Why Does College Cost So Much?

August 13, 2010 by Kenneth O'Connor

2 comments

A recent article published in Forbes entitled Why Does College Cost so Much? attempts to explain the reason for years of tuition increases. Authors and Professors Robert B. Archibald and David H. Feldman weigh in on this subject while promoting their book “Why Does College Cost So Much?” that is set for release in the fall. While the article makes good note of the “artisanal” nature of the industry, their explanation of the dramatic increases in college costs fails to address the real issues. Archibald and Feldman report three primary reasons for increased college costs; First, maintaining small student to teacher ratios to keep classes in a small seminar format. Second, the cost of hiring highly educated employees to teach. Third, the price of modern technology used in the classroom increases cost. These three reasons alone fail to fully explain where the cost increases are really coming from.

Pile it On!

It is widely held that smaller classrooms produce a better learning experience. The goal of maintaining smaller classrooms is to encourage a more in depth learning experience through increased academic rigor. But there is evidence questioning if this method is even working. My blog post entitled “Students study less than ever: What are they doing in college?” explains how average weekly study time has reduced from 24 to 14 hours a week per student. We cannot assume that teaching methods have become so effective that students need to study ten less hours a week. Evidence points towards more disinterested students than ever despite higher education’s claim that smaller classrooms best serve educational goals. Using smaller classroom numbers to justify increased tuition costs without inspiring students to perform academically only leads to a conclusion of inefficiency. While keeping a good student to teacher ratio may increase the cost of tuition, it is not enough to substantially demonstrate the incredible rate of tuition increases over the past twenty years.

For their second reason they claim that hiring highly educated employees to teach is very expensive. This ignores the fact that most college classes today are taught by low paid, non-tenured adjunct professors! Adjunct professors have seen an incredible increase in their role as part of higher education. An ongoing trend in higher education has been to cut their faculty pay rates to help save money. So if costs are being cut why has there been over the past twenty years a steady increase in college costs of 6-8% a year far outpacing inflation? If costs are rising but the cost of teaching is reducing, then I must ask, where is the money going?

Finally, the third reason claimed is that technological advancement is a cause for increased costs. As explained by Archibald and Feldman “The contemporary chemistry student, for instance, needs to be familiar with current laboratory tools, and they are more expensive than the chalk-and-test-tube world of the past.” While the cost of complexities in technology is apparent, they fail to recognize the dualities of this proposition. Namely those advancements in technology provide opportunities for efficiencies in other areas. Well used technology should be able to cut down on total costs when used correctly. Rather than use technology to increase efficiency for the benefit of the students, the authors claim it as a hindrance and reason for more expense. For every technological breakthrough in one area, there is a benefit of cost cutting in another. Technology is a two way street where costs and efficiencies are balanced appropriately. Again this cannot explain where the money is going.

Times have changed
Times have changed
So if reduced class size, cost of teaching, and technological advances are not the reason for increased costs, what are?

This leads to my conclusion of why costs have really skyrocketed out of control. Increases in spending were driven mostly by higher administration, maintenance, and student services costs. When attending school, students are really paying for amenities and services that are separate from the classroom experience.

The cost of administrating a college has been the major driver of increases, especially because of a failure to adapt and modernize useful technology. It may cost more to train chemists using modern techniques, but the cost of administrating such training should be reduced by using technology. Many schools use antiquated billing and payment methods along with web systems that are inefficient. They require endless paper documents where electronic documents are superior, and if paper is used, they must store it en masse rather than simply scanning the document and storing it electronically. This dramatically adds to total costs and inefficiencies because of all the wasted time and effort to complete mundane tasks. In a non-profit organization such as a college the greatest expense is salaries, and the fastest growing segment of college employment has nothing to do with teaching: it’s administration. The non-teaching staff at universities often costs as much as the faculty. In 1976, there were three non-faculty professional staff for every 100 students in American higher education; today, there are more than six.

Consider that most schools require students to buy overly expensive textbooks written on paper that become obsolete within one year. This has become unreasonable and inefficient the same as paper newspapers. The knowledge is important, but with e-books there is a better means of delivery as explained in a recent blog post. If schools were really committed to the cutting edge of technology as part of the curriculum, they would find ways to achieve the goal of superior education at a lower cost through utilizing technology.

Tuition costs are bundled with all services whether a student uses them or not. This leads to an increase in tuition for all students. Consider The Center for College Affordability’s study of the costs of intercollegiate athletics. Surely there is importance in sports activities, but what benefits do they provide to the average student who is not qualified to throw and catch a football for example. Hasn’t the realities of this economy revealed the importance of economic development in new areas? If students have already reduced study time from 24 hours a week to 14 hours a week, it can be inferred that colleges redirecting resources toward non-academic endeavors has had an effect.

In conclusion, the true costs of college cannot be blamed entirely on the need to keep classrooms small, the cost of hiring highly educated staff or the counter-intuitive claim of the cost to advance technology. The true cost driver is amenities and services and administrative staff that are separate from the classroom. In an effort to attract more students, colleges have developed a wide variety of creature comforts and features that look good on admissions tours but have driven costs unreasonably high. The result is inefficiency in cost/benefit that cannot be ignored.

For more detailed info please review a study titled “Over Invested and Over Priced: American Higher Education Today” by Dr. Richard Vedder of Center for College Affordability and Productivity

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  • Andy

    “Tuition costs are bundled with all services weather a student uses them or not.”

    I didn’t realize that students had to pay based on the local weather. Whether or not that last comment was funny, I agree with the intended point. More money goes to non-education related expenses.

    I think a huge driver of the inflation, though, is the very financial aid system that is in place. When you have a welfare state system (e.g. need based student loans and grants), those customers are spending other peoples’ money. When you spend other peoples’ money, you care much less about what price you pay.

    The idea that everyone has a “right” to a college education has created a monster where there is no real incentive for price competition between these institutions, and so the costs just continue to soar.

  • Ken

    Thanks for the Comment Andy, you are not the only person that sees it that way. I am correcting my spelling mistake now!