Wednesday, March 11, 2009

Why College Tuition Is So High

Just to be clear up front: this is part and only part of the picture. I do think that cost to students and families are too high, and that that is a problem for our society which needs to be dealt with, but it can't be dealt with by telling the colleges to cut costs. Also, let me take a minute to say that private colleges have higher tuition because public colleges get tax money. That that needs to be said is probably surprising to you, but I do run into a fair number of people who think that the state universities are more efficient than we are. They're not. They spend more per student.

Colleges are expected to offer more than in the past: computer labs; nicer dorms; better food; electronic white boards (Smartboards). One little known fact is that colleges are spending a higher percentage on administration than they did before. It isn't all justified, but some of it is. Here that has meant going from one mental health counselor to three, a full-time staff person to assist students with learning disabilities, a better staffed career services department, more people in the business and financial aid offices, and more people in student services running programs, not to mention the six over-worked people in the IT department.

The pressure to research is no longer just what happens at "research universities." Faculty are pressured/feel the need to research more, and they respond by demanding that teaching loads be reduced. I'm inclined to think this affects things like class size more than total cost of the education, but it should be mentioned. I may sometime write an entire post about what I think the pressure for everyone to research is doing to the profession, but that is another post.

Stated tuition numbers are close to meaningless. When a school says its tuition is $30,000 a year what they mean is that (1) they think they are just as good as that other school that charges $30,000 a year; and (2) they think there is a chance that they can get a few students to actually pay that much. Here, where our tuition is nowhere near that high, the students who are paying full tuition are generally international students.

You should know that from the college's perspective there are two kinds of financial aid: real money and discounts. Andrew is going to school on a "tuition exchange" scholarship*. When I look at his bill it says that the school has given him something like $8000/quarter. In fact no actual money went anywhere. They just aren't charging him anything. The other kind of financial aid puts real money into our bank account. Student loans represent real money. Many colleges have endowed scholarships which means that there is actual money in an actual account that generates actual income that we give to ourselves on behalf of a student. Scholarships students get from outside organizations are also real money. Many colleges have discount rates of 50%. That means that their published tuition is, say, $20,000 and they collect an average of $10,000 of tuition money per student. That is less money than you may imagine when you think of all the salaries, science equipment, books computers, etc the college has to pay for.

So what this means is that when you try to figure out how much college costs, the sticker price is an inaccurate measure. Fortunately, there are people who figure out how much families spend and how deeply students go into debt. That number is way too high, and it is a problem.

Now here is the dirty little secret: less and less scholarship money is going to students based upon need.

That might not sound like a bad thing. Meritocracy is good, right? Students who work hard and get the grades should get the money. Well, it is less of a good thing when you get into the nitty-gritty and realize that there are a bunch of kids getting very generous scholarships who have GPA's of 4.0 and families whose make $200,000 a year, and another bunch of hard-working kids paying for their education primarily with loans whose GPA is a 3.6 and whose families make $50,000. I am not saying that all the kids with 4.0's come from wealthy families and all the kids with 3.6's come from middle income-families. I AM saying that when a lot of the available non-loan financial aide is awarded to the kids at the top of the academic meritocracy without regard to need, there isn't a lot left over for other students who really need it.

You may be wondering why colleges do this. Why don't they give out their aid based upon need? The answer: US News & World Reports. Okay, it isn't that simple, but it is almost that simple. College ratings have become immensely important to students, families, and people who give out grants. Ratings are calculated on a variety of factors and one important one is the stats on incoming students. If a college wants to gain in the rankings, it will need to recruit more students with 4.0's and high test scores. Colleges are competing for those students. They may think they are paying us, but we are trying to out-bid other schools for them. It is becoming crazy. We are creating new "scholarships" for the "best" students and there is no money behind them at all.

We need the kids who have 3.5's to pay us more money so that we can give the 4.0 students a free ride.

This existed before widely published college rankings, but it was not this bad. I went to college on a merit scholarship. Twenty-five students a year got it and it came with an automatic payment of what was then about 25% of the tuition. However, if you got the scholarship the college met your need. Every year there were one or two of us whose scholarships were equivalent to 50% or even 100% of the cost of tuition. If the other 23 students were unhappy with their 25% of tuition scholarship then they could go somewhere else and some other student would get it. An average entering GPA of 3.6 instead of 3.7 was not big deal. Still, colleges typically award the money they have to give away based upon merit.

The other side of the problem is that state schools are getting less support from tax money and the federal government has cut their budget for need-based aid. When you hear that students are increasingly going into debt it is not merely that the cost is going up, but that the funding is going down. More of the cost is being put on a smaller percentage of students.

As a society we have to decide whether higher education is important to us. I accept that it isn't the right choice for everybody, but I also believe that a significant portion of our population needs higher education and that it is a tragedy for some of us not to get it because we can't afford it. The only way I know to solve problems this big is collectively, and in this case that means through our government. You may have another idea, but I don't see how increased federal support cannot be a big part of the solution.

*Tuition Exchange is a program that colleges can join. Every time we give a scholarship to a student whose parents work at one of the other colleges in the program, we get a credit that allows us to send one of our kids into the program. Schools need to stay in balance. So some schools only give scholarships to 10% or less of qualifying applicants. Some, like us, have a lot of kids we want to send out and so give the scholarship to 100% of qualifying students accepted to the college.


