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The True Cost of University

In the past 30 years, the cost of private colleges has doubled, while the cost of public colleges has tripled! What’s going on?! Let’s talk about what your hard-earned money goes towards when you pay for an American education, what accounts for the rising cost of universities, and what you should do take advantage of the system. We begin by asking the question “why”; why are the costs of university rising so quickly? It appears that there are at least three good explanations: increased demand, loss of state funding, and rising administrative costs.

One key piece of the puzzle is artificially inflated demand. Thanks to generous student loans and the expectation that all children from middle-class families attend college, more than ever, students are clamoring for a degree even if they might not need it for their future careers. A future plumber, for instance, would be much better served attending a trade school than a university. Many European countries figured this out and automatically place all students on a dual-track system into trade schools or universities depending on their academic achievement (see Germany for a great example). With no such system in place in the United States, basic supply and demand raises the cost of a college education.

The second issue at play is the loss of state funding by many public institutions. A Demos report from 2015 concluded that, “During the 2001 to 2011 time period, state funding per student fell $3,081 at research universities and $2,067 at nonresearch universities, a decline that was in near lockstep with tuition increases.” This finding is consistent with the College Board’s 2019 Annual Report, which found that college revenue per student for bachelor’s degrees from public universities remained virtually unchanged between 2006 and 2017 ($14,220 vs $14,180), but the tuition revenue rose from $5,160 to $6,080, an almost-perfect mirror of the decrease in federal, state, and local appropriations from $9,060 to $8,100. Why the change? With the Great Recession, legislators found themselves in a bind. They needed money and couldn’t raise taxes. Now we are all suffering the consequences of that decision.

Finally, administrative costs for universities are skyrocketing. According to data from the National Center for Educational Statistics, “During the 1980-1981 school year, public and private institutions spent $20.7 billion in total on instruction, and $13 billion on academic support, student services and institutional support combined. By the 2014-2015 school year, total instructional costs had climbed to $148 billion, while the same grouping of administrative expenses had risen to $122.3 billion.” In other words, while universities used to spend most their revenue on instruction, administrative costs now run almost even. Imagine that! Colleges spend as much money running background services as actually teaching students! Why? Again, it’s complicated. One explanation is the increase in federal and state regulations by which universities much abide (Clery Act for reporting crime, Title IX supporting sexual assault survivors, etc.). Another is the race to constantly build new facilities, host more clubs, and have the prettiest campus to lure prospective students. Yet another still is that students simply expect more from universities. For example, affordable mental health counselling is now unofficially required for any large university. Thanks to the myriad of staff required to service all these functions, the cost of tuition climbs higher still.

But what does this all mean for you? It seems like there are at least three major takeaways from these findings that relate to each of the three aforementioned buckets: 1) Before attending university, make sure that it’s the right decision for you. What is your expected career trajectory? Do you really need a university degree to get where you want to go? 2) We need to do a better job of holding lawmakers accountable educating the next generation. 3) If you choose to attend a university, take advantage of the many auxiliary resources they offer. If you’re struggling with mental health, see a counselor. If you’re falling behind in math class, visit the math center. If you’re looking for a way to get involved in science as an undergraduate, do research in a lab. Simply put, if you’re not taking advantage of the many perks offered by the university offers, you might as well be lighting that money on fire.



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