The cost of higher education has far outstripped the cost of living. In the late 1960s, my tuition at an elite private school was $2400 a year, the equivalent of $12,381 in today’s dollars. Tuition today at that same elite school is $33,000. (Room & board is extra.) I’ve read reports that say that on a percentage basis, the cost of public colleges and universities has risen even faster.
At the same time, financial aid is down. In the late 1960s, I had two scholarships, a National Merit Scholarship and a state scholarship that supported attendance at a private school in the state. These were need-indexed, paying only $100 or maybe $200 apiece at a minimum, but in my senior year when both my siblings were in college, in combination they paid more than my tuition, and I made a couple hundred dollars’ profit towards living expenses by registering for my last quarter, even though I had met the requirements for graduation already. I worked all through college and held some unpleasant jobs, but I worked 10 hours a week, not the 20+ a lot of our students are working at state schools. I was not unusual. (Well, OK, I like to think I was unusual in the ability that led me to win those competitions, but need-based aid was widely available, and quite a few of my friends at said elite private school were from substantially lower class backgrounds than my own and got more financial aid than I did.)
The proportion of the population who are going to college is rising. The economic divide between the college educated and the non-college educated population is growing, but a college diploma is no longer a guarantee of economic success. Elite colleges (both private and public) are increasingly filled by those from the top 20% of the income distribution. There are plenty of non-selective colleges available, so that everyone can be admitted to a college somewhere. The question is whether s/he will be able to afford to attend it. Even public institutions are increasingly out of the price range of the bottom half of the income distribution, and financial aid is not making up the difference.
The financial facts are pretty well known. But I’ve seen much less discussion of why this is happening. Is this just because I don’t know where to look? Is it cost-driven? If so, where are the costs? Is this related to the escalation in faculty salaries at top institutions? Health insurance is surely taking a bite, but that has to be affecting everyone. Is something else going on besides costs? Are universities somehow making a profit? Does anybody know?
At my public institution, we don’t know much about our costs, because information is seen as dangerous in our political climate. The university is administratively part of the state (unlike, say, Michigan or Penn State) and the state legislature has a track record of actually raiding and putting into the general fund any money that is accumulated anywhere in a state agency, including student activity fees and the bank accounts of agencies set up as “cost recovery” centers that were supposed to be operating independently of the state budget. This has led to a culture of mystification in money matters, and transparency is viewed as dangerous. A schematic of the distribution of grants overhead looks like a bowl of spaghetti, and is more or less a money laundering system. I sat on a special committee to address graduate tuition issues that met weekly for nine months and came to be viewed as someone who really knows a lot about the university budget. I still don’t have a clue about basic facts like what proportion of our expenses are faculty salaries. We argued about whether grants were effectively subsidizing instruction or whether undergraduate tuition was effectively subsidizing grant-funded research, and could not get data that could answer the question. Colleges at other schools tell me that the “dirty secret” of elite schools is that undergraduate tuition effectively underwrites research.
So there’s my question. Or questions. 1) What is really going on financially with higher education? and 2) Why is it happening?
The defunding of public education seems relatively easy to explain as part of the politicized defunding of the entire public sector. Also, there is a higher percentage of the young population trying to go to college, so the total cost of college students per taxpayer is perhaps higher. (But this may not be true, as I went to college in the baby boom years when there were a lot more young people.)
But what is going on with private universities?
I am convinced that those of us at public institutions need to understand our financial realities better. Maybe so do the folks at private schools.
Edit: A point I meant to make that isn’t worth a separate post. I publicly chastised an administrator on exactly this point a few weeks ago. Because it gets billed to grants & a weird feature of our budget process means that our campus writes a check to system for uncollected graduate tuition, faculty and even administrators (who should know better) refer to graduate tuition as a “cost,” when it is obviously a revenue. The budget people view tuition remission as lost revenue that can be collected by giving fewer remissions. But if, as the faculty insist, graduate students respond to the loss of tuition remission by dropping out of school, the net effect is lower revenue and a deeper budget crisis. On the faculty side, there is a tendency to disparage the unfunded graduate students who are actually paying to attend the institution and to ignore their positive contribution to institutional revenue. The cost of graduate education is the cost of putting teachers in the classroom to teach graduate students and the cost of faculty time in individual advising. Graduate students do work as teaching and research assistants. Institutionally, the net cost of a graduate student is the value of his/her work to the institution minus his/her stipend minus his/her health insurance and other benefits and minus the cost of educating him/her. On our campus, we don’t do the calculations to figure out whether graduate students are generating profit or loss, or to compare programs on this factor.