Chancellor's Speeches

     Remarks of USM Chancellor William E. "Brit" Kirwan
  50th Anniversary of the College Board College Scholarship
                  Laguna Beach, California.
                   Sunday, January 11 2004
                         AS DRAFTED

Thank you.  It is a pleasure to be with you today and an
honor to serve as the opening speaker at this vitally
important colloquium.

I want to begin by congratulating the College Scholarship
Service on the occasion of its fiftieth anniversary.  For
five decades the CSS has helped open the doors to higher
education for countless young people.  But today your efforts
are even more important-and in many ways more
challenging-than ever before.  I am confident that fifty
years from now, when the CSS hits the century mark, it will
be said that your second fifty years had an even greater
impact on higher education.

I also commend the College Board for having the foresight to
convene such an impressive group of leaders from throughout
higher education.  Higher education is at a critical juncture
and the opportunity to explore in depth the plethora of
issues surrounding access to a post secondary education is
especially timely.

The final speaker on this first day will be Gasper Caperton,
President of the College Board.  Under his exceptional
leadership, the College Board has strengthened its core
programs, and embarked upon an impressive national effort to
encourage and inspire more young people, particularly those
from the least economically advantaged backgrounds, to make
college a part of their future.  I applaud his leadership and
this effort because access-and its companion,
affordability-will be the defining issues for higher
education in the coming decades.

I begin my comments with an assumption that I'm sure
virtually everyone in this room will endorse, namely, for
individuals and for our nation, higher education is the key
to success in the knowledge-based economy of the 21st
Century.  Our economy is now -- and will be increasingly --
dependent upon a well educated workforce and a steady stream
of new university-driven advances in the bio-sciences, the
information sciences, material science, nanotechnology and
other exciting fields.

This morning I will speak both about the broader trends and
developments affecting higher education and the need to re-
examine and rethink the issues of the cost of higher
education and the related topics of access, affordability and
financial aid.

By way of background, the University System of Maryland-where
I serve as Chancellor-consists of 11 degree granting
institutions as well as 2 specialized research centers.  We
enroll over 120,000 students (both full and part-time) with
over 6,600 faculty members.   I had the privilege of serving
as President of our flagship campus-the University of
Maryland College Park-for ten years.  I was also privileged
to serve for four years as president of The Ohio State

Over the past half century, higher education and its role in
society has undergone a fundamental change in the United
States.  The emergence of the international marketplace and
the reduction of trade barriers make it clear that the US can
no longer compete as a manufacturing economy.  Gone are the
days when a strong back and a sound work ethic all but
guaranteed a decent job and a good life.  The path to a high
quality of life - both for individuals and for our nation --
now requires knowledge, innovation and creativity on the part
of our workforce.  Our nation has been successful in making
the transformation from an economy built on muscle power to
one driven by brainpower and our institutions of higher
education-both public and private-have been largely
responsible for this success.

Indeed, the cornerstone for building the U.S. knowledge
economy has been the expansion of access to higher education.
In the first half of the twentieth century, college was
considered the private domain of an elite minority.  Since
then, with financial aid and greater public support, the
doors of higher education have been opened to larger and
larger numbers of people.  The U.S. was the first nation in
the world to "democratize" higher education. In 1960, for
example, approximately 45% of all high school graduates
continued on to college.  Today, the figure stands at nearly
70%.  Even more telling, in 1960 less than 8% of the
population of the United States over the age of 25 had
completed four or more years of college.  Today, that number
stands at almost 30%.   In my view, this transformation is
the crowning achievement of post-WW II America.  It has
provided the U.S. economy with the workforce necessary to
build the world's largest knowledge-driven economy.

