America’s Universities: High Costs for Low Results
If a key industry dramatically increased its prices far higher and faster than the cost of inflation, while delivering a product that was manifestly declining in quality while company officials openly expressed contempt for those paying for its services, there is little doubt that politicians and pundits would rapidly and loudly call for investigations and the imposition of regulations.
That is precisely what is occurring in America’s colleges, where tuition rates have been hiked by 74% since 1995.
However, they are escaping the scrutiny they truly deserve.
As the New York Analysis of Policy and Government has noted, “Stunning tuition cost hikes have outpaced price increases in just about every other area. U.S. News reported in 2013 that
“According to data from the Labor Department, the price index for college tuition grew by nearly 80 percent between August 2003 and August 2013. That is nearly twice as fast as growth in costs in medical care, another area widely recognized for fast-rising prices. It’s also more than twice as fast as the overall consumer price index during that same period.” During that time period, college tuition increased 79.5%, while the Consumer Price index increased only 26.7%, medical care, 43.1%, food and beverages, 31.2%, and housing 22.8%. The money hasn’t gone into improving the educational experience of students, and it hasn’t gone into the salaries of professors.
A Washington Monthly review found that ‘as colleges and universities have had more money to spend, they have not chosen to spend it on expanding their instructional resources—that is, on paying faculty. They have chosen, instead, to enhance their administrative and staff resources. A comprehensive study published by the Delta Cost Project in 2010 reported that between 1998 and 2008, America’s private colleges increased spending on instruction by 22 percent while increasing spending on administration and staff support by 36 percent. Parents who wonder why college tuition is so high and why it increases so much each year may be less than pleased to learn that their sons and daughters will have an opportunity to interact with more administrators and staffers… Over the past four decades…the number of full-time professors or ‘full-time equivalents’—that is, slots filled by two or more part-time faculty members whose combined hours equal those of a full-timer—increased slightly more than 50 percent. That percentage is comparable to the growth in student enrollments during the same time period. But the number of administrators and administrative staffers employed by those schools increased by an astonishing 85 percent and 240 percent, respectively.”
Individuals are free to decide whether it is appropriate to overpay for declining quality, but taxpayers are not. State colleges are clearly supported by taxpayer funds, but so are for-profit universities.
Open Secrets notes: “For-profit institutions derive much of their funding from the federal government, in the form of financial aid grants and subsidized student loans.”
The Fiscal Times found that
“Between 2000 and 2010…The portion [of students] receiving federal aid skyrocketed from 31.6 percent to 47.8 percent, and the average award nearly doubled. In addition, the percentage taking out student loans climbed from 40.1 percent to 50.1 percent, and the average borrowing rose 76 percent. The ramp-up in loans to students has not only driven up costs but has undermined the value of a college degree. Some 30 percent of people ages 25 to 29 are college graduates today, up from 12 percent in the 1970s…Richard Vedder, economics professor at Ohio University, has written that we have one million retail sales clerks and 115,000 janitors with college diplomas. At the same time, one fifth of the country’s managers say they can’t find skilled workers to fill job openings.”
The Rand Corporation questions the effect of tuition subsidies.
“…almost 30 years ago, then-Secretary of Education William Bennett warned that tuition subsidies may also encourage institutions to raise tuition, since the government would foot the bill. Research on what came to be known as the ‘Bennett Hypothesis’ increasingly suggests the secretary was correct.”
Originally published on New York Analysis of Policy and Government.