Study Criticizes College Cost Structure : Education: Report says the current system saddles low-income students with massive debt. A panel is formed to explore solutions.

Barring a radical overhaul of the nation’s higher education financing system, a whole generation of low-income students will soon be priced out of the college market, according to a study made public Thursday by the Council for Aid to Education.

The sharply worded report, “Investing in American Higher Education: An Argument for Restructuring,” warns that decreases in public funding have made the nation’s colleges less and less accessible to nonwhite, non-wealthy students.

But the report stresses that higher education’s problems go far beyond the need for more money and require dramatic changes in how resources are used and perhaps even in the public’s expectations about colleges and universities.

“How ironic that education is enshrined at the heart of this nation’s historic promise of opportunity, yet our public policy fails to provide adequate subsidy for it,” says the report, which describes as “perverse” a system that saddles many low-income students with massive debt.

The report’s release accompanied the announcement of a new 14-member panel, formed by the New York-based Council for Aid to Education, that will attempt to find ways to make high-quality college education more affordable.

The panel, called the Commission on National Investment in Higher Education, will be headed by former New Jersey Gov. Thomas H. Kean and McGraw-Hill Chief Executive Officer Joseph Dionne, and includes other corporate and higher education executives such as Cal State Chancellor Barry Munitz.

Over the next several months, the commission will consider the problems described in the report. Among them are reduced public funding, rising tuition and fees and a growing confusion about what a high-quality education really is.

By fall, Kean said, the commission will draft its report, including a detailed blueprint for restructuring the way public and private and corporate money is used in higher education.

“It’s not a commission formed just to say, ‘We need more money.’ It’s really a commission formed to recommend policy. We have no policy in this area,” said Kean, who is president of Drew University in New Jersey, where he sees firsthand how students are affected.

“It just breaks your heart when you talk to these kids,” he said, noting that several students have recently told him they must quit school, and another student’s parents lost their home to foreclosure in order to keep paying college bills. “I don’t think policy-makers are trying to do that. But that is the unintended consequence.”

The new commission is hardly the first group to sound the alarm about the increasing indebtedness of the nation’s college students. A recent study by the American Council on Education, for example, reported that from mid-1993 to mid-1994 the nation’s students and parents borrowed 41% more than during the previous 12 months.

What appears to set this commission apart is that it reaches outside academia, drawing on the expertise of people from several disciplines in order to challenge the underlying assumptions that shape higher education financing.

“This may be the only group in the country that’s looking at these issues with a mix of political, corporate and academic leadership,” said Munitz.

The Council for Aid to Education report, which is the base from which the panel will begin its work, asserts that a willingness to rethink the “givens” of higher education funding is essential to success. It suggests there may be a growing misalignment between where money is spent and where it is needed.

For example, The report notes that three-fourths of corporate support for higher education goes to research and doctoral institutions, most of which are in relatively good fiscal condition.

“Perhaps some of the corporate dollars invested in research would be better spent funding undergraduate teaching and learning,” the report says.

The report also addresses the public’s changing expectations of higher education. Traditionally, the report says, college has been seen as preparatory to a career, with an explicit commitment to intellectual development.

Now, however, the report says, higher education is increasingly “expected to provide a replacement for high school, with major responsibility for high school level education.” And instead of merely preparing students for work, “it now is expected to provide education for career continuation and self-improvement through life.”

Munitz said that part of the commission’s focus will be on re-establishing accountability between institutions of higher learning and the public they serve.

“There seems to be a genuine worry that there’s a disconnect between why people are sending us money--alumni, legislators, corporations and students and their families--and what in fact is happening to that money,” he said.

Kean agreed. “We need to know what we’re doing, what the money is going for, who is paying the costs,” he said. “We shouldn’t be resisting accountability. We should be welcoming it, because then the public will have confidence in what we do.”