<p>I guess one issue if we are speaking of beyond means is how much can kids who are say going to be teachers afford to borrow/payback out of future earnings??? Certainly many of the tuitions are beyond the means of a student who has to borrow.</p>
<p>Colleges are under pressure to improve their facilities and their programs. Who is clamoring to go the schools with the ugliest dorms, worst food, highest student-faculty ratios, and most rundown facilities? </p>
<p>...You know that new suite-style dorm we've decided to build? Well, we decided to make it regular dorm rooms, a bit smaller than the old dorms. Phones are at the end of each hallway, and their will be one kitchen in the basement outfitted with some stuff we found at Goodwill.
Wireless zones? I don't think so...</p>
<p>That'd go over really well. (I should go visit my alma mater and see if it's still like this!)</p>
<p>Although, when my youngest was looking at schools, I was wishing for a list of least-wired colleges (computer game addict).</p>
<p>I'm sorry that I have not read the whole discussion, but I must add this:
<a href="http://www.amazon.com/exec/obidos/tg/detail/-/0844741973/102-7345667-0132957?v=glance%5B/url%5D">http://www.amazon.com/exec/obidos/tg/detail/-/0844741973/102-7345667-0132957?v=glance</a>
Basically, this book (which I hope to read) attributes the rising costs to the government's increasing financial aid. It's logic is almost self-evident; Colleges raise tuition, the feds raise aid to help poor students, and then colleges raise tuition again so that they can squeeze more federal funding out of students, who are in need of aid. Federal subsidy, as it always does, promotes inefficiency and bureaucracy. </p>
<p>"He suggests that possible solutions to the tuition crisis include modifying tenure, increasing teaching loads, paring administrative staffs, increasing distance learning, and cutting costly noneducational programs. He also suggests even more dramatic changes, including transforming state grants to universities into student voucher programs, as well as other steps to increase privatization of state universities."</p>
<p>How would you motivate universities to streamline their structure? The tactic listed in the article is sloppy and likely ineffective. The original one, of cutting off aid to schools whose tuition increased too greatly seemed appropiate, as it would force colleges to directly confront the costs but now it's totally emasculated. I'd vastly prefer a market incentive.</p>
<p>I think this book is why the feds are studying tuition hikes.</p>
<p>It's almost as if colleges have formed a cartel. They seem to have an implicit agreement not to raise prices, and yet they compete on all else. Duke mandates ipods, another a 53 person jacuzzi, and yet another a waterpark. And yet, they still do not try to maximize efficiency to lower prices. Is college tuition an income redistribution scheme?</p>
<p>Vedder suggests using vouchers for higher education (instead of going to a public school and paying less tuition than at a private, you go to the college of your choice, and the state, not federal government, pays to the university of your choice. This movement is rapidly growing at the K-12 level, but it's still pretty novel at the college level. At both levels, some aim to eventually privatize all education.), and though I strongly approve of it, I do not see how it would assuage the situation.</p>
<p>I originally came upon this when perusing CATO's web site. CATO is a libertarian think tank. Basically in libertarianism, you either deregulate or privatize or abolish. I agree with libertarian principles, though I do not agree with all their stances (I'm skeptical of the wisdom of abolishing research grants)
Here is the general handbook: <a href="http://www.cato.org/pubs/handbook/index.html%5B/url%5D">http://www.cato.org/pubs/handbook/index.html</a>
And the article itself: <a href="http://www.cato.org/pubs/handbook/hb109/hb_109-29.pdf%5B/url%5D">http://www.cato.org/pubs/handbook/hb109/hb_109-29.pdf</a></p>
<p>Like Xiggi, I'm all for small government; however, as I'm from Massachusetts and not Texas, I see this proposal a bit differently. IMO, adding one more federal agency to serve some weird administrative function is not a good thing. Do we really need colleges to spend time filling out paperwork instead of educating students? Newer facilities, more facutly, smaller classes, and better food = higher costs. Does this surprise anyone? Also, many colleges go through periodic changes, where they will build a bunch of buildings over a couple of years, and then nothing for a decade. Obviously, costs go up when you are improving the infrastructure that way.</p>
<p>Maybe I'm just too much of a privacy person and really don't like the feds collecting information for their databases. </p>
