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.


Larry Gritz

This explanation is unsatisfying without analysis of how increased regulations and support positions have not resulting it similarly rising costs for ordinary companies, and therefore getting folded into inflation generally.

Companies I've worked for in recent years have had sustainability officers, elaborate recruiting and training departments, all sorts of amenities for employees, that did not exist 20 or 30 years ago. Are universities really so different? And if so, why? That's the interesting question.

Mark B.

"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."

And so has the push for professors/researchers in these areas to get *outside* funding. You know those science grants John McCain made fun of? Those are what actually fund a good proportion of cutting edge research.

orlando

Don't you think your lumping of all colleges together is unfairly ? In non-flagship state unis, the main reason for tuition increases has been that the state governments subsidize education less as time goes (which you may like or dislike, but that's the main reason for it)

amanda

I work at a university and I read the NY Times half the day. That should give you an idea of where the money is going....

Octavian

For Elite colleges: supply & demand. 9-10 applicants for every slot. Prices will rise and bureaucracies will figure out how to justify those rises.

whakojacko

#20 but those science and engineering programs also generally rake in huge amounts of grant money so really arent that much more dependent on tuition that humanities.

#25 not really applicable given that most school do need-blind admissions so they are accepting students before figuring out how much they can pay

anon

I once had access to the payroll information for a major university. Highest paid employee : the basketball coach. Although it's possible sports pays for itself.

Alex B

I'd like to see more "lab fees". In other words I think since I already go to another gym, and since I am studying Information Science and not say Nuclear Engineering, and since I took my core classes at a community college, I should pay less tuition than the guy that goes to the English composition classes, uses the super-collider in their engineering class and works out at the school gym.

Frank

As higher education publications pointed out, most of the institutions that rank highest on the list of non-teaching personnel have medical centers with teaching hospitals. All those nurses, physical therapists, quality assurance officers add up.

Another reason why economic arguments often don't hold water: there are too many variables to make conclusions.

Daniel

The college I attend has also decided to do plenty of construction projects and put up various flat screen TVs all around campus as a sort of "alert system" in case something horrible happens a la Virginia Tech.

WholeMealOfFood

Easier credit is the answer to why tuition has gone up so much. Student loan defaults are on the rise now though...

alan longland

In Ontario, a major reason for student fees rising occured when faculty associations put a stop to university raiding the faculty pension plans in the 1990's.

marty isaac

I highly suspect pricing is not dictated simply by cost (cost plus pricing), but rather by market conditions. While rising demand may have had something to do with it,, I'll bet perceived value was even more important.

If the Ivy schools were pricing themselves at a high level, other schools were compelled to price themselves at an equally (ridiculous) level. Consumers have no easy way to gauge pricing at schools -- in fact, if pricing was significantly lower, many consumers would likely deem that school to be inferior to others. So, there was a vicious cycle put in motion ... pricing at top schools would rise ... and every other school needed to maintain their "quality" ratio.

Brad

I have to agree with most of the other comments on the blog. While there may be an increase in support staff, and rightly so, that alone is not a reason for tuition to rise as much as it has. Additionally new facilities are not causing a rise in tuition, a rise in tuition is allowing new facilities to be built, generally those types of buildings don't come mainly from tuition though, that's why they get named after rich guys ;) The rise to me is severely linked to a rise in the predatory lending schemes of college loan companies. Not only are these companies making more money than ever, even with the current economic crises, but there is too little oversight for them to be perfectly honest. The colleges don't care because they subsidize the increase in middle and higher level management while professor's salaries have not been increased at nearly the same rate, probably not even to match tuition in some cases.

I can appreciate that colleges need to spend money in order to garner enough students to keep things running properly. I can also appreciate that the support staff is generally necessary. Although my personal experience with them has been less than stellar they are generally busy people and nobody wants to wait in order to be helped so finding that balance of people to ensure customer satisfaction is quite a delicate act.

