Understanding the Rise in College Tuition (Part 2: Debunking Myths)

Concern over the price of a college education is widespread, and as a result, there are nearly as many explanations for why college costs so much as there are colleges.

In "Understanding the Rise in College Tuition," I noted the steep rise in college tuition and the main reason for its most recent increase — the 2008 recession. Now, let’s take a deeper dive. While it can’t be denied that college tuition has increased, some of the explanations are either a bit lame or only half-truths.

Here are a few of the most widespread laments:

Administrators Ate My Tuition

This headline certainly gets our attention, but is it accurate? A 2014 report on college staffing I co-authored noted that there had indeed been an increase in the number of administrators, but primarily in mid-level professional positions rather than in highly-paid executive and managerial positions. These are the people who review the skyrocketing number of college applications, help the many students applying for financial aid, assist faculty and students with their increasingly complex IT needs, and staff the university centers that provide services families have come to expect, from tutoring to counseling to job placement. I know of very few students who would want to go to a college without these supports.

Of course, it’s easy to find examples of highly-paid administrators. The president of Rensselaer Polytechnic Institute makes more than $7 million annually, and there are many examples of college football or basketball coaches who earn more than college presidents. But these cases are not indicative of overall trends in higher education; they are really just headlines.

"The Faculty Are to Blame"

In college finance courses, students learn early that higher education is a “labor-intensive industry,” meaning that much of the cost of running a college or university results from paying salaries. And despite mid-level administrative growth, faculty still comprise the majority of professional positions in most colleges and universities.

There are, however, two important facts about faculty that shed some light on conversations about rising college costs:

Fact 1: The growth in faculty has been in low-paid, part-time positions.

Between 1990 and 2012, part-time positions in different types of public institutions increased between 115 and 155 percent, while the growth in full-time positions grew less than 40 percent. Private colleges and universities also saw a much faster growth in part-time positions.

Part-time instructors, often referred to as adjunct professors and typically paid on a per-course basis, don’t earn anywhere close to the salaries of full-time, tenure-track faculty. Two years ago, adjuncts were paid from $2,250 to $3,800 per course, depending on where they taught. So, if a part-time instructor taught six courses in a year, her pay would be between $13,500 and $22,800 — not exactly a living these days! Colleges and universities have thus saved money by hiring low-paid, part-time faculty. (Research is mixed on whether their teaching is better or worse than that of full-time faculty.)

Fact 2: Salary increases for full-time faculty have been flat or minimal.

Indeed, faculty salaries are still at pre-recession levels, despite a slight increase above inflation in 2014.

Resort Living Comes to Campus

One of my favorite headlines! Campuses today look different than they did a few decades ago, and there are indeed fairly luxurious dorms, first-rate gyms, and student centers — and yes, climbing walls too! The truth of the matter is that these so-called amenities do cost money, but in reality, less than 15 percent of all new college space built since 2005 was devoted to student centers, recreational facilities, dining halls, and other student-life facilities.

The flip side of the coin is that students typically want these amenities. I cited several studies in a short brief, "Climbing Walls, Climbing Tuitions," showing that applications increased after new dormitories were built. More than half of first-year students surveyed considered campus appearance important; good facilities — especially good academic buildings — make college recruitment easier. There is even evidence that student use of recreational facilities results in better retention and graduation rates.

So yes, campuses are more “luxurious” these days — visibly so — and there are costs associated with these facilities (although new facilities aren’t the main cost driver). Students more or less expect these amenities, and colleges reap benefits from them — at least in terms of increased applications and enrollments.

The Other Factors Driving Tuition Increases

The topics I highlighted are those that tend to get media attention, but we really need to ask if they are significant contributors to escalating tuitions. The answer is “kind of/sort of” or “on the one hand/on the other hand” or “in some ways, ‘yes’/in some ways, ‘no.’” In other words, what is fundamentally driving tuition up, beyond the recession, isn’t terribly straightforward.

