College Tuition Costs Continue to Rise

Published November 15, 2015

As students returned to college this semester, they found their tuition is higher than ever.

Between the 2013–14 and 2014–15 school years, average tuition and fees for local, full-time students attending public four-year colleges and universities increased nearly 3 percent, according to the College Board’s “Trends in Higher Education” webpage.

Nationally, the average going rate for a year of college was more than $9,000 in 2014–15. If costs related to room and board and other mandatory fees are factored in, the cost is closer to $20,000, says Richard Vedder, an Ohio University professor and director of the Center for College Affordability and Productivity.

Over the past decade, the College Board found average net tuition and fees at public, four-year institutions increased by 32 percent, taking into account federal and state grant aid.

The Aid Issue

According to “Trends in Higher Education,” in 2014–15 full-time students received an average grant aid and education tax benefit of $6,110 at public four-year institutions, $5,090 at public two-year colleges, and $18,870 at most private four-year institutions.

“The federal student financial assistance program has worked to push the cost of college up, and I also think it has allowed universities to raise tuition [and] fees to do things like buy expensive travel for their presidents, pay million-dollar salaries, [and spend on] student affairs,” Vedder said. “I think that is contributing importantly to the rise of college cost.”

“The causal effect on tuition prices is less important than the broader [loss of] incentive,” said Andrew Kelly, director of the American Enterprise Institute’s Center on Higher Education Reform. “Loans are open to anybody, especially parent loans. It sends a signal to colleges. … What incentive does that bring to colleges to contain costs? When faced with budget constraints, students still have access to loans.”

Administrative Bloat

Kelly says administrative bloat is a big problem.

“[There] is a big growth in expenditures on non-professional employees who do not teach: an administrative layer,” Kelly said. “While there are slightly more faculty [per student] than there used to be 20 years ago … there are [significantly] more non-teaching professionals.”

State Del. David Ramadan (R-Prince William County) wants to eliminate wasteful spending on higher education in Virginia. He has criticized the University of Virginia, a top-ranked public college, for excessive expenditures at the administrative level.

“If the [tuition] increase was solely used and spent on additional direct educational resources, one might argue that it contributes to a better education for students,” Ramadan said. “However, it is almost never spent on direct educational cost, but instead on administrative costs. Further, our universities can cut administrative costs to fulfill their budgetary needs instead of increasing tuition.”

State Money Problems

Meanwhile, a decline of state funding per pupil is part of the post-recession educational landscape, says Kelly.

“The states have to balance their budgets and have commitments to other social services,” Kelly said. “One of the [areas] in state policy where they can raise their own revenue is higher education: They can raise tuition. That seemed to happen in many, many places, so that’s the easy theory.”

In addition, the need for colleges and universities to attract workers in a competitive job market plays a part in college tuition rises by increasing costs, Kelly says.

“Wage increases in the rest of the economy will cause professors’ pay to rise even though colleges are no more productive,” Kelly said.

Lawmakers ‘Clueless’

“On average, legislators are clueless about what goes on in colleges and universities. … What that does is there is not very systematic or good oversight of what universities are doing,” Vedder said. “If legislators start to interfere in the day-to-day [operations] of universities, I think that would be a very bad thing. On the other hand, if you don’t have some oversight on the people [spending] money, you run the risk of wasteful spending at a high level.”

“Every public university in Virginia is governed by a board which solely decides tuition rates,” Ramadan said. “It seems that most of these boards have bought into the arguments by bureaucracies of these institutions to increase tuition for various reasons; some for the desire by universities and a few board members to reach ‘academic elite’ status, while forgetting the role of state universities is to educate their citizens, not become Ivy League members and cater to out-of-state students.”

Tuition has been on this upward trajectory because institutions are failing to control their costs, Kelly says.

“Colleges could certainly do more to contain costs,” Kelly said. “The harder course is to contain costs, battle people, and cut jobs. Some schools have tried to step up and make cuts and … reorganize and streamline education.”

Competition for prestige is also pushing costs up, Kelly says.

“Colleges seek to maximize things like prestige and influence and spend any money they have on that goal,” Kelly said. “So colleges raise all the money they can and spend all the money they raise. If the incentives are not there for colleges to contain their costs and spend wisely, you’re going to end up with a scenario … with no end. Couple this with competing peer institutions, and you end up really quickly with incentives for colleges to increase in size and spending.”

Ashley Bateman ([email protected]) writes from Alexandria, Virginia.

Image by Tax Credits.