Students Spending More and Getting Less

Very troubling report about the increasing cost of college and where the money is going. I've highlighted the key takeaway down at the bottom of the article.

Brainstorm: Tution (Way) Up, Spending on Education Down

Everyone knows that college is getting more expensive, but it’s easy to get lost in the vagueness of that general knowledge and lose track of exactly how expensive, how that rate of change is changing, and (in particular) where all those additional dollars go. Fortunately the good people at the Delta Cost Project have taken the time to analyze vast amounts of revenue and spending data submitted by colleges to the U.S. Department of Education and report their findings, which were released today.

They found that average tuition for full-time undergraduates at public research universities increased from $4,486 in 2002 to $5,825 in 2006. (All numbers are adjusted for inflation and presented in constant 2006 dollars.) That’s an increase of 29.8 percent during a time of economic expansion. Tuition is going to increase terribly in the next few years, and it will be blamed entirely on declining endowments and state appropriations, and those problems will certainly be culprits, but let’s not forget that tuition also increased terribly when state revenues and endowments were on the way up. (This is partially mitigated by a simultaneous surge in enrollment.) The pattern for public master’s degree institutions was virtually identical: Tuition went from $3,652 to $4,710, a 29-percent increase

Some may say that this overstates the problem because many students don’t pay the full sticker price, and in the past there’s been some truth to that. But apparently things have changed. Here I’ll just quote directly from the report:

Among public institutions, sticker prices routinely increased less than gross tuition revenues. This happens because more public institutions are using differential pricing to capture greater increases in tuition from students other than in‑state undergraduates. These higher tuitions can come from out‑of‑state students and international students, or from professional schools such as business, law, and engineering where full-cost pricing is increasingly common. Institutions are also turning to user fees to fund many functions (e.g., technology fees), which have become a significant source of revenue. This means that focusing on sticker price increases alone understates the real impact of price increases for many students.

One could argue that price increases aren’t necessarily bad for students if the money is used for things that benefit students, like education. But it turns out that’s not happening either. At the same time that tuition jumped 29.8 percent at public research institutions, education and general spending per FTE student increased by only 2.5 percent. At public master’s institutions, which imposed a 29-percent tuition jump, spending on education declined by 2.1 percent. Many students are spending more and getting less.

The report then puts these two sets of numbers together to calculate the student share of costs for education and related expenditures. In 2002, the ratio was 39 percent at public research universities. By 2006 it had jumped to 49 percent. Same thing at public master’s institutions: 36 percent to 46 percent, in just four non-recessionary years. That’s a scary trend. Education expenditures as classified under the federal reporting system, moreover, include the total costs of professors’ salaries. Since many professors spend only part of their time teaching, these numbers significantly understate what students are paying for the educational services they receive.

Where, then, is the money going? In public institutions, it’s mostly a matter of holding overall spending fairly steady while shifting more of the revenue burden to students. Private institutions, by contrast, have seen real spending growth. But the overall trend is clear: Even as colleges are charging students much more and reducing the proportion of money spent on education and professor’s salaries, they’re spending a relatively larger amount of money on ‘administration, maintenance and support.’

In other words, if you’re a college student and you feel like you’re getting a raw deal, you’re probably right. And if you’re a college professor who feels the same way, you’re probably right too.