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The Real Reason College Tuition Costs So Much

182 points| colincsl | 11 years ago |nytimes.com | reply

129 comments

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[+] reuven|11 years ago|reply
American universities aren't just about education. Or even research, for that matter. They're often about providing a "life experience" for undergraduates. So you have a huge investment in sports, entertainment, and living facilities that are basically unheard of in other countries. Plus, all sort of administrators and advisors who help students in a variety of different ways.

These add up to a great experience, and arguably make the education better. But they also reflect how little the US government provides vs. other countries. And how much students depend on the university to provide services that in other countries would be provided by other agencies. And how an American university is expected to provide much more than just classrooms, lectures, and research.

I graduated from two American universities (MIT and Northwestern). Each of these had an on-site medical facility (unnecessary in countries with nationalized health insurance), financial aid offices (unnecessary in places where the tuition is lower, or handled by centralized government agencies), student-only shuttle services (unnecessary where public transportation is good), sports teams (unheard of outside of the US), and a wide variety of extra-curriculars (again, basically non-existent outside of the US). Each of these requires a bunch of administrators.

The building in which I did my PhD had a huge support staff. In an Israeli or European university, I think that the 15-20 secretaries, planners, and managers would have been replaced by 3-4 people. Overworked and underpaid people, mind you, but that's how you keep costs low. And my office (as a graduate student) in the US was positively opulent compared to what you'll find abroad.

I used to think that student aid in the US was a great thing. But I do believe that American universities have basically decided that they can raise tuition without any penalty, because almost no one pays that sum out of pocket -- and everyone else just takes on crushing debt for many years to follow.

Now, the fact is that I had a blast in my undergrad years, and my experience editing the student newspaper led directly to my current career. But having met many students and graduates in Israel (where I live), where universities are places to learn and do research, rather than have "life experiences," I'm not at all convinced that the added expense and overhead are worthwhile.

[+] chrisBob|11 years ago|reply
The extra features are all based on how US students choose a school. Here undergrads go to the school with the beautiful student union, the gym with a juice bar and climbing wall, and want to live in a room near the nicest 24 hour dining hall with made to order stir fry and sandwiches. Having granite countertops in the dorm room also helps.

This is just how the select the specific university though. The target group of universities will probably be something like "City school in the North East", "Private college with small class sizes", or "Ivy with good greek life".

As a contrast ask a Chinese person how they pick which university to go to in China. You will immediately get a confused look and the answer: "The highest ranked one you can get in to". My co-worker couldn't even imagine picking based on anything else.

[+] jakejake|11 years ago|reply
Some people treat college like a four year vacation with planned activities. In which case the price is really quite cheap.

Looking back, I was guilty of this attitude at various times.

[+] gumballhead|11 years ago|reply
I upvoted this comment because this is all very true and gets to be very expensive as enrollment rates increase, which was also mentioned in the article.

But, despite all of this expense, I don't feel like I got a great education while I attended a public university. My classes were taught by grad students and adjuncts in 400 person auditoriums.

I ended up transferring to a small private school about the size of my high school. The tuition was about four times what I was paying at a public school (though I didn't pay near that much out of my own pocket) and the quality of teaching was night and day.

[+] snogglethorpe|11 years ago|reply
One thing I've noticed about American universities compared with universities in other countries (Japan, Korea, UK), is that almost every decent American university I've seen seems to be really well-maintained, in that the campus is very clean, in good repair, frequently renovated, etc, even the out-of-the-public-eye spaces (grad student offices and the like).

Japanese and Korean universities, on the other hand, are often rather shabby, even the top-tier ones (Toudai etc). They're still perfectly fine places for the intended purpose, mind you, just maybe a little worn.

I dunno how much of a part money maintenance and construction play in university costs, but I imagine it's labor-intensive, and so not exactly cheap...

[+] HeavenFox|11 years ago|reply
This. It basically holds true for any product: price doesn't increase linearly as quality goes up.

