The Tuition is Too Damn High — Why there’s no reason for big universities to rein in spending

[dkf]

Freddie de Boer is a grad student at Purdue University, one of Indiana's flagship public research institutions. Purdue has a new gym – excuse me, a new "sports center," the France A. Cordova Recreational Sports Center, to be exact. When de Boer went to check it out, he found treadmills that each featured a TV and an iPod dock, a bouldering wall and a 55-foot climbing wall, a spa with Jacuzzi function that can fit 26 people, six racquetball courts, and a "demonstration kitchen" for cooking lessons.

"It really is lovely to look at," he concluded. "It looks like…money."

The Cordova Center wasn't an expense that needed to be paid for. It was an expense made because it could be made, because the nonprofit university rewards those who spend money, not those who save it. This basic principle has come to be known as the "Bowen effect."

First elaborated by the late Howard Bowen, an economist and president of Grinnell College, in his book “Costs of Higher Education,” the theory, in its most basic form, is that universities will spend all the money they can possibly raise. If they raise more than they need for educational objectives, they will spend it on non-educational uses like climbing walls and nicer buildings.

But it doesn't go the other way.Under financial strain, universities will seek to increase revenue and avoid cuts at all costs. Bowen summarized the theory, also known as the “revenue theory of cost,” in five rules:

http://m.washingtonpost.com/blogs/wonkblog/wp/2013/09/02/the-tuition-is-too-damn-high-part-vi-why-theres-no-reason-for-big-universities-to-rein-in-spending/

[last1standing]

1. My university has been in a building frenzy for the last ten years.

At the same time, it has seen state funding slashed and the school's administration has attacked tenure and opposed raises while giving the president a $400,000 salary for part time work.

Did I mention that tuition has doubled in the last five years?

[Sen. Walter Sobchak]

5. I recently went to my university for the first time in seven years,

I just sort of stood there agape, there had to be a million square feet of new buildings. Only one of them containing classrooms and one of them basically empty and advertised as available for corporate events.

And oh yeah... parking was $16 a day.

[last1standing]

6. Sounds very familiar.

n/t

[hedgehog]

2. I was laughing at my radio last week - someone from Harvard explaining that while it is true

that tuitions have gone up, they are still a good value because salaries have gone up as well! I wonder what rock this guy has been under the last 30 years!

[last1standing]

4. A rock on the banks of De-Nile.

Or he's simply a liar.

[ProdigalJunkMail]

3. universities are fueled by two stoopid situations

with no need to back off the throttle...

1) We have convinced EVERYONE they need to go to college. So, when EVERYONE needs you, you charge whatever you can get away with... and raise it every year. And at the same time, you dilute the world of Bachelor's Degrees and make them worthless.
2) Lotteries that pay full scholarships mean an unchecked flow of money into the schools regardless of how much they charge. The student/parent is no longer the customer... there is no need to control prices if your customer is not paying the bill (see health care/insurance relationship).

sP

[Jefferson23]

7. It is a terrible state of affairs. For students seeking a master degree, if they are

excellent students many universities will compete to have you and pay the costs. They often
ask that you work as a TA for them but give you a decent stipend...even health care can be
offered as part of the package.

It's a weird system.

[riderinthestorm]

8. Student loan debt that cannot be discharged also plays a (large) part

If you want a bachelor's degree, most students will accrue loans. You can't ever default. The universities know that the students' will be able to find the money they need for school through the bank and the students' are over a barrel - they have to pay what the school is charging. So they borrow and get stuck in that endless vicious cycle.

The school has no incentive to keep costs low as long as the students' are always going to be able to get the cash. If you've already accrued $10k for 2 years of college, it feels like common sense to simply borrow the extra $10k for finish right?

But as we know that $20k balloons with interest. And/or if you can't find a job and can't pay it down then it blows up even more....

[exboyfil]

10. Agree with your assessment but

the numbers are a little off. For engineering students at our large state engineering university, the cost in the final two years is $22K/yr. For four years you are looking at $80K. The universities could do some things to reduce the cost. For example students in the dorms require meal plans which are very expensive. The meals are extraordinary (all you can eat) but really hurts students who are on a budget. Textbooks are another near criminal enterprise. Between the code for the online homework and the textbook, you are looking at $200 for a single class. They constantly change editions to keep this going.

For engineering they charge an additional $2,000/yr (a great way to promote entry into that field).

[QC]

9. Too many (fancy) buildings, too many administrators.

When I was a freshman thirty years ago, dorm rooms were minimal--basically barracks--and we generally had to find ways to entertain ourselves, which is usually pretty easy for a group of teenagers.

Now, dorms are more like condos, with the kind of health clubs described in this article, and there is an entire "student life" bureaucracy dedicated to coming up with things for the students to do.

None of this stuff is cheap, and it's a big reason why tuition at that same small state university has gone up by a factor of six since I was a freshman in 1983. As I point out to my own students, that was a long time ago, but a person who was making $20,000 a year then is not making $120,000 now. Tuition has far outstripped the increase in incomes over those three decades, and out students are going to be paying for that for the rest of their lives.

[dkf]

11. Our state university is still supposedly a bargain but 10x what I paid.

[TM99]

12. My alma mater has been building up the campus

for over a decade now. There is a new state-of-the-art sports center, a new library, additions to the science building, and several new off-campus apartment suites for seniors.

I received an email the other day that my old dorm has been mothballed because enrollment is so low they really couldn't afford to keep it open.

This insanity has to end or higher education, which is an absolute necessity for an informed electorate, is dead in this country. Well except for those 1% who can afford out of pocket to pay for their kids education. The other 99% are screwed.

[Initech]

13. Tuition is too damn high, rent is too damn high, and the pay is too damn low!!