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When colleges discuss their rising prices, they often protest that running a college is simply very expensive. Tuition, in fact, doesn’t really cover how much it costs to educate students.
“It’s important to remember that tuition doesn’t cover, in fact it doesn’t come close to covering, the full cost of education” said Duke University spokesman Michael Schoenfeld in February, back when Duke announced a 4.3 percent tuition hike. “The rest of the costs are made up by things like income from the endowment, fundraising and other sources of revenue.” Students weren’t paying too much; the college was extensively subsidizing their education.
Except that might not be true, or it might be a little misleading. According to research by the Center for College Affordability and Productivity, tuition payments are actually much higher than what’s needed to really educate undergraduates. Colleges actually use tuition to subsidize spending on things unconnected to classroom instruction, like research.
As the report explains:
Conventional wisdom holds that colleges and universities heavily subsidize their students. This assertion seems correct, given that total spending per student is almost always in excess of per student tuition payments. However… such a comparison is seriously misleading because institutional spending encompasses far more than just the educational expenditures that tuition revenues are ostensibly designed to cover. The more logical comparison—and the one which we make here—is between what colleges and universities are paid to provide an education versus what those institutions actually spend to provide that education.
In many cases student tuition and third-party payments on behalf of students easily cover the portion of spending that is actually used for educational activities. Between 52 and 76 percent of all students attend institutions where educational payments exceed educational spending. For four-year students, this figure is between 59 and 87 percent, and for two-year students, it is between 24 and 63 percent.
The problem here, and the reason that there’s confusion, is that colleges habitually assume that all of their spending constitutes the cost of providing an education. If this is true tuition doesn’t really cover university education. But that’s not really true, explain the authors of the report: “This does not mean that students are being subsidized because not all of that spending is used towards specifically educational purposes.”
The report estimates the true cost of an undergraduate education (“instruction”) based on faculty salaries and a share of other expenses, including academic support and operation and building maintenance.
In fact, if one counts only expenses related to undergraduate education, according to the somewhat mysterious formula used by the Center for College Affordability and Productivity, “public four-year institutions… are paid more in tuition than they spend on providing an education and are able to use excess funds for other purposes.”
Whether this means students and their families are being “misled and overcharged,” as the report argues, rests on the assumption that these other things (things like research, administration, and buildings, don’t really matter to education. That’s certainly an arguable point, but it’s by no means obvious.
At the majority of private institutions, however, colleges are still spending more to educate students than they derive from tuition.
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J. Michael Neal on April 08, 2011 6:50 PM:
I can't tell from this exactly what is included in the expenditures for education, but it sounds as if research is not included. That really isn't correct. A lot of that money is spent in the sciences and the medical school, and provides both direct and indirect benefits to undergrads. Majors in those fields sometimes use the equipment that was purchased with research dollars. The availability of research funds affects the quality of the faculty that teaches at a school.
What I think is true is that undergraduates subsidize graduate education with their tuition. It's probably also the case that freshmen and sophomores are subsidizing upperclassmen, who are taking smaller and, in the sciences, often more expensive classes.
SqueakyRat on April 08, 2011 10:13 PM:
Great, let's just cut out all that useless research and give everybody a refund! Who needs more knowledge anyway?
Walker on April 09, 2011 12:20 PM:
What J. Michael Neal said.
There are a wide variety of colleges out there. A research-heavy school might have its faculty teach 2/1 (that's 2 courses one semester, 1 another) or even 1/1 if they have to manage a laboratory. Then there are 3/3 colleges that want a balance between teaching and research. Finally there are 4/4 or 4/5 colleges that are teaching only.
So why doesn't everyone go to the 4/5 college if it is so more efficient in terms of tuition to education (measured in terms of headcount per class)? First, because those schools do not recruit the best faculty. More importantly, faculty at those schools react to trends in their fields and do not lead them in them. This is a major problem in the STEM fields. After ten years, a STEM faculty member at a 4/5 school is no better than a high school teacher.
I agree that it would be nice if there were more transparency to tuition. But subsidizing research is import to the educational mission of the university.
The bigger concern (again, as J. Michael Neal said) is subsidizing graduate courses. If a faculty member is already reduced a to a 1/1 load to account for research and running a lab, having one of those courses be a graduate course is double counting.
Texas Aggie on April 09, 2011 1:04 PM:
In addition to the bit about research, an important part of our Land Grant institutions especially, there is the question about whether things like buildings, dorm maintenance and utilities, meals, buses, security, grounds and similar activities that aren't directly connected with teaching are included.