I go to college in U.S., and a lot friends of mine attend one of the best universities in China. I have the freedom to take practically any course in the university, and my friends basically know what their four years look like before freshman year. I never worry about finding seats in the library, and my friends sometimes have to camp outside before it opens near finals. I have plenty of resources (Profs, TAs, advisors, peer tutors) when I get stuck, whereas my friends mostly have to figure it out on their own. I've been living in singles since freshman year, and my friends have dorm rooms that are slightly larger than mine, but with four students living in it. They don't even have shower in the dorm and have to go to a communal facility. Their bathrooms are dark, dirty and don't have bowls (squat toilets), while ours are some of the cleanest I've seen.

On the other hand, I pay almost $50k in tuition alone each year, while my friends pay <$1000. I pay $8k a year for housing, and my friends pay ~$150, per year

[+] cowsandmilk|11 years ago|reply
Some might even argue more run-down buildings allow for better science. When you believe your building is cramped and in bad shape, changing its form slightly to get an experiment working is more acceptable. Cutting holes in walls, exposing beams to add supports for chemical reactors, and general experimentation. At least that's the idea behind the fetishization of Building 20 at MIT[1-3].

[1] http://www.nytimes.com/1998/03/31/science/last-rites-for-a-p... [2] http://newsoffice.mit.edu/1998/b20main-0401 [3] https://en.wikipedia.org/wiki/Building_20

[+] morcheeba|11 years ago|reply
The author of the article is from Boulder... they just started on a $63M rec center renovation and they have a pool in the shape of a buffalo. There are only 30,000 students, so right there is $2,000 per student on a portion of the facilities that isn't involved in teaching.

http://www.dailycamera.com/cu-news/ci_25916902/cu-boulder-bu...

[+] mdasen|11 years ago|reply
Economists sometimes talk about different types of quality: actual quality and perceived quality. There has been a lot of spending that has been directed toward perceived quality at American Universities. That includes a lot of new buildings, a lot of maintenance, etc. In a certain way, it becomes a race to spend more. The more you spend, the better students you can attract, the better your status is and your alumni and industry donations are. All of this spending to entice 16 and 17 year olds to choose your university over another based on a cool study area, the prospect of free concerts, lots of student life staff to talk to and handle your needs, etc.

In the United States, university education is extremely hierarchical. If you're fairly well off (parents earning $120,000/year), you can easily get a free education at one of the top schools. However, go to a school closer to 25th and there will be fees even for those whose parents earn less. I don't think most countries third-level systems are nearly as hierarchical. As such, it's a big deal for universities to compete for students (and students to compete for universities) in the US.

A lot of that probably comes from American universities being completely independent of one another. I mean, sure, Imperial College London is independent from University College London, but they're ultimately responsible to the UK government. I don't think unbridled spending to court students from one government institution to another (via perceived, not actual quality) would really be looked upon well.

To be fair, the lack of coordination can also put American universities in an awkward position. As soldiers came home and took advantage of the GI Bill, universities greatly expanded their capacity to teach them. As that large increase in students dropped off, universities were left with a lot of excess capacity. A lot of the increase in spending can be traced back to that period as universities tried to keep their enrolment steady.

Ultimately, American universities are a combination of school and summer camp. Generally students live in university-owned dorms, they eat in university-owned cafeterias, and go to university-sponsored social events. All of that costs money, but in a competitive environment where students travel across the country to go to the university they perceive as best (that let them in), those costs are necessary from the university's perspective.

[+] jkestner|11 years ago|reply
Those are the things that administrators care about. Can't bring in more money if you don't have good-looking brochures. Like a lot that administrators do (including replicate themselves), it's considered a marketing expense. Because building reputation takes too much time.
[+] Animats|11 years ago|reply
The short version: "A major factor driving increasing costs is the constant expansion of university administration."
[+] dikaiosune|11 years ago|reply
At the university where a friend works, a huge amount of the staffing expenditure is on (rarely well-run) IT. Another big chunk of the staff is employed to essentially wrangle the part-time faculty who are on short contracts and don't stay for more than one or two years.

