A popular meme right now is how the cost of college is soaring, and how universities are making out like bandits, which puzzles a lot of faculty, since they know that they aren’t getting rich and the cost of running a college is mainly in the salaries.
I recently came across a document with figures explaining the situation. First let’s look at the state funding plus tuition for all public colleges in the US over the past 25 years.
Funding per full-time equivalent student for public colleges in all states combined, for 1986–2011 in constant dollars.
From http://www.sheeo.org/finance/shef/fy2011 tables/All States Wavechart 2011.pdf
Note that the funding (tuition+state funding) has varied from a low of $10,200 in 1993 to a high of $12,766 in 2011($11,483 ± 11%). There is fluctuation, but not much, and no clear trend. Public college costs have been remarkably stable over the last 25 years. What has changed is who pays those costs. In 1986, about 23% of the funding was from tuition, and in 2011, about 43% of the funding was from tuition. Essentially all the change in tuition can be attributed to differences in state funding.
The situation in California is even starker:
Funding per full-time equivalent student in California public colleges, 1985–2011, in constant dollars.
From http://www.sheeo.org/finance/shef/fy2011 tables/All States Wavechart 2011.pdf
Note that California costs are much lower than in most states, largely because of the very cost-effective community college system. Costs in constant dollars vary from $8,286/FTE in 2005 to $9,970 in 1998 ($9,128±9%)—again, remarkably stable over 25 years. The share coming from tuition has changed from 11% in 1986 to 27% in 2011 (though the low was 9% in 1989). Once again, the story is not that colleges have gotten more expensive, but that the nearly constant cost has been transferred from the state to the students.
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This doesn”t explain the rise in tuition at private schools. There are plenty of other contributing factors such as increasingly expensive athletic facilities, lower performance on endowment investments, substantially more extensive student services, and other features and services designed to attract students. The number of employees per student has steadily continued to rise over time and employee productivity at universities is relatively stagnant, unlike the situation in many other parts of the economy. But ignoring that, I’ve always contended that education in the US was like sausage in Poland under communism or gasolene in Saudi Arabia – its true cost wasn’t appreciated because it was government subsidized and thus people became accustomed to its subsidized price and, hence, using it in a more prodigal manner than might be considered prudent. With education, perhaps now we’re having to face reality – it’s true cost is becoming more apparent.
Comment by dennisfrailey — 2012 August 13 @ 05:12 |
I don’t have any data for private schools. It is clear that tuition has soared, but I don’t know how much of that is from the high-price-high-aid pricing scheme (so that average net price is much lower than sticker price), how much from increased costs (if any), how much from high priced amenities, how much from large administrative costs, and so forth.
What I found data on is that the state schools have not been getting more costly to run, and that tuition increases are almost completely tied to declining state support.
Comment by gasstationwithoutpumps — 2012 August 13 @ 11:55 |
I’ve wondered about this for a few years now. Thanks for tracking the numbers down.
Comment by Rob St. Amant — 2012 August 13 @ 05:20 |
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