Monday, December 5, 2016

An Analysis of Rising College Costs

Jonah Katz posted this comment in a thread on Scott Alexander's blog:
The rising cost of higher education isn’t quite so mysterious, at least for the last 10-15 years. The Delta Cost Project has put together some fairly comprehensive data about this. What you see across most categories of post-secondary institutions is that basically *everything* is becoming more expensive, but ‘student ‘life’ and ‘academic support’ are rising fastest, followed by ‘institutional support’. Student life is all of the bells and whistles (athletic centers, movie theaters, etc.) that colleges use to try to entice prospective students into paying huge amounts of money to enroll in their institutions, and I believe it also includes health and mental health services, which I would imagine have become exponentially more expensive over the past couple decades (this is probably unavoidable, because health costs are going up in general and universities are enrolling a far wider range of students with more mental and physical health issues who wouldn’t have gone to college in the past). Academic support includes a mix of stuff that is crucial to the academic mission of a university (libraries, IT systems), stuff that is arguably not part of the core academic mission at all (Dean’s Office personnel, museums), and stuff that is well intentioned but tends to be useless in practice (central offices for teaching and curriculum development). Institutional support is administration proper. Note that these data come from 2003-2013, so they don’t capture the explosion in university administration that is generally agreed to have occurred from roughly the 1970s to 1990s. I’ve never been able to find categorized data that goes back that far, but I imagine the change in spending on administration during that period must have been astronomical. The cost of instruction is still the largest single category of expenditure, and accounts for the majority of absolute price increases, but proportionally it is not rising as fast as these other categories.
Some of the Delta Cost Project data is in the tables here; for public research universities above, and public colleges below. Lost more at their site.


G. Verloren said...

I saw a graphic somewhere which broke it down and compared the average minimum wage and the average Ivy League annual tuition from the 1970s through to the present.

They presented the final tally in terms of number of hours per workday a student has to work to be able to afford tuition. In the 70s, it was about 4 to 5 hours per workday to attend a school like Harvard. In 2015, it was almost 20 hours per workday, or two and a half full time shifts.

So forty years ago, you could afford a top tier school on a part time minimum wage, and still have enough time in your day to actually attend your classes, sleep, and even recreate. In the modern day, that's flatly impossible.

John said...

Of course such calculations ignore financial aid; it's important to remember that as Ivy League tuition has risen, the percentage of students paying the full amount has fallen. Nobody gives numbers for the cost of college after financial aid, because colleges are secretive about how much aid they give out, which makes the calculation difficult. But I have seen it claimed that for a child of parents at the median income, an Ivy League tuition costs less in real terms now than ever before.

G. Verloren said...


Who in their right mind is going to believe such a claim without any numbers whatsoever to back it up, though?

That's like putting down your wallet for a moment, then coming back to find it gone and someone holding one that looks just like it busily rifling through the contents, and then simply believing them when they tell you "Oh no, this is mine, not yours - but I refuse to prove that claim by letting you look inside."

These are for-profit schools. These are businesses. These are multi million dollar corporations, with deep pockets and teams of lawyers and lobbyists influencing the law to serve their financial interests. They ruthlessly dominate their local economies and communities to an absurd degree. They are practically modern day fiefdoms, beholden only to the highest powers in the land, whom they quietly appease through special favors.

And remember - financial aid is chiefly drawn from taxpayer money, not from the profit base of the school. The very fact that a greater number of students today receive financial aid actually means the rise in tuitions is even less justified, as it means schools are today receiving a much larger percentage of money from the government where before they received almost nothing.

Previously, you didn't need financial aid to attend Harvard - you could quite realistically get by working a part time job at minimum wage. Today, that's flatly impossible, and the government has to make up the difference, while the Ivy League schools pocket the difference.

So where does all that extra money go? How has tuition cost risen so astronomically? What has driven up the cost so very much?

Well for one thing, wages for key figures in the administration have ballooned catastrophically. You can find school presidents at public universities whose annual salaries are literally 500 times the cost of tuition. College sports coaches routinely rake in millions, while the student athletes actually busting their asses on the field receive no actual pay whatsoever, their only compensation being in "financial aid" - which, again, comes overwhelmingly from taxpayer money, and which can be denied effectively on a whim to exert control over the athlete.

This all coincides eerily with growing inequity in America over the past forty years. According to the Economic Policy Institute, the average CEO has seen their pay rise 941% since 1978. Meanwhile, over the same period of time, the average worker's pay has risen 10%. The leaders of the 350 largest companies in America receive 276 times as much pay as their average employees.

So is it any wonder that as college tuitions continue to rise, the number of school administrators who are multi millionaires is also rising dramatically, and has been for decades?

We live in a mercenary society. Our schools care less about teaching people than about making money. Our hospitals and doctors care less about healing people than about making money. Our politicians care less about representing people than about making money. And they do everything in their power to maximize profits while giving out just enough bread and circuses to keep the public complacent and compliant.

These institutions badly need to be reformed. These are the fundamental systems that the whole of our society relies upon for the wellbeing of all of us. How in the world can we justify a for-profit education system, a for-profit healthcare system, and a for-profit justice system?

These are the basic, foundational institutions that keep our society operating healthily, that are inextricably vital to serving the public good - they need to operated in a fiduciary manner, and not be allowed to betray the needs and the trust of the people in service to the pursuit of naked greed.