Edition: U.S. / Global

Education; The Cost of a Degree: Counting the Factors

Published: March 23, 1988

At a recent discussion of forthcoming college tuition increases, the president of Kalamazoo College in Michigan raised some eyebrows among his colleagues by declaring that he was considering writing an ''honest letter'' to parents for the first time.

''It's not that my previous letters have been dishonest,'' said David W. Breneman, the president. ''It's just that I haven't gone into a lot of the details.''

Mr. Breneman said that an ''honest letter'' to parents would acknowledge that college tuition is a reflection of marketing considerations as well as inflation.

''I'd also talk about the strategic plan we have to make Kalamazoo into one of the better liberal arts colleges in the country and how this will cost money,'' he said. Up Faster Than Inflation

Most private colleges and universities are increasing their charges by 6 to 8 percent for next fall, making this the eighth straight year that the cost of education has gone up faster than general inflation. In many cases the tuition increases will be more than double that of the Consumer Price Index, now about 4 percent.

Such whopping increases have stretched the wallets of college students and their parents and given William J. Bennett, the Secretary of Education, one of his favorite political issues.

Mr. Bennett's Deputy Under Secretary, Bruce M. Carnes, recently described colleges as ''filthy stinking rich'' and ''rolling in dough.'' This prompted one college president, Peter J. Baleziunas of Dickenson College in Pennsylvania, to write back suggesting that Mr. Carnes had failed to keep in mind the adage to ''make certain the mind was engaged before the mouth was set in motion.''

In their annual spring letters to parents explaining tuition increases, colleges invariably talk about the rising costs they themselves face. They cite the catch-up spending needed for faculty salaries and for maintenance, neither of which kept pace with the double-digit inflation of the late 1970's and early 1980's. Depending on the year, colleges also mention energy costs, computers, library expenses and growing financial aid budgets.

Many economists say that, over the long term, the cost of college should rise at about 2 percentage points more than the Consumer Price Index. This is because education is a labor-intensive industry that does not readily lend itself to savings through automation. Also, the price of materials colleges must buy, like books, tends to increase faster than items in the average consumer market basket.

But if inflation is 4 percent and tuition increases 8 percent, where does that extra 2 percentage points come in? Why 8 rather than 6? Competition and Quality

Much of the explanation lies in the fact that colleges, like automobile makers, distillers and perfumers, operate in a competitive environment where price is related not only to the quality of the product being offered but also to a buyer's perception of quality.

At a time when the number of 18-year-olds is declining, colleges are eager to keep their classrooms and dormitories filled, and they realize, especially the more selective ones, that the best way to do this is to offer a better education.

Thus, faced with the choice of keeping tuition down or raising it enough to hire more faculty members, start courses in Japanese or build some racquetball courts, most colleges will choose the latter path.

Mr. Breneman of Kalamazoo, who happens to be an economist, suggests that presidents who want to restrict tuition increases to 2 percentage points above the Consumer Price Index are ''trapped in a competitive marketing situation.''

''Were my college to make a noble stand by staying at 6 percent, while others go up by more and spend the increase on faculty salaries, computers, library resources and other enhancements to quality, then my college falls behind,'' he said. ''Project this pattern ahead a few years, and the logic of compound interest would alter our competitive position, both in perception and in reality.'' 'Chivas Regal Argument'

Then there is what Joseph Ellis, the dean of Mount Holyoke College in Massachusetts, calls the ''Chivas Regal argument.'' He says that, as consumers do with Scotch, parents and students tend to associate quality with price. Private colleges say they have little to gain by keeping their tuitions and fees much below those of major competitors when they are likely to be perceived not as a bargain but as a lesser institution. Though they deny it, some colleges have been known to ''artificially'' raise tuitions by a couple of thousand dollars for this reason alone.

Mr. Breneman said that he would like to see ''everyone scale back,'' adding, ''We could all get along fine if we went up two points less.'' The problem, he says, is that ''no one can do it on their own.''

Next fall the total cost of tuition, room and board at Kalamazoo will rise 8 percent, to $13,100. Mr. Breneman said the increase would help pay for a new East Asian studies program. He also said it would put Kalamazoo's yearly cost - now one of the lowest in the 12-member Great Lakes Colleges Association - right in line with that of competitors like Oberlin and Kenyon, both in Ohio.

Is this the year for his ''honest letter?''

''I don't know yet,'' said Mr. Breneman. ''I haven't written it yet. I'm watching to see how things play out.''