Why is the cost of college so expensive?

back view of people sitting at graduation

By Ron Lieber

So why does college come with such a big price tag, anyway?

It’s not because of lavish dorms or climbing walls. And it’s not because the schools themselves insist on too many deputy associate vice provosts. But to even begin searching for an answer, we need to start by taking a quick look at how the market for college works and what most people actually pay for a degree.

And before we do that, we need to have a word about words. When we talk about costs, we’re talking about the expenses that colleges and universities face when educating students.

Price is something else; it’s what you pay. It’s what you see when you do an internet search for the “cost of attendance” at whatever school you’re considering. It’s what you might refer to as the retail price or list price or rack rate in other parts of your life.

Demos, a left-wing think tank, took a deep dive into the data in 2015 and came to the following conclusion: All of the nonacademic construction that people might be tempted to criticize as extravagant—dorms that resemble condos, dining halls that are better than local restaurants, gyms that faculty prefer to nearby health clubs—contributed just six percent to the rising prices at public universities in recent years. Jane Wellman, who spent years overseeing a microscopic examination of higher education budgets called the Delta Cost Project, summed up the amenities story nicely in 2015: “The symbolism of this is worse than the reality of it.”

Is it so-called administrative bloat that’s driving tuition higher? Too many associate deans and vice presidents? If you’ve heard about this supposed phenomenon in recent years, the rhetoric probably came from one of two places. First, there are the editorial page writers at places such as the Wall Street Journal. They live to mock the growing human resources infrastructure around diversity on campuses and the regulation-driven efforts at gender equity there. Then there are the college faculty organizations, which worry that the new administrative positions at campuses nationwide have resulted in fewer new tenured faculty jobs and more low-paid part-timers.

Let’s take the Wall Street Journal critique first. To a certain extent, as voters and consumers, we choose the administrators we want. Voters elect the politicians who create the regulations that govern, say, gender equity in college sports and rules around the adjudication of sexual assault and access for people with physical disabilities or learning differences. When new rules come into existence or our elected officials enforce existing ones more carefully, colleges need administrators to help them stay on track. If we want fewer rules and fewer administrators, we can make those choices on election day. So far, we haven’t made those choices though. In fact, we’ve done something more like the opposite.

As student populations have become more diverse, the number of students who are the first in their families to attend college has increased. Ditto the number of undergraduates attending college with diagnoses for moderate to severe mental health conditions that might have kept them home a decade or two ago. And most students arrive with a computer and a phone. All of these undergraduates and their parents expect that diversity administrators, mental health counselors, and information technology experts will be on call, and not in small numbers, either. “The most common complaint I received from students and faculty members is that we don’t have enough administrators,” said Brian Rosenberg, a former president of Macalester College, in an essay he wrote for administrators who worried that they might have “BS jobs.”

A quick look at federal data shows that there aren’t that many more full-time employees working at colleges than there used to be, when you express it as the number of people working there for every 1,000 full-time students. What’s changed is their composition, according to the Delta Cost Project, which used the same federal data: The average number of faculty and instructional staff per administrator declined by about 40 percent at most types of colleges and universities between 1990 and 2012. This continuing trend is what upsets the faculty organizations.

So to the extent that many of us are or will be paying more for our children’s college education than our parents did for ours, what or who is actually responsible? At state schools, the economic downturn at the end of the first decade of the century squeezed state budgets in a variety of ways. One easy fix was for the states to give fewer subsidies to their public universities. That meant that most schools had to raise tuition for the in-state residents who often (but not always, as in the case of the University of Alabama and the University of Vermont) make up the majority of their undergraduates.

Many state schools also tried to cover the lost state subsidies by marketing harder to international students and affluent students from out of state—and charging them even more. The Demos study I mentioned earlier determined that the decline in state appropriations accounted for nearly 80 percent of the price hike at public universities.

But the biggest cost of all—one that every undergraduate institution faces whether it is public or private—is labor. The majority of the money that goes to educating undergraduates is for salary and benefits for the people who teach and the staff who support them. These are figures that were nearly always on the tips of the tongues of the presidents I interviewed at the highest-priced schools.

On a single day of reporting in Maine, I saw or heard the presidents of both Bates College and Bowdoin College cite a figure of 60-something percent of their overall budget that pays for salaries, retirement benefits, and health insurance. Even administrators at well-resourced schools like those do not ever stop thinking about this.

In the meantime, costs rise because well-educated people expect good salaries. We can all cross our fingers and hope that states start subsidizing more of this cost once again, but that could require new or higher taxes at a time when most states are struggling to pay for crumbling infrastructure and rising Medicaid costs and deal with underfunded public sector pensions. At private colleges and universities, few endowments have enough money to subsidize even more of the annual cost to educate students. The federal government has shown little desire to raise the lending limits for undergraduate student loans or substantially increase the size of Pell Grants.

That leaves all of us to cover the costs. And everyone else in this crazy system is betting that we will—or at least hoping that we will.

. Copyright © 2021 by Ron Lieber
Reprinted here with permission of Harper, an imprint of HarperCollins Publishers


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