It is important to digress for a just moment to make a point
that we must never forget: The value of colleges and
universities is not restricted to educating people for
success in the workplace.  Education for its own sake has
always been central to our mission.  An understanding of
history, an appreciation of art and literature, insight into
philosophy, and an awareness of world cultures are
indispensable aspects of a civilized society.  Yes, we have
an obligation to ensure that our graduates are prepared to
meet the rigorous challenges of the new economy armed with
the knowledge and skill they need to compete in an ever-
changing and increasingly-competitive workplace.  At the same
time, we have an obligation to make sure our graduates have
the cultural and intellectual underpinnings necessary to
enable them to take their place as enlightened and
progressive members-and leaders-of society.   As we face the
enormous challenges in the years ahead, we must never lose
sight of the fact that this dual responsibility is part and
parcel of our raison d'etre.

Ironically, just as higher education in the U.S. is at the
height of its success and is the envy of every other nation
in the world, so too is it at the zenith of adversity.  There
is a convergence of factors that make it increasingly
difficult for our colleges and universities to fulfill their
missions and meet their obligations to society.
One challenge we in higher education face is funding. We all
know that adequate funding is the life-blood of quality
higher education.  Attracting the best faculty in competition
with the private sector and -- increasingly -- universities
in other countries, developing state-of-the-art facilities
with cutting-edge technology, supporting the best and
brightest academic talent, expanding capacity to serve more
students, and meeting the growing demand for financial aid,
all require resources.  We have a self imposed expectation,
and the larger society also expects us to pursue excellence.
But, excellence comes at a significant cost!

With the economy struggling across the United States, state
revenues are down, giving and endowments are down, and -- as
a result -- financial support for public and private colleges
and universities is not keeping pace with rising costs.  But,
I fear that the dynamic at work is more than just a sluggish
economic cycle. There appears to be a troubling long term
trend at work.  Forces seem to be moving us away from the
very approach that has served higher education and our nation
so well.  There is a demonstrable shift in the public's
attitude away from thinking of higher education as a "common
good" to considering it more of a "private benefit".  By this
I mean, rather than states and the federal government
investing in higher education to make college accessible and
affordable in recognition of the fact that an educated
citizenry benefits the larger society, there is a dramatic
shift toward expecting individuals to pay a larger share of
the cost since - as the argument goes -- college graduates
have a significant increase in lifetime earnings power.  To
illustrate the longer term trend in higher education funding,
I note that in Maryland, from 1990 to the present--in
constant dollars--State support for higher education has
dropped from almost $7,900 per-student to less that $5,700
per-student.  That is a reduction in state support of almost
28% in less than 15 years.  Data from most other states shows
a similar pattern.

Paradoxically, this shift is occurring at precisely the time
when higher education institutions-both as centers of
learning and hubs of research-have never been so vital for
economic growth and for advancing the common good.  Indeed,
in the long run, it will be access to our higher education
institutions and their contributions to advancing knowledge
that will ensure a sound economic future and a high quality
of life.

But in state after state across the U.S., the story repeats
itself.  Budgets are strained by a struggling national
economy, the effect of recent state and federal tax cuts,
increasing healthcare costs, and mandated spending for
primary and secondary education.  Higher education is
generally the largest discretionary item in most state
budgets.  And higher education is facing a systematic-and I'm
afraid a long-term-withdrawal of public support.

California is often a "prequel" of what happens nationally.
And a quick review of the circumstances facing California's
public higher education system paints a very troubling
picture.  As an economic region, California has an annual
gross domestic product of $1.36 trillion-an amount equal to
one-sixth of the U.S.'s total gross national product.
California's GDP ranks fifth in the world, behind the U.S.,
Japan, Germany, and the United Kingdom.  This state's
economic leadership is matched by - in fact is a result of --
their leadership in the realm of higher education. Indeed, I
think most would agree that no state has better supported or
benefited more from higher education than California.

Yet, the University of California (UC) had their state aid
reduced by $410 million last year.  And I know Governor
Schwarzenegger just released a budget proposal for next
fiscal year that included additional cuts to higher
education.    Over the past three years, the UC state -funded
budget has already been cut 14%, while enrollment has
increased 18%.

