Leading reasons for high college costs are research and public service

by Grace

Higher education insiders sometimes point to the increasing cost of auxiliary services like student housing and bigtime athletics as a major cause of large tuition increases. This is a red herring.  Yes, over the years dorms have become nicer and food more abundant and edible, and as a result, room and board charges are higher. But higher room and board charges are not a major culprit in the drastic increases in the cost to students of attending college; it is the massive run-up in tuition.  Similarly, football coaches make a lot of money and the costs of these athletic programs can be high. But football at many universities generates so much revenue that it can pay its own way, plus covers the cost of the minor sports and women‟s athletics.   Football, good food, and hot tubs are not the reason for runaway college spending.  Rather, the root cause is high E&G [education and general] costs.

As part of his new study,Opportunities for Efficiency and Innovation: A Primer on How to Cut College Costs, Vance Fried created a hypothetical college to find more efficient ways to run institutions of higher learning.

The College of Entrepreneurial Leadership & Society was created on paper as part of an earlier study to determine what a high quality education would cost if a college‟s operations and management were designed with a focus on efficiency and effectiveness.  In the earlier study, I first designed a hypothetical college complete with students, faculty, curriculum, and buildings.  Then I created a detailed pro forma E&G budget for the college.  To make CELS more applicable to a wider range of school comparisons, I designed two institutions: CELS 3.2 and CELS 1.2. CELS 3.2 corresponds to a top of-the-line, comprehensive undergraduate college with 3,200 students, while CELS 1.2 is for a similar college with only 1,200 students….

My guiding design principle for CELS was never spend money unless the resulting additional student benefit is clearly greater than the additional cost….

The Most Obvious Cuts: Research and Public Service
Since CELS‟s primary focus is on undergraduate education, the most obvious spending cuts built into the hypothetical budget are to eliminate spending on research and public service.  While these may be worthwhile activities in their own right, they add little, if any, to undergraduate education.

Research cost are actually underreported in this table because industry accounting convention allocates most faculty salaries to instruction even though some faculty spend much time doing research.  Consequently, about 40% of instruction costs at research universities are actually research costs.

Fried recognizes that research is a worthwhile mission of some universities, but it should not be subsidized by students in the form of higher tuition costs.

Other recommended cost-cutting strategies from this study:

  • Optimize class size
  • Eliminate or consolidate low-enrollment programs
  • Eliminate administrator bloat
  • Downsize extracurricular student activity programs

Found at The College Puzzle

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8 Responses to “Leading reasons for high college costs are research and public service”

  1. I should probably read the study before commenting, but will indulge in a couple off the top of my head remarks… I’m not sure that educating students is the primary mission of a research institution. It’s definitely not the primary mission of tenure track faculty at that type of school. The advice given to young faculty is to be careful not to spend too much time on teaching and students, since tenure decisions and evaluation in general will not be based on that part of their job.

    Also, there are some experiments in different models of higher education – for instance, Olin. It’s small and new, but very different in setup. (Faculty aren’t tenured, or at least – they weren’t, not sure if there have been changes.) Tuition used to be offset fully by a scholarship given to all students. Looks like they’ve gone to 50% scholarship now. In any case, it has sounded to me like a place more interested in teaching & not being too expensive for students.

    Tuition costs are much lower in European countries. Government funding? The social contract is so vastly different there, but I do wonder how the tuition is kept low.

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  2. I’m not sure that educating students is the primary mission of a research institution.

    You’re probably right about that, and as “consumers” we should understand that. But we probably just don’t think about it or know about it. Or we think our tuition SHOULD subsidize research because of the value it adds to our education.

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  3. I didn’t know that about Olin. Very interesting. Now, I want to learn more about it.

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  4. Olin’s a very interesting example. Basically, someone was willing to donate money to experiment with a total re-work of an engineering degree. No existing university was willing to mess with what they had, so they ended up starting a new college.

    The first class of students committed to attending for an extra year and spent their first year helping plan the program. They were really brave, as the school (obviously) wasn’t even accredited at that point.

    The professors left big name places to come to Olin.

    It’s a small school — around 300 students, all undergrad. There are 5 buildings on campus, I think. They only offer engineering degrees.

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  5. Thanks for that info, Jo! It sounds like an amazing school, and I saw that women constitute 44% of the student body. I believe that’s higher than many other engineering schools. If I had a child interested in engineering I would definitely look at Olin. Not sure why they aren’t ranked by USNews.

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  6. Yes, it’s been a place that my husband & I have been watching, thinking it would be good to know more. (He’s engineering faculty at a school that is well known, though not for engineering.) I don’t know a lot more than you’ll get from their website. Their alumni are well-regarded among graduate departments, as far as I hear, and it’s the sort of place engineering faculty think about sending their kids.

    I think the demographics are similar for undergrads in many engineering programs these days. Olin only offers a few majors, that could be drawback. Not sure why they aren’t in US News, but I dislike that ranking game.

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