Recently, a federal report examined the impact of government regulations on higher education, including its cost. At least 80 different regulations were identified, and although there was no national estimate of the cost burden, Vanderbilt University estimated that it spent approximately $150 million per year simply complying with higher education rules and regulations —which range from filling out required surveys to addressing financial aid documentation to reporting student safety statistics. Certainly some of the costs of complying with these regulations are passed on to students.

Another potential cost driver — our K–12 schools! Although estimates vary, a significant portion of entering college freshmen aren’t ready for college-level work and need to take remedial courses. One estimate indicates that 52 percent of students entering community colleges and close to 20 percent of students starting in four-year colleges need remediation. Students taking remedial courses rarely receive credit, and thus their time in college is extended if, indeed, they pass the courses and continue (many don’t). Estimates that I worked on for a report about remediation and its costs ranged between $2.3 and $2.9 billion a year.

One unexpected cost driver — tuition itself! Tuition discounting, or the practice of offsetting the posted tuition price with financial aid, is especially widespread in private colleges — and growing in the public sector, as well. Students who can afford to pay the full tuition (and who are willing to do so) help subsidize students who cannot pay the posted sticker price and whose financial aid from other sources isn’t enough to offset the cost of attendance. A recent study found that these institutions actually only see 54 cents for every tuition dollar charged. Tuition discounting is both a “Robin Hood” strategy to lure students who can afford to pay the posted tuition and a recruitment strategy to attract students so that colleges can meet their enrollment goals.

Decode any university's price sticker using this glossary of common financial aid terms.

What about college spending? This hasn’t really being going up much! The Delta Cost Project, which monitors college spending patterns, has shown that colleges and universities, particularly public institutions, have largely held down spending in most of the categories it examines. This, of course, does not mean that spending couldn’t be reduced in some areas, but the notion that our higher education institutions are spending excessively isn’t really the case.

One Final Thought

The high price of a college education is obviously a widespread concern, but why should you care about what is and isn’t driving the price? Because understanding the complexities of what’s actually behind tuition increases will enable us to make better decisions about how to address rising costs — so that, ultimately, pursuing higher education will be a more affordable prospect for all college-bound students and their families.

When you use Noodle's college search, you'll see that each university profile has a thorough analysis of the cost to attend. You can review the cost for different household incomes, a breakdown of tuition pricing, and the percentage of students receiving financial aid by source.

Sources:

Curtis, J., & Thornton, S. (n.d.). Here’s the News: The Annual Report on the Economic Status of the Profession. Retrieved March 1, 2015, from Academe.

Desrochers, D., & Kirshstein, R. (2014, February 1). Labor Intensive of Labor Extensive? Retrieved March 1, 2015, from Delta Cost Project.

Diploma to Nowhere. (2008, January 1). Retrieved March 1, 2015, from Broad Education.

Ginsberg, B. (2011, September 1). Administrators Ate My Tuition. Washington Monthly. Retrieved March 1, 2015, from Washington Monthly.

Kambhampati, S. (2015). At Private Colleges, Presidents May Not Be the Top Earners. The Chronicle of Higher Education. Retrieved March 1, 2015, from The Chronicle of Higher Education.

Kirshstein, R., & Kadamus, J. (2012, December 1). Climbing Walls and Climbing Tuitions. Retrieved March 1, 2015, from The Delta Project.

Losing Focus: The Annual Report on the Economic Status of the Profession, 2013-14. (n.d.). Retrieved March 1, 2015, from American Association of Academic Professors.

Newman, J. (2015). Coaches, Not Presidents, Top Public-College Pay List. The Chronicle of Higher Education. Retrieved March 1, 2015, from The Chronicle of Higher Education.

Recalibrating Regulation of Colleges and Universities, Report of the Task Force on Federal Regulation of Higher Education. (2015, January 1). Retrieved March 1, 2015, from U.S. Sentate.

Remediation: Higher Education's Bridge to Nowhere. (2012, April 1). Retrieved March 8, 2015, from Inside Higher Ed.

Resort Living Comes to the Campus. (2012, January 1). The Wall Street Journal. Retrieved March 1, 2015, from The Wall Street Journal.

Rivard, R. (2014, July 2). Discount Escalation. Retrieved March 2, 2015, from Inside Higher Ed.