The True Cause of College-Tuition Inflation?

For college students and their parents, the steady spike in tuition prices in recent decades has been not only troubling but mysterious: why on earth is tuition inflation double the general inflation rate? What’s behind these huge tuition bills: Massive legacy costs? Less public funding? The cost of acquiring real estate?

While none of those reasons are necessarily off the table, consider this article by Tamar Lewin in today’s Times:

Over the last two decades, colleges and universities doubled their full-time support staff while enrollment increased only 40 percent, according to a new analysis of government data by the Center for College Affordability and Productivity, a nonprofit research center.

During the same period, the staff of full-time instructors, or equivalent personnel, rose about 50 percent, while the number of managers increased slightly more than 50 percent.

Support staff! And what kind of work are they doing?

The growth in support staff included some jobs that did not exist 20 years ago, like environmental sustainability officers and a broad array of information technology workers. The support staff category includes many different jobs, like residential-life staff, admissions and recruitment officers, fund-raisers, loan counselors, and all the back-office staff positions responsible for complying with the new regulations and reporting requirements colleges face.

This explanation seems satisfying (intellectually, at least, if not emotionally). But it’s probably also important to consider how much money colleges have been putting into student amenities as well. When I visited my undergrad alma mater a few years ago, the chancellor pointed out that three buildings had gone up in the past decade or so that were each larger than any existing building on campus. There was a library, a convocation center (a multipurpose arena), and a huge student gym. The gym, he said, was a top priority because parents and prospective students increasingly think of themselves as customers, shopping for the most amenities for the best price, and the colleges that didn’t come to grips with this would soon see their customers going elsewhere.


kristine

I would agree, when I worked in accounting @ the local univ, I would say about 35% of the support jobs could be cut if they raised productivity. Crazy incompetence in state government jobs. It's impossible to get fired from a job at a university -- my hubby's boss had an alcoholic assistant who he tried to get rid of for 3 years, it wasn't until she showed up intoxicated he was able to swing the axe. Even then she appealed to the employee board.

Mike

"...all the back-office staff positions responsible for complying with the new regulations and reporting requirements colleges face."

And this is precisely why I'm against all government regulation. It just increases costs above and beyond any perceived benefit that they provide. I bet there's also an equivalent increase in government employees required to check that these regulations and reporting requirements are met. So there's an additional cost to the taxpayer too!

LZ

College tuition increased because the massive increase in subsidized student loans means that students are able to pay more money to the colleges. It's a simple case of supply and (government-subsidized) demand.

Thirty years ago, non-elite colleges couldn't charge tuition equal to the median household income because few students would have been able to afford it. Nobody would go to those colleges, so they would have been forced to lower tuition. Nowadays, colleges can raise their tuition willy-nilly because students will simply get the extra money by signing on the private loan agreement dotted line, without thinking about the repayment repercussions. And the lenders don't care because the repayment is government guaranteed.

Willie Cavecche

The thing is, is that while all us college students (go UW!) hate the tuition spikes, none of us want to give up the libraries, or the computer systems that need manning, or the nice gyms. So, unfortunately, if we like them so much we gotta pay for them.

Though I could do without the "environmental sustainability officers," but I'm Republican.

Celeste

Every time I read an article about increased tuition cost, it just reaffirms my decision to go to Berea College. My 4 years there were cheaper than 1 year of instate tuition at a North Carolina University (Appalachian State was my 2nd choice). It's a great example of keeping the costs of education down. And all that support staff? At Berea the majority of low level employees and managers are the students.

Walter Wimberly

Two other things to consider, which were not mentioned - but are related.

1) 20 years ago you didn't HAVE to go to college. Now it is pushed by every HS counselor, TV, etc. So you have more students, which as mentioned are looking from a customer point of view as the article mentioned. If schools build gyms, rec halls, etc, and not classrooms - then demand is going to out strip supply, and prices will rise.

2) 20 years ago - there were not as many scholarships, grants, etc. You generally paid out of pocket, and/or got a loan, which wasn't as easy to get as it was 5 years ago. Now that cash is easier to get (for some) it allows people to not shop by price, but by other things (such as the amenities). Even if students get a loan, they don't think of them having to pay it back, because it is so far in the future (4+ years is almost an eternity to an 18 year old), so they don't think of the cost involved.

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Ari

Increasing subsidies to students and their parents drive increased prices. Loan guarantees, grants and tax deductions and credits.

Students and their parents are going to pay what they're going to pay for college. Federal student aid adds what the government is willing to pay to what the student and family are willing to pay. The result is the university feels much more free to increase the price.