In response to this budget crisis, the UC raised student fees
by 30%.  The impact of this is dramatic:  UC institutions
experienced some of the largest year-over-year tuition
increases in the country; and because of the budget cuts UC
has been forced to delay for at least one year the opening of
a new campus planned in Merced, Calif.

Perhaps most significantly, the UC is exploring enrollment
caps . . . proposing to turn away over 5,000 potential
freshmen students next year.  Under California's Master Plan
for Higher Education, the University of California has
guaranteed a place to all students who meet UC eligibility
requirements, either by graduating in the top 12.5% state-
wide or in the top 4% of their particular school.   But with
state budget reductions cutting so deeply into the University
- and with the Legislature explicitly stating that funding
for enrollment growth will not be available - that promise
could be fading.  And UC's sister-system, the CSU, may be
forced to deny admission to as many as 30,000 qualified
students next year because of their budget cuts.

On the opposite coast, we see the same issues in play.  In
Maryland, for example, state support for higher education was
reduced by 14% last year, erasing the budget increases of
recent years.  In real, not constant dollars, we actually
stand at the same state-funding level we did five years ago
when we served 8,000 fewer students.  A decade ago, state
support was the largest part of our total budget.  Today
state support is less than 25% of our budget and is actually
the smallest of our three main funding sources, being
surpassed by both tuition revenue and research grants.

Like most systems and universities across the US, the USM
used a combination of tuition increases and spending cuts to
address our budget shortfall, including the elimination of
some 800 positions, 4% or our workforce.  As a result, class
sizes grew; courses offerings were reduced; support services
have diminished; students are paying tuition at a level they
could not possibly have planned for when they began their
studies; and our ability to accommodate enrollment increases
is in doubt. If not reversed, these actions threaten the
quality of our campuses - a standard of quality that has
taken years to achieve.  Just as alarming, higher education
opportunities could be denied thousands of young people in
the future either because the costs are too high or the
capacity is inadequate.  I'm sure most of you in this room
have experienced a similar change of events in your states.

The second challenge for higher education is a sharp surge in
enrollment demand.  Although the impact is not evenly
distributed across the states, over the next several years,
we will see the "baby boom echo" reach college age.  Not only
will that population cohort be large and disproportionately
minority and low income, but laudable efforts are being
undertaken-both at the national level and on the state
level-to ensure that a greater percentage of these
individuals will be able to move on to college.  So, we in
higher education face the prospect of a growing percentage of
a growing population of youth, which is disproportionately
economically disadvantaged, expecting to continue their
education at the very time when public investment in higher
education is sharply declining.  And this does not even
factor in the huge growth we anticipate from a growing
population of life long learners.

Consider that the Census Bureau projects that over the next
decade the "college age" population (18 - 24) will grow by
over 12%.  According to a survey conducted by the National
Center for Education Statistics, college enrollment will grow
at a somewhat faster rate of 16% over those same ten years.
In Maryland, we anticipate an even greater enrolment increase
of almost 25% over the next decade at our public colleges and
universities.   And, as I mentioned, the rate of growth among
the minority student population is expected to be

These two realities -- reduced funding and surging enrollment
-- threaten our colleges and universities, and are in
conflict with the overall heightened expectations placed upon
our institutions with regard to workforce preparedness and
economic impact.  We are, in fact, facing a "perfect storm."
But the greatest threat posed by the double whammy of
declining public support and rising enrollment demand is to
the future well being of our nation.  Imagine living in an
America where the ladder of opportunity which, higher
education represents, is not available to thousands of
qualified young people from the lower end of the economic
spectrum.  Imagine living in an America where, because there
is an inadequately skilled domestic workforce, industry must
export jobs or import workers to sustain our knowledge-based

Besides cursing our fate and wringing our hands, what should
we in higher education be doing about this situation?  What
actions should we be taking to address the enormous
challenges facing our institutions and meet our
responsibilities to our communities and our nation?  What
steps can we take to rebuild public support for our mission?