<p>As mentioned earlier, colleges can offset higher costs by taking more students who can pay full fare and thus keep their tuition changes in line with inflation and avoid the federal requirement. </p>
<p>Finally (pardon the rambling), some schools have radical tuition increases because they had years and years of below-inflation tuition increases. The undergrad side of my school had extremely low tuition for a school of its caliber but is instituting large increases. So the percent change high, but the overall figure is low.</p>
<p>This discussion is curious.</p>
<p>Xiggi, if one believes in free markets, then we consumers are ultimately to blame for the cost of a college education, especially private colleges. We agree to pay the cost. Who on these boards has opted to attend the least costly option? Who has chosen a local community college over Harvard? Yes, I realize the comparison is apples to oranges, and we all realize that some families do consider cost. If one does a segmentation analysis, though, one cannot help but observe that those who most consider cost (a good swath of the middle class?) are also the least sought after group of students, especially at the elites.</p>
<p>Now, let's consider the cost side. In most unis with grad programs, it is the latter that drive expenses, especially the sciences. In fact, many unis make money on undergrad education, although it is rarely discussed, and invest the surplus in grad education.</p>
<p>When hearing he argument about federal fin aid money driving up tuition costs, (any monetarists around? Sure sounds like an M1 argument to me...) keep in mind that correlation is not causation.</p>
<p>IMHO, this sounds like one more example of the administrations hostility to higher ed, maybe ed in general. First we have No Child Left Behind, leading to federal mandates and controls. Then we have GWB's desire to have ID taught alongside evolution. Now we have this?</p>
<p>A couple of thoughts--what inflation measure are they going to use? It better not be CPI, and rather be something more like HEPI.</p>
<p>I don't believe colleges currently have "no accountability" for their tuition increases (which has been implied). For that to be true, one would have to believe that students and parents don't react when tuition is announced. You'd have to think prospective students don't ask about price. You'd have to assume that state legislators and governors don't say something when public institutions raise tuition.</p>
<p>To some extent students vote with their feet, so that is the ultimate accountability. Where this falls down is among upperclassmen, where they already have a lot invested in their current institutions. They're pretty much on the hook to just pay whatever hikes come along, or risk losing credit hours and momentum.</p>
<p>For this reason, as a consumer I can see the appeal of a plan like that imposed upon Illinois public colleges, where for each incoming class they set and guarantee tuition for the four years. Students can decide upfront if that's a fair price for the education, and know they'll pay it until they graduate. No surprise tuition hikes. </p>
<p>As a higher ed administrator, I find that plan scary, since you don't know what your revenue stream will be in the future and to have a quarter of your student body locked in at one rate feels like a gamble. But as a parent, taxpayer, and economist, I like the idea of such a system. :-)</p>
<p>I reviewed Going</a> Broke by Degree some months ago - I hope that the book was one of the things that got this proposed Fed program rolling. The consistency with which tuitions have risen faster than inflation over the last quarter-century is astonishing.</p>
<p>Colleges currently have pricing power. When people complain about higher tuition, colleges offer aid to the neediest students. While this is laudable, it does nothing to hold down the growing costs. Successful businesses periodically reorganize, whack entire operational segments, prune deadwood, and slash overhead. Colleges have yet to be forced into this position, although the eventual baby bust will put some in a position where they have to make cuts.</p>
<p>As a UT-Austin administrator put it, different colleges report tution costs differently. It would be interesting, though I'm not sure how possible that would be, to report tuition increases separately from other types of costs. I suspect that a lot of expenses by the colleges have little to do with tution per se: New and expensive athletic facilities, a larger range of sports offered in order to comply with Title IX, bettter equipped dorms (with Wi-Fi, more singles, and all sorts of amenities undreamed of when I was in college), better and more varied food, computer centers and support staff. Who demands such things? We, parents cum taxpayers.