This is true in other things the government subsidizes that private entities sell, including health insurance, health care, and, until recently, residential real estate.

Captain Obviousness

Same reason as the housing bubble - easy monetary policy and federal subsidies. Just like the technocrats in DC thought everyone should own a home, they thought everyone should go to college. Cheap loans plus the perpetuation of the myth that everyone should go to college caused the demand for a college education to increase unnaturally. Make no mistake, there is a bubble in college tuition rates. It is simply not sustainable for people to emerge from school with six figure debt and a degree in 18th century literature or the like.

DD

I can't emphasize enough how misleading the "cost of college" is for elite universities, where students rarely actually pay the sticker cost of tuition. More than likely the cost is cut significantly by grants, scholarships (internal and external), and financial aid.

Joe

I am a graduate student at an expensive private school. The sticker price is wild, but the President always reminds the students that 51% of tuition returns to the students as financial aid. Insert snappy comment from Joe the Plumber about Barack Obama. It cannot help the price mechanism for allocating goods and services...

J Lemke

I agree with the comments who talk about the availability of money to pay the tuition and the the posters who talked about the need for it. The blog post has confused cause and effect. The effect of more money for college and increased money available for it (via loans) has caused the swelling of admin staff and extraneous buildings. Not vice versa.

John S.

Does anyone believe that the enormous bureaucracy of the university can run a gym at a lower cost than the local health club?

Salman Razzaque

In the two years I've been at Stanford, the tuition has increased for a lot of programs that are beneficial to students like increasing staff at the Student Health Center. However, I don't understand how this can't be covered in the 50 grand students pay or in the huge endowment.

I do have a question on this issue. Why isn't tuition tax-deductible? After all, most if not all colleges are non-profit organizations and it provides a great benefit for millions of American families paying so much money for the betterment of their children. From an economic perspective, there has to be tons of dead weight loss in paying those taxes to the government where it goes into obscure programs rather than directly educating students.

caveat bettor

Just like government subsidies for healthcare, ethanol, sugar, and even government jobs (which have gone from half private sector wages to double), government subsidies in education drive hyperinflation.

George Stigler was right.

jblog

And yet my son takes classes from TAs who cannot speak intelligible English.

Gammaboy

I'd like to see a study on whether college is even a worthwhile investment anymore.

For elite students, there is certainly a value to investing in a college education, but what about the marginal student? Wouldn't it be better for many potential students to spend the four years earning income and learning a skilled trade rather then spending four years building up $100K in debt in pursuit of a degree of dubious productive value (pretty much any liberal arts degree).

Every time I meet a waitress or retail store manager with a college degree, I have to think that time and money was wasted for both themselves and society.

Paul

re: #6, Walter:

You are mistaken.
College was expected of myself and my peers 30 yrs. ago.
Only 'the losers' didn't go. That was middle class suburbia 30 yrs. ago.

There were many students on work study, others on loans (including myself), and many scholarships available - especially if you could dribble a basketball.

My graduate degree (it too was expected), acquired 25 yrs. ago was completed via academic scholarship, partly 'cause I can't dribble.

Sorry, no real changes in either regard.

Rachel

You've ignored the spiralling cost of health insurance premiums, (which is probably affected by the fact that many people working in a college environment will be there for the insurance, so their spouse can run a small business.)

Read Dean Dad - suburbdad.blogspot.com, he has come cogent things to say about this, from the perspective of a smart administrator making things work despite the system.

Xian

There is a multitude of factors that are all combining to create a massive financial burden on college students. As stated in this the administration staff (not the teachers) has doubled, and if they had the ablilty to look, they would also find their salaries have also increased faster than the teachers. Local college presidents' salaries have tripled over the last decade, as well as perks, such as a car and house, though they have not increased the quality of the education. They have become the CEO of the colleges, but yet the stockholders (students) don't get a vote as to who they want, we should revert back to the old days of such a practice. Students vote on teachers, teachers select administrators, and administrators select presidents. I have a feeling these colleges would become cheaper, and actually care about education. I think we should have parents vote on teachers, admins, and president of our lower 'public' school system

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ScottH

What about the increased cost of doing science and technology research?

While the resource requirements for an English professor probably have not changed much over the years, the facilities and resources required to do cutting edge science and technology research have certainly increased dramatically. At most campuses, it's the physics, chemistry and biology, as well as the various computer-related departments, that often seem to be in the ever larger, newer, and more expensive, buildings.