I think that in many cases universities have turned to hiring staff to circumvent many of the political problems of trying to manage professors (edit: tenured people are a bitch to manage and will resist any and all changes in most departments, in case this wasn't clear before). It's a poor solution but in some areas it's the only way to make changes.

The IT, the slow rate of change among faculty, the part-timers, etc, could optimistically be put down to changing student and market demands. Pessimistically much of it could be put down to an institutional desire to have central control.

[+] seunosewa|11 years ago|reply
What's responsible for the constant expansion of university administration?
[+] ForHackernews|11 years ago|reply
Part of it is also a social signaling factor. Because eduction is a superior good and a positional good, there's pressure for it to get ever more expensive (at least on paper). After all, if the Johnsons' kids are going to a $40,000/year school, you want to make sure your little darling goes to at least a $45,000/year school.

The secret is that many elite colleges give such generous financial aid that only the extremely wealthy are paying full freight. But it still makes the college looks good to have an astronomically high sticker price.

[+] graycat|11 years ago|reply
The OP keeps talking about the tuition increases. But as far as I could tell, the OP was considering only, call it, tuition list prices. But, with scholarships, various forms of financial aid, etc., maybe often the list price is not the actual price, that is, what the school actually receives from the student (and their family). So, the OP didn't explain how much the actual price has changed over the decades.

E.g., recently Stanford announced that the tuition will be $0.00 for any student whose family earns less than $125,000 a year. Sure, maybe the list price tuition at Stanford is ballpark $50,000 a year. But the actual price is sometimes zero. And some scholarships also cover room and board making the actual price negative.

It was long the case that the tuition for a student paid only ballpark 1/3rd of the full school budget per student. So, maybe what's happened is that the schools decided to set the list price to be the full cost per student, maybe plus some, and have students from wealthy families actually pay that price. Then nearly all the rest of the students get a significantly lower actual price, maybe even $0.00.

Further, given that there are student loans available to cover the list price, then maybe just go ahead and charge list price for students using student loans.

Then we have the issue of, with so many students getting student loans, maybe they are not very good students and wouldn't even have been accepted at the school back decades ago. Maybe. Or, if some money sources are eager to pay or loan list price for some not very good students, then colleges can be tempted to go ahead and take the list price easy money and let the students attend the classes.

[+] nkassis|11 years ago|reply
I'm not sure I understand what you are trying to say. But I challenge your argument that schools are listing the full cost per students.

One reason I doubt current list price of tuition covers 100% of the cost per student for the vast majority of schools (which are public and receive state funding).

Students with student loans aren't bad students. Depending on you parents salary they might not qualify for any other type of need based financial aid except student loans. Also, merit base aid is limited and can't be extended to all students with academic standing that usually leads to them successfully completing college with high grades.

In the end, a large amount of students pay for college entirely with student loans and don't realize the cost until they are in repayment. They pay the list price and more due to other costs of going to college.

To successfully be able to pay for college without aid and loans a student today would need to have a full time job while students in the 1950-60... could generally pay the full amount with a summer job.

Edit: Also, price per students vary between faculties, a engineering student might cost 50K+ while a arts student would cost half or less of that. Some students end up subsidizing others.

[+] muzz|11 years ago|reply
Yes this article, and many others, employ the "sticker price fallacy" to advance their claims.

As David Leonhardt put it, tuition is like sticker prices at Joseph A. Bank "If you take Joseph A. Bank’s sticker prices literally, you don’t understand its business."

http://www.nytimes.com/2014/07/29/upshot/how-the-government-...

[+] pacifist|11 years ago|reply
It didn't make sense to me until I read this:

from the article:

"Some of this increased spending in education has been driven by a sharp rise in the percentage of Americans who go to college."

from the comments:

"The money PER STUDENT was slashed. That is what matters for the cost to each student."… "This is an elaborate lie, to justify what is indefensible without the help of such lies."