There are as well all sorts of support resources, again, unavailable when I was in college: bureau of study skills, drop-in math center, a lot more investment in mental health support.<br>
I wonder where in a student's tuition bill do these components of a college education get listed. Some can obviously go under room and board, but a lot are not strictly tuition, nor are they part of room and board.</p>
<p>I wonder where this cost is factored into the tuition rise? Also despite some endowments having good investment returns and some of that growth offsetting current tuition the market and interest rates will have hurt this. We are coming off of 10 years of growth in return. As things change I guess the question is will folks of my generation be as "prosperous" as the parents on CC now are. I mean we are paying more and going out into a global market. I wonder about this. Retirement plans at risk, higher medical expense, other costs.....perhaps the money passed along to the endowments will not be forthcoming.</p>
<p>marite, it has a lot to do with the budget structure of the college or university. Where I work, housing is an auxiliary unit that is self-supporting. That is, anything increased costs for upgrading dorms have to be paid for by housing itself from room and board revenues, not tuition revenues. Athletics is also separate--anything built, bought, or upgraded for sports teams is a part of that budget, and is paid for by, well, football tickets. :-)</p>
<p>You raise an excellent point, that many of the costs that colleges incur are demanded by "consumers" or required by new regulations. And many of them are things we'd agree are good additions (such as mental health services). But it's probably not the case that all of them drive up tuition, particularly if auxiliary units have completely separate budgets.</p>
<p>ariesathena, there is also increased inefficiency, the result of increasing administrative oversight and decreased teaching burdens (though, if teachers are doing more research instead of teaching, they increase their productivity, as the university obtains money from research grants). Aren't most new buildings paid for by alumni? Don't construction of new buildings accompany an increase in class size, increasing revenue?</p>
<p>newmassdad, I agree, in that the college 'brand' is so strong that it can transcend price. A kid from my school reportedly spurned JHU and instead attended a community college with the intent to transfer later.</p>
<p>Universities actually make money on the research done. They get 40%+ of the research grant money, and may even recieve hundreds of millions in royalties from patents later. There was some lawsuit against Columbia regarding the latter point. I think though that the science, medicine, and engineering bring in far more revenue than other disciplines. Athletics, if sufficiently popular, also produce profits.</p>
<p>This is not a case of hostility towards higher education but rather a healthy skepticism of the reasons for tuition increases.</p>
<p>It's ironic how nonprofits can be more expensive than for-profits.
Elite colleges wonder why the poor are so absent from their campuses but have no qualms about raising tuition. There seems to be no real pressure on schools to lower their tuition.</p>
<p>Hazmat, exactly what are you implying? Interest rates are rising to moderate the economy. A higher interest rate is good if you simply put money in a bank account and bad in the short term if you invest otherwise (If the interest rate is too low, the economy overheats and goes into recession). As we go "out into a global market," we are paying less, not more. If another country is more productive, ie produces things more cheaply, and trade is unrestricted, we will benefit from their productivity through lower prices. You could not consume as much if China and others had higher wages for labor.</p>
<p>Vouchers for higher education would be very interesting, but it is still very tentative. For the fall 2005 session, students in Colorado will be able to use a $2,400 voucher at any public university in Colorado or at three private universities there. If public universities recieved funding from vouchers from all states, and not directly from the state of residence, and would not be required to have a certain proportion of instate students, they would better compete with the private universities. Basically, it would privatize public universities but the state would fund students directly instead of forcing them to attend certain universities to recieve benefits.</p>
<p>Hoedown:
Thank you. I just wonder about what the "index" would cover. The phrase "tuition costs" seems to be used very loosely. When I look at the $43k per year my S will be incurring, I don't break it down into "so much for faculty salaries, so much for providing wi-fi throughout campus, so much for police protection" etc... I doubt other parents do, either,</p>
<p>For sports, I expect that only some teams can fill their stadiums (same with professional teams) and only some sports attract lots of spectators. </p>
<p>I find it interesting to juxtapose the discussion of rising college costs and the reports of visits to colleges on CC: wha appeals to most students and parents is probaly high on the list of what drives college costs up.</p>
<p>"wha appeals to most students and parents is probaly high on the list of what drives college costs up."
If that was the sole reason, don't you think lower prices would appeal to some more than amenities, and thus a college would serve that market? Are colleges that out of touch with the market? Or is the price of college that removed from the decision making?
If Harvard reduced its tuition, would other colleges follow suit to compete?</p>
<p>
[quote]
If that was the sole reason, don't you think lower prices would appeal to some more than amenities, and thus a college would serve that market?
[/quote]
</p>
<p>Yes, and that's why many students go to college in-state or chase after merit money.
[quote]
Are colleges that out of touch with the market? Or is the price of college that removed from the decision making?