  1. I'd love to read your post on the growing research expectations at schools that aren't research universities. I'm on the market right now and struggling to figure out how to strike that balance - not that I really have much of a choice.

  2. My husband and I are in our 30's and both attending school right now. In our first year collectively we will have gained $26,000 of debt. I hope after 4 years the debt we have acquired is worth it.

  3. I agree that government support has to be part of a solution.

    But the stuff that really gets me angry is at the other end of the education market.

    Laxly regulated for-profit colleges compete for low-income students. They promise them jobs at NASA, then deliver them a substandard degree that few employers respect. They specifically target immigrants, members of the military and minorities. They will get these people to take out student loans for huge amounts, and many end up defaulting when they don't get that dream job the recruiters promise.

    It's a terrible scam. There reputable tech colleges and trade schools out there, but the substandard ones with the flashy marketing suck in way too many students. I believe accreditation needs to be much more standardized and these for-profit colleges should not be allowed. To maximize their profits, they underserve students... and also underserve their potential employers.

    For-profit colleges are run for the benefit of the executives and shareholders. Top-flight private colleges have a more complex group of stakeholders, and prestige is a huge part of the equation.

  4. I absolutely agree about the for-profits. I would like for them to have to disclose that they are for-profit AND give accurate statistics regarding the jobs and debt loads of the students who graduate from their institutions.

    When we dismiss a student for academic reasons they generally don't appreciate that we are exercising the only ethical option. You have to have a 2.0 to graduate. Enough D's and F's and that becomes nearly impossible and taking tuition money is becoming a scam job.

  5. So now I am worried that I am missing something with the school I am attending as far as accreditation. What should I be looking for? I am not attending a technical school, but I am doing a distance learning program with a University in Iowa. I would love some feedback...

  6. Stacy,
    The issue with accreditation is that they primarily evaluate schools on whether they are doing what they claim they are doing. They don't tell schools what they should do. So if you start a college and say that your goal is to produce students who can do sudoku well, then you need to show that your students can in fact do sudoku well.

    They also care about financial solvency, and have some standards regarding how big your library should be. Stuff like that.

    If you are doing a program associated with a state university then you are not going to one of the for-profit institutes that make some of us so crazy.

    How you evaluate your program will depend upon what you want and need. I don't have specific suggestions except to get as much information as you can about what their graduates are doing.

  7. Generally I delete posts from people who are advertising something, particularly if they are anonymous posters. I'm not deleting the one above, but it's continued presence should not be interpreted as endorsement by me. I don't know if this is a legitimate program or a scam. (If I get evidence that it is scam, I will delete it.)

  8. Stacy, you should look for accreditation by one of the six regional accreditation boards. In Iowa, that would be "accredited by the Higher Learning Commission of the North Central Association of Colleges and Schools." Go to this link to check. It has to be accredited, not just a "member". The regional boards accredit everyone from two-year community colleges to elite private colleges.

    Andrew Jackson is not regionally accredited. DETC accreditation is not necessarily a scam, but it's not as widely accepted as regional accreditation. This statement -- "The DETC is the only accrediting association approved by the US Department of Education solely for the purpose of accrediting distance institutions" -- could be misleading because it implies DETC is the standard for distance learning... plenty of regional-accredited colleges (up to and including Harvard) offer distance learning programs but have no affiliation with DETC.

    The people behind AJU are reaaallly conservative, which really does not attract me. See here. The fact that they named their college after the most racist president in the history of the U.S. is also rather creepy.

    The best way to research online degrees is to check out forums like this one, see what people in the programs have to say and see what people who have graduated from the programs have to say.

  9. To clarify, I don't think AJU are scammers, but they're definitely spammers.

  10. Thanks for the input atlasien. My university is on that list that you linked me to, which makes me feel better.

  11. AJU commercial post deleted.

  12. There is another aspect of this for public universities, I think. That is, in my state, it is clear that both the federal and the state allotments for higher education are dropping in terms of real dollars, so that they cover less and less every year and students or their families are paying more. At the same time, the university systems are not equal access to everyone in the state. Because of the way that schools are funded here, it is highly unlikely that students from certain areas could ever meet the requirements or be competitive enough to be admitted to my campus or perhaps to any public campus beyond a community college. So it is fine to say the state has to pay more, but if they pay that by putting more expenses onto the backs of people who don't have a chance in heck of actually getting onto these campuses, that strikes me as unfair as well. In this state, the upper and middle classes monopolize the state educational system in order to benefit themselves disproprotionately at the elementary and secondary levels, so I am less concerned about middle and upper class complaints about how much they are paying in tuition. They already got a huge bargain earlier, and I would rather see the benefits of tax dollars distributed in a way that is more equitable to the majority of tax payers.

  13. I see your point. Maybe part of the solution is spending more on elementary and secondary education so that more people will qualify.

  14. I totally agree. Then again, I am convinced that a lot of what public universities cover in the first year used to be covered in the sort of solid public high school education that used to be available to most folks, or at least most white folks. My mother is a better writer than most of the first year students and sophomores who I teach, and she got her HS diploma from a rural high school in 1959. We could step up provision of primary and secondary education and make a college education worth a lot more to a broader number of people. Then again, high school teachers now have to deal with so many things that were not at stake back then. I don't think there are any easy solutions.


Comments will be open for a little while, then I will be shutting them off. The blog will stay, but I do not want either to moderate comments or leave the blog available to spammers.