There are, of course, many things we can be and are already
doing.  My sense is, however, that for the most part these
actions are institution or system specific, uneven, erratic
and uncoordinated.  There is no unifying national agenda to
unite higher education - public and private, two-year and
four-year institutions.  While it would be presumptuous of me
to propose such an agenda, I do have several actions that I
think should be part of a common agenda for most colleges and
universities.  I will conclude my talk by describing four of
these to you.  I make no claim of originality with any of
them.  For the most past, they are things I've discussed or
heard discussed in other forums.  Taken together and as part
of a comprehensive agenda for higher education, however,  I
think they could make a huge difference in addressing our
twin challenges of protecting and building quality - on the
one hand -- and accommodating expanding demand  during this
period of declining public support on the other.  My first
item is a concerted effort on our part to

  1.   Contain costs.  We in higher education have a reputation
     - not entirely undeserved if we are honest with ourselves -
     for being somewhat inefficient in our operations and in the
     management of our resources.  Some of the criticism is
     undeserved.  "Best practices" from the business world are
     often inappropriate in our world.  We could be more
     'efficient' by increasing class sizes, eliminating low
     enrollment majors like philosophy, or restricting library
     hours.  But such actions would run counter to core values in
     Nonetheless, there are areas were savings can occur
     without compromising quality and most universities are
     today engaged in efforts to realize at least some cost
     reduction.  The problem is that we have no benchmarks or
     "best practice norms" to guide our efforts.  What
     fraction of our budgets should we be spending on
     administration, academic support, or deferred
     maintenance?  Obviously, the answers to those questions
     will vary from institution to institution.  But, surely,
     it would useful to have some national standards to serve
     as benchmarks by category of institution...comprehensive,
     research extensive, research intensive, etc.
     Fortunately, the University of Illinois is engaged in a
     project to do just that.  Using outside consultants,
     they are surveying expenses by category for research
     universities to establish a data base upon which norms
     or "best practices" might be established.  Done well, I
     believe such measures would be enormously useful, not
     only as a management and budgeting tool but also as a
     means of responding to critics about our management
     We at the University System of Maryland have taken
     several steps aimed at reducing costs.  For example, we
     use the buying power of the entire system to create deep
     discounts on purchases of computer equipment, software
     and other goods and services.  We estimate that that
     this past year a system-wide agreement with Microsoft
     saved us more than $15 million in software purchases.
     We are also re-engineering our administrative operations
     to make them more cost effective.  In addition to
     individual actions on each of the campuses, we are
     exploring ways to create consolidated, system-wide
     service centers - for facilities and construction
     management, auditing and accounting, purchasing and
     other service areas were a single center can serve the
     needs of all the system institutions, as opposed to
     maintaining 13 separate offices on each campus.
     My basic point is that we do need to rigorously and
     systematically look for cost saving measures that do not
     impact the quality of our institutions both as a means
     of holding down the rates of tuition increases and
     strengthening our case for better public and donor
     funding.  The public needs to be assured that we
     recognize the new realities of our nation's economic
     circumstances and that we are systematically and
     aggressively taking steps to optimize the use of
     available resources.  This is essential if we are to
     have any hope of regaining former levels of public
     confidence and support.

