognize the

06:13ranking member Mr. Nadler for his opening statement. Mr. Chairman, before before I start my opening statement, let me uh

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