I work in the public sector and most of our financial and other information is fairly transparent. Citizens can request information pretty much at their whim and they often do. Our board meetings are open to the public and many people can but not so often do attend. I would like to see more transparency on the true costs of college at universities, especially public ones. There is no reason that information needs to be so secretive for public institutions especially colleges. I understand why private institutions would not want to relate that information so publicly but if they receive government grants, etc. then they too should be forced to open up their books so that the people can see how exactly the institutions are run. Obama is starting to bring some of this to the Whitehouse, but it is too little and takes far too long.

I also think that public institutions should be free for students who maintain minimum "B" averages but that is a different story altogether.

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Ryan

Any industry that has excessive government intervention and regulations has excessive costs. Why, because you have to have compliance, excessive bureaucracy and support staff, and shielding people from the true cost of something causes people to over consume. That is why it costs twice as much to educate kids at public schools versus private schools, why it costs a $1 billion to bring a new drug to market, why ALL health care costs are inflated, why there is a shortage of doctors in certain specialties and on and on.

Ronald Reagan was right when he said the scariest thing one can ever hear is something to the effect of, "I am from the government and I am here to help..."

Mo

In our department - economics ironically - there are 7 admin staff members. If they worked like folks in a profit-driven office then there would be a need for about 3 of them. Most of the time they are either talking, walking around, or simply sitting idly at their desks. If I was paying tuition I would be pissed!

Jeffrey

Research is huge. Grants and contracts from the government, non-profits, and companies to sponsor research on college campuses is a multi-billion dollar industry. The feds have tons of rules and regs to follow with that money, though, so LOTS of support staff must be hired.

Now, before anyone blames the "nanny" government for that, just think of how much taxpayers complain if so much as a penny is misspent on a research project.

Like many things, a very large reason that tuition increases so much is because of the public. For better or worse.

M

Is a private citizen/taxpayer able to obtain a real operating budget/balance sheet for a public university, in order to determine where the money flows are traveling? Are these documents available for viewing and/or downloading somewhere within our wonderful electronic net?
Thank you.

Bankruptcy Lawyer

There is a simple solution to this problem: make student loans dischargeable in bankruptcy. The current bankruptcy law makes it next to impossible to discharge a student loan. An individual can discharge virtually all of her debt in bankruptcy, including credit card, mortgage, health care, consumer, and other debts, but not student loan debt. This makes student loans among the lowest risk loans out there.

Because lenders take very little risk when they loan to students, they make very little evaluation of the individual's ability to back the loans. Unlike with other loans, because student loans are not dischargeable, it's not a question of if they'll be paid back, it's a question of when. Thus, a D student at a school that turns out graduates with little to no job prospects is not much worse a risk than an A student at an Ivy League school whose degree all but assures him a job in a lucrative field. In fact, the D student may be a better lending prospect - he is unlikely to pay back the loan ahead of schedule, thus accumulating more interest, fees and charges. The loan is not dischargeable, so again it's not a matter of if the lender will be paid back, it's just a question of when.

The solution is to make student loans dischargeable. This will separate the wheat from the chaff. Loans will only be available to students at those schools or those degree programs, majors, and fields that ensure reasonably good job prospects upon graduation. Gone will be the days of the 22 year old with $160,000 in debt and only a degree in an umemployable field to show for it (philosophy comes to come).

(None of this would affect merit and need based scholarships, which, of course, could still be given).

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yossi

If it is really just adding more staff jobs, then it is great because the staff in the universities is not very educated and they are usually from the lower-middle class.

This is especially true if as someone above suggested -- these jobs could be done by half the number of people. This increases the well-being in our society because people have more leisure time and decent salaries. This should be the end-goal of any society: increasing the well-being of as many members as possible.

And, if the increase is being funded mainly by loans, then it is probably fine, as long as college graduates end-up earning more money than the average American. In that case, it is a great system by which the rich (the students) are contributing money (tuition) to the poor.

However, I know well that the elite universities pay a lot of money to the professors. Too much, I would say, because there is no reason why a person in America would earn more than $100,000, as long as there are so many people who earn much less. In that case, the increase in tuition is immoral and does not serve the goals of society.

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