  2.   Find lower cost alternatives for course and program
     delivery.  For most universities, course and programs are
     delivered today pretty much as they were decades, even
     centuries ago.  While we have enriched the learning
     experience through investments in information technology and
     while IT has become a powerful learning and research tool, I
     think it is fair to say that we have only scratched the
     surface in the use of IT for the delivery of course modules,
     entire course or even degree programs.  Surely, this is a
     fertile area for development.
     The Carnegie Foundation recently funded about a dozen
     schools to experiment with the use of IT to reduce the
     cost of course delivery.  Ohio State had one of these
     awards during the time I was there.  At OSU, the
     university used online instruction to eliminate
     recitation sections in some freshman survey courses in
     statistics.  It was a controlled experiment because
     several sections were done in the traditional mode.  By
     all accounts the experiment was a great success...lower
     costs with no reduction in student performance.
     The University System of Maryland is fortunate to be
     home to the University of Maryland University College,
     arguably the leader in the development of online
     education.  With over 85,000 course registrations, UMUC
     has the largest number of online enrollments in the
     world. When UMUC thinks about expansion, it is does so
     without the burden of planning and building new
     facilities.  Rather, it invests in IT infrastructure and
     capacity.  One of UMUC's great strengths is its ability
     to respond quickly to the needs of the students online,
     anytime, anywhere.  It will soon be the largest
     university in our system not just by head count but in
     FTE students.
     UMUC has entered into a remarkable agreement with every
     community college in Maryland.  Under this agreement, a
     community college and UMUC can guarantee students
     enrolling in the community college that if they complete
     the two-year college prep curriculum, they can complete
     a four-year degree from UMUC right there at the
     community college drawing upon UMUC's online and on-site
     course delivery capabilities.
     We are exploring other innovative, cost effective
     approaches.  A few years ago, the USM established a
     single facility in an underserved region of our state.
     Eight separate USM institutions have come together in
     this location-under one roof-to deliver low cost access
     to a range of different USM programs selected to meet
     high student demand in areas such as biosciences,
     information sciences, business, nursing, and education.
     A local community college provides the lower division
     course work and each of the participating institution
     provides regular faculty and academic support services
     to the center.  Students earn their degrees from the
     institution offering their particular programs.  This
     model has been so successful and well-received, that we
     are in fact replicating it in a different region of the
     Between UMUC, its partnerships with the community
     colleges, and our educational centers, we anticipate
     that we can accommodate approximately 2/3 of the
     projected enrollment growth...and at a small fraction of
     the cost it would take to educate these students at a
     traditional campus.  This will be a huge boost in our
     efforts to both serve the needs of the state and protect
     the quality of our existing campuses.