[+] MCRed|11 years ago|reply
I think a more interesting question is, how has the ROI of college changed over the past 40 years?

The cost has gone up much faster than inflation.

The number of people going to college has also risen dramatically. This means there are a lot more college educated peers competing with you in the workplace. This means that the college degree is not as rare, and thus has lower scarcity value.

Finally, I think it's quite possible the quality of the education has declined significantly in the past 40 years. When I was in college, almost 30 years ago, I was appalled at how the university focused and spent so much of its money on a losing football team (in a zero sum situation where the other schools were always going to be abel to massively outspend it and had larger pools of students to recruit from) ... and in the decline in the education. I remember sitting in a class and learning about how universities were started by tradesman who banded together and hired experts to teach them, and I thought "Man, I wish I could go to a school like that". Since then I've seen nothing but an increase in these efforts... I've see the quality of a CS degree (based on the people who I interview for jobs who have them) decline.

So the formula is: More Cost, Less Value, Lower Quality = Lower ROI.

If things don't turn around, at some point College will be a losing proposition.

Of course, this presumes that the education colleges give can be obtained elsewhere.

Which brings up another point MOOCs, and online access to open source frameworks have really changed things in the past 30 years. 30 years ago we were buying our compilers (CodeWarrior for life!) now they and our frameworks are open source and well documented. The books are cheaper-- $40 to Oreilley rather than $120 to the campus book store (or are my prices out of date?)

You can learn more modern technologies better than going to college and spending 4 years on Java and C++.

Then there's the MooCs. you can learn CS fundamentals by video, along with people all around the world.

I think we're close to that tipping point.

[+] nickysielicki|11 years ago|reply
One criticism I have of education systems is that they structurally encourage only superficially studying content.

Let's take my compilers class as an example. I go to a 75 minute lecture 2 times a week and I do about 4 hours of homework a week. I do this over 18 weeks.

That's only roughly 120 hours of study over the course of a semester. That's only as many hours as most full time employees work every 3 weeks! And the sad thing is, I imagine if I spent 3 weeks reading a compiler book, reading though the source of lex and yacc, and implementing some kind of basic compiler using them, I'd be a much better programmer than what we're doing-- implementing a C compiler for MIPS in java, using a shitty lex library and only implenting the parts the professor thinks is important.

This brings me to another point. Programmers are necessarily autodidacts because shit changes incredibly fast. You can't be a one trick pony. So if we're pushing kids through these incredibly formulaic methods of learning, what are we really preparing them for? A life of being an enterprise code monkey? The student who taught themselves anything, even if they are missing a few core details, are more equipped to fix those gaps in their understandings.

I did a hackathon a couple weeks ago that had a sort of business spin on it. There was this group of 4 guys that made a college choosing application based off your GPA, as a desktop java application with a GUI that had background images and looked like an early 2000s keygen program.

The thing is, I have absolutely no doubt that these guys are good students and they'll probably find an alright job out of school. But all they know is java development.

I think that students that want to be more than that probably shouldn't go to school.

Here's a question to you: if I handed you a résumé, without a bachelor's degree, but instead included my github profile and a list of books I've read cover to cover and some open source contributions, am I going to get the salary I am worth?

[+] FLUX-YOU|11 years ago|reply
You still need some sort of equivalency in the mind of the people doing the hiring before the MooCs move in -- something to get them past the mindset that only people who go to college can perform the job. Businesses also need to stop auto filtering people who don't have a degree, and that's something that you'd actually have to fight for to get removed, meaning most hiring managers won't be arsed to take up that fight. Most sane places will realize that actual code is more indicative of skill than the degree (this is before you've met the person), and we thankfully have free tools to accomplish that goal.

It would be fine if college were something optional and there could be a carefree debate. The degree in America is quickly turning into something that is required for decent employment, but can give you a very difficult financial situation for a long time if the reward doesn't meet the cost.

