Wednesday, April 15, 2009

Why Does My Tutition Keep Going Up?

Nearly everyone likely to read this blog is aware that college tuition and fees have risen considerably over the past 25 years or so. A report released this last December, "Measuring Up 2008," found that tuition and fees have risen 439 percent since 1982 while median family income has only risen 147 percent during the same time. Unsurprisingly, students and families are piling on more debt and access is declining. This figure shows just how dramatically college costs are outpacing inflation and even medical care.

What is going on? Are colleges and universities spend-thrifts?

According to the Delta Cost Project, the answer is generally no, although there are differences between public and private institutions. For the most part, spending is not dramatically increasing over inflation, except in research spending. In the case of public universities and, especially, community colleges, tuition increases are mostly the result of cost-shifting. State subsidies to higher education have been declining over time in Minnesota and in nearly every state. About 92 percent of tuition increases in public research universities is due to cost shifting. Spending is actually declining in real terms at every other type of public post-secondary educational institution.

The situation is slightly more complex at private institutions, because they vary so much in size, wealth, and mission. Harvard, Yale, and the rest of the Ivy League received a lot of attention until recently over the massive size of the endowments and their low rate of endowment draw. These institutions tend to skew the data regarding spending, because they essentially went on spending binges during the long run-up of endowments since the mid-nineties. Only about 30 percent of tuition increases at private research universities was because of cost-shifting, the rest went to spending increases.

At other private institutions, the story is more similar to public institutions. According to that same study, about 85 percent of tuition increases was due to cost-shifting. The truth is that most private institutions are heavily dependent on student revenues and the exceptions are places like Harvard, Carleton College, and Macalester College.

Despite cost-shifting, some spending is taking place. Where is it going?

The biggest spending increase has occurred in institutional aid, a practice called tuition discounting. This practice is more common at private colleges and universities, but grant aid has increased at nearly every institution.

The next biggest category of spending increases occurred in sponsored research. In general, this does not have any effect on tuition, up or down.

The last major increase in spending is in student services and remedial education. Very little of this funding is directly related to instructional spending, it is for support programs and expanding access to post-secondary education.

So, which state spends the most on education and research per student at research universities? Minnesota at $21,400 (only Pennsylvania and Connecticut also spend over $20K).

How much do students at the U pay, on average, of that cost? $9,533 or about 44%.

The national per student average for education and research spending is $14,058 while students are expected to cover about $6,909 or 51% of the total.

1 comment:

  1. Brad, this post caught my attention even when it was still hiding in the "draft" folder. Keep up the excellent work!