  3.   Redirect financial aid programs to merit aid based on
     need.  Financial aid is obviously the most important tool we
     have to address access and affordability.  My concern is that
     we are not using this tool properly today.  From the time
     financial aid programs began to become common fifty years
     ago, and through the 1960s and 1970s, they were almost
     exclusively aimed at students who would otherwise not be able
     to afford college.  Even in the 1980s, when merit scholarship
     began to grow both need-based and merit based aid grew in
     parallel.  All that changed in the early 1990s.  With the
     introduction and subsequent expansion of the HOPE Scholarship
     Program and its counterpart in other states, there was a
     turning point.  Since 1993, need-based aid has seen a very
     modest increase while merit-based aid has virtually exploded.
     In 1993, merit-based aid represented less than 10% of state
     financial aid; today it stands at over 25%.  That is an
     enormous shift in less than 10 years.  Unfortunately it has
     occurred at the expense of, not in parallel with growth in
     need-based aid.
     The reasons behind this shift were all laudable: to
     attract outstanding students; to keep bright students
     from leaving the state; to reward academic achievement;
     and to ease the financial burden on middle-class
     families.  As president of the University of Maryland
     College Park back in the early 1990's, I was leading the
     charge in promoting merit aid as a means of recruiting
     the best students coming out of Maryland's high schools.
     But, collectively, we have gone too far in this
     direction. Aid based only on merit is now crowding out
     funding for meritorious students who have real need for
     scholarships.  The fact is, for the most part, merit aid
     has the effect of subsidizing students who are already
     college bound.   Indeed, I have read where one of the
     primary beneficiaries of Georgia's HOPE Scholarship
     Program has been the state's automobile dealers.
     Parents offer their HOPE-eligible children a car if they
     opt to accept the scholarship and stay in-state; a far
     less expensive proposition for most parents.
     To make matters even worse, many of these HOPE programs
     are funded through state lotteries, which have been
     proven to be a regressive "tax" on the poor.  So we
     actually have a situation where low-income families are
     subsidizing the higher education of middle and upper
     income families.  That simply makes no sense from either
     an ethical of practical perspective.
     We are also responsible for creating a false dichotomy
     with our aid programs.  Need-based aid already takes
     "merit" into account.  By gaining acceptance to an
     institution, the student has to meet certain
     requirements...has to demonstrate merit.  We are talking
     only about college-qualified, college-capable students.
     Most merit aid does not incorporate a similar
     requirement to demonstrate need.  And so we find
     ourselves in an indefensible place where the highest
     achieving poor students attend college at essentially
     the same rate as the lowest achieving wealthy students;
     about 78%.
     I am not so nave as to think that universities across
     the country are going to abandon need-blind merit aid.
     I do urge two things, however.  First, as tuition rises,
     universities should commit to holding need-based aid
     recipients harmless.  We did this at Ohio State and I am
     urging a similar practice within the University System
     of Maryland.  Second, future growth in all financial aid
     programs should target merit aid based on need.  From
     past experience, I can say that such programs have
     enormous appeal with donors and legislators.  This is
     the direction I intend to move the University System of
  4.   Develop a new and united approach on federal financial
     aid.  The Pell Grant has been our nation's primary "work
     horse" for need-based aid. At one point in time, it served
     our nation's neediest students and our universities extremely
     well.  In the 1970's, it provided about 70% of the average
     cost of attending a public university in the U.S.  No more. I
     believe that figure is down to about 30% today.  Although our
     nation's higher education institutions, through their various
     DC based associations, recently made a concerted effort to
     get a substantial increase in the Pell Grant, these efforts
     produced negligible results. Unfortunately, I'm not
     optimistic that support on the Hill or in the White House for
     the traditional Pell Grant will change soon.   While we must
     continue to press the case for the Pell Grant, I believe a
     new approached is needed.
     Quite frankly, this is an area where we must look to the
     College Board for leadership.  Through some quirk of
     circumstances, I will be chair of the Board of both
     NASULGC and ACE this year.  I pledge my efforts to get
     these two organizations to work with the College Board
     on the development of some new federal financial aid
     One idea I have is to create a matching, need-sensitive
     aid program with the states.  In my view, many states
     have shirked there responsibilities with need-based aid.
     Perhaps Congress would be willing to increase its
     investment in financial aid if it knew that such dollars
     would leverage increased state financial aid
     investments.  And this brings me to my final point.  It
     really is the national and state governments who must
     take the primary role in fixing this financial aid
     problem.  It is unrealistic to think that universities
     can ever be the primary source for financial aid to
     needy students.  Through some of the steps I have
     suggested, we can be a ready and willing partner with
     government but it is in the nation's and our states'
     vital interests to see that every qualified student has
     a chance to earn a college degree.  For although a
     college degree is a personal benefit, there is no
     question that in the knowledge-based economy of the
     future, a highly educated citizenry is -- most
     definitely -- a common good.

Fifty years ago, when the College Scholarship Service was
born, the nation faced higher education challenges that are
surprisingly similar to those we face today: surging
enrollment; inadequate capacity; and enormous financial
barriers restricting access for the less affluent.  Through a
spirit of collaboration at the federal, state and
institutional levels, we addressed the challenges and
provided affordable access to a remarkable system of higher
education.  It is time for a renewed effort of collaboration.
We must work cooperatively with leaders in Washington and in
our state capitols once again and find the means to insure
access to high quality collegiate experiences for a bulging
new generation of qualified students.  Nothing less than the
future well being of our nation is at stake.  The Federal
Government must expand its commitment to aid for the
economically disadvantaged.  State governments must place a
greater focus on providing aid to meritorious, needy
students.  And campuses must recognize their obligation to
holding down costs without compromising quality and to
protecting need-based aid from erosion due to tuition
increases.  Failure on the part of anyone of these three
entities to meet their responsibilities in this area will
compromise the social and economic future of our nation.  The
challenges are daunting, but not unprecedented.  The ability
to overcome these challenges is within our reach if we just
have the will and the spirit of cooperation to do so.