[+] hacknat|11 years ago|reply
Agreed. One thing people usually don't take into account when they talk about current College ROI is the opportunity cost. Especially at non-first tier private schools the opportunity cost must be considerable.
[+] beachstartup|11 years ago|reply
what they taught me in econ 1a:

1. limited supply (even when you count the fake for-profit schools)

2. increased demand (EVERYONE wants to go to college)

3. easy financing which increases 2. (student loans)

results in inflating prices.

not really sure what the mystery here is.

[+] mark-r|11 years ago|reply
This is the fallacy in government providing low-cost loans to everyone. Unless the supply of colleges increases, it just ends up increasing demand for the same supply, driving up prices - and producing a boatload of graduates with mortgage-sized student loans. All on the assumption that the degree will give them increased earning power, which is increasingly unlikely in today's economy.
[+] mrxd|11 years ago|reply
Revenue per student (state appropriations + tuition) has been flat for 30 years. What's changed is the proportion of revenue that comes from tuition.
[+] ta82828|11 years ago|reply
The article is about state schools though.
[+] m3talridl3y|11 years ago|reply
Someone needs to build a "spartan" college. Use the cheapest construction materials+. No sports teams++. No extracurricular activities+++. No degrees that aren't in STEM.++++

+ - Does the round glass section contribute to learning in some way? What am I missing? http://newsroom.unl.edu/releases/downloadables/photo/2012091...

++ - If your sports team starts to win, people will wonder why your crappy 10-year-old sports stadium hasn't been demolished and rebuilt. It's 10 years old already! We need at least 30% glass panel coverage on the exterior! Get with the times already!

+++ - You want a robotics club or a harry potter reading club or a javelin-throwing club? Fine, but find your own funding.

++++ - If you really think you're the gods' gift to mankind when it comes to ancient Egyptian art, then by all means, get admitted to an ivy-league-status establishment. The last thing the world needs are more junior-league art majors.

[+] cm2187|11 years ago|reply
I would say quantitative easing has a lot to do too. It didn't create the broad inflation everyone expected. Instead some sectors went into high inflation: housing, stocks, tuition fees, etc.
[+] marincounty|11 years ago|reply
The real reason college tuition costs so much=because they can!

(Most schools found that students/families will find ways to come up with the money. These schools will blame everyone, and everything, but they still raise tuition. When questioned, they brag about the scholarships. I understand some state schools, but really question schools like Haarvard with a billion/year coming in through endowments.)

[+] adrusi|11 years ago|reply

    > For example, the military’s budget is about 1.8 times
    > higher today than it was in 1960, while legislative
    > appropriations to higher education are more than 10
    > times higher.
This isn't the relevant statistic. I'm going to guess that the size of the national student body has increased since 1960, and I wouldn't be surprised if it was by more than a factor of ten.

I'm not saying that therefore lack of government spending is the cause of high tuition, but this article dismisses it too quickly.

[+] nulltype|11 years ago|reply
Well the article addresses that point like a paragraph or two later.
[+] brianbreslin|11 years ago|reply
My father is a university administrator, and he told me this theory years ago, that the costs were due to excess bureaucracy.
[+] sytelus|11 years ago|reply
What would be an example? What these administrators are doing anyway to destroy so much of value?
[+] guelo|11 years ago|reply
One of the big crimes of these administrators is that it's so hard to get accurate numbers when trying to have this debate. Has the funding per capita gone down proportionally to the tuition increase? Is the increase in administration and facilities proportional to the increase in enrollment?
[+] melling|11 years ago|reply
We should all try to remember this because it's not what we've been told:

"What cannot be defended, however, is the claim that tuition has risen because public funding for higher education has been cut. Despite its ubiquity, this claim flies directly in the face of the facts."

[+] endzone|11 years ago|reply
as he admits, per capita funding has indeed fallen. the problem is an over expansion of higher education. what proportion of the population can really benefit from a full time residential degree course? much less than 50%
[+] bawana|11 years ago|reply
the same malady affects health care. corporate-itis