[/quote]
</p>
<p>The pricing strategies of luxury goods providers is worth thinking about. What distinguishes a pair of Manolos from similar sandals from Target? Going for low prices at la Wal Mart is only one way to make profit. The other way is to cultivate an air of exclusivity and set prices sky high.</p>
<p>"Universities actually make money on the research done. They get 40%+ of the research grant money, and may even recieve hundreds of millions in royalties from patents later."</p>
<p>This is an interesting point, and largely untrue. Universities are allowed to add inderect costs to the direct costs of federal grants, but the indirect cost rates are heavily negotiated with the government, so only certain kind of expenses are covered. What is? The cost of the building, for instance - after all, you DO need lab space for most of these grants. The concept of "making money" comes, I think, largely from the fact that the expenses being covered by overhead are largely fixed expenses. As anyone who has ever run a business will tell you, you need to cover fixed expenses too, or you'll be out of business.</p>
<p>Regarding the profitability of U inventions, while a few unis, Columbia, Stanford, U. Florida (Gatoraide!), MIT, for example, have made many $$, most others have not.</p>
<p>Actually, it is a COMPLETE FALLACY to assume that increased students = increased revenue, and thus there is no need to increase tuition. </p>
<p>Tuition, even full freight, does not cover the per-student cost. Roughly speaking, full freight is half of what the university spends on each student. Therefore, when you increase the amount of students, you increase what the university pays out of its endowment. Most endowments (and please, I said most, not all - so don't jump in with Harvard numbers) do not increase at, say, 10% per year, but the student enrollment could so increase. If the college pays $30k per student from its coffers and accepts 100 more students, then it has to come up with $3 million more. Roughly - see below.</p>
<p>To a certain extent, more students won't increase costs. If the dorms are not filled to capacity, if professors have extra room in their classes, and the academic buildings are not bursting at the seams, adding a few more students will not change your cost. However, the addition of, say, 100 more students could require building a new dorm and academic building to allow all students on-campus housing and to keep class sizes down. Do the math. 100 students, $35k each in tuition = extra $3 million in revenue that year. Cost of academic building and dorm: in the $25-$50 million range for the two of them. The increased revenue from tuition obviously does not even cover the increased need for infrastructure, let alone professorships. There is also parking, gym facilities, cafeteria facilities, computing labs, etc that would need to be expanded. It is nuts to assume that increased tuition revenue could cover that.</p>
<p>I don't think that "research" covers the professor problem - more likely, it's just that colleges are trying to reduce their class sizes. Unless you want professors to teach more classes (some would probably prefer one class of 25 students to two classes of 16 - and many might have contracts which limit the number of classes they teach, regardless of size), you're going to have to hire more professors. You're also going to have to find a place for them to teach and to get more office space for them. </p>
<p>In math terms, there is not a linear function between student enrollment and university spending - it's a step function. Spending is constant until a certain point; above that threshold, you see a dramatic increase in spending needs. That is part of the reason for cyclical building. Another reason is the economics of the time - for example, a college which does not guarantee on-campus housing and allows upper-classmen to go off campus will not have a constant need (determined by the student's preferences) for dorm space. When rent in the surrounding town is low, many students will live off-campus, thus freeing up dorm space. When rent increases, students will want to move back on campus, which creates a huge housing crunch. </p>
<p>Unless I'm mistaken, alumni donations do not cover the full cost of new buildings. My alma mater only requires that 1/2 of the cost of the building be paid for by the alum to be named for him. There are also quite a few buildings on campus which aren't "named," so obviously they were built without significant alum funding - not uncommon. The university will often try to solicit a donation after the completion of the building for the right to name. Alums are more likely to donate money for academic buildings and not dorms.</p>
<p>Has anyone had any success tracking down a debit and credit type budget report for a private college or university? I've looked and looked and the closest I have come is some broad details such as "we spend $X millions a year on our operating budget" or "our endowment income rose by $X million this year" with no specific breakdown of where money comes in and how it goes out. Maybe I'm missing the obvious: does anyone know the correct name for this type of report and how to approach colleges about releasing it? Perhaps the above book would provide some information of this type.</p>
<p>
[quote]
Alums are more likely to donate money for academic buildings and not dorms.
[/quote]
</p>
<p>They are also more likely to donate money for sports facilities than libraries or graduate student support--or reducing tuition. In the last Harvard campaign, the first category to be endowed first was chairs for sports coaches. The library did not get as much as it needed although digitalizing it involved huge costs.</p>
<p>carolyn, </p>
<p>I tried Stanford on a lark, and found this.</p>
<p>Chicago also:</p>
<p>I just went to the website and typed "budget."</p>
<p>Research as demonstrated by the links above does produce revenue, but it is difficult to discern whether it is indeed profitable or not, though I doubt that universities would pursue research as vigorously as they do without the incentive of profits.
My stepmother, a research professor, has personally told me that universities take a certain percentage off all grants. At USC where she works, they take about 60%+ off. They may also charge in addition to that for other costs.
A university need not be prestigious and large to make money off a single patent; one patent by itself can bring in millions of dollars. Not to say that those royalties will offset other costs, but merely that many universities have the chance to pursue patents and royalties.</p>
<p>ariesathena, strictly speaking, raised enrollment increases revenue and costs. I do not know the policies of alumni donation. I agree with what you wrote, except that the cost of increasing the student body by (say) 100 students would varies between public and private schools, between large and small schools, as each has varying aims for student faculty ratio and the like. If one school has a 10:1 ratio, and another a 5:1 ratio, and both seek to uphold their ratios, the former must hire 10 more professors, and the latter twenty more, for enrolling a hundred more students.</p>