More for Less

As tuition rises across the country, few colleges are actually spending more on students, according to a new report from a leading higher education researcher.

January 15, 2009

Most college students are carrying a greater share of the cost of their education, even as institutions spend less on teaching them, according to a report released today.

The report, published by the Delta Project on Postsecondary Education Costs, Productivity, and Accountability, gives a potentially troubling picture of spending and revenue trends in higher education. Spanning from 2002 to 2006, the report indicates that tuition hikes have resulted in little if any new spending on classroom instruction at public research universities.

“The public’s got it exactly right,” said Jane Wellman, head of the Delta Project. “They are jacking up tuition, and they’re not re-investing it in quality.”

There’s plenty of blame to go around, however, for this predicament. With state support waning for public colleges, rising tuition dollars are merely being used to make up for lost revenue -- not for hiring more faculty or taking other steps that would arguably improve classroom instruction, the report asserts. On the other hand, the Delta Project suggests that colleges haven’t made the hard choices required for adapting to lower subsidies, as evidenced by relatively small changes in spending levels.

“The data tell us that the spending patterns are not changing, we’re just shifting revenue sources,” Wellman said. “So what this tells us is we’re not dealing with our cost structures, we’re just shifting revenues.”

There’s not much evidence to suggest that students at public universities are getting more for paying more. Between 2002 and 2006, average tuition at public research universities increased by nearly 27 percent or $1,419, but the spending on each student only went up by 1 percent, or $149. In calculating “education and related” spending -- the dollars spent directly on students -- the Delta Project included expenses on instruction and student services. Also included in that figure is the per-student share of administrative functions tied to academics, academic support and operations and maintenance.

Tuition increases outpaced per-student spending even more dramatically at public master's institutions and community colleges.

Private institutions, on the other hand, are charging students more and putting more money into instruction at the same time, according to the report. At private research institutions, for instance, tuition went up by $985, but per-student spending actually rose by $1,453. Whether that spending translated into a higher quality education, however, remains to be seen.

“This [report] tells us how we spend our money, but it doesn’t tell us about effectiveness,” Wellman said.

The report does note that community colleges, for instance, are able to spend less money per student on the path toward graduation. Wellman concedes, however, that there's no way to determine whether what's gained in savings isn't lost in quality.

Richard Vedder, a professor of economics at Ohio University, applauded the report for shining a light on how universities do business. At the same time, Vedder lamented that no one has been able to demonstrate effectively whether spending increases are helping colleges to better educate students.

“What they have not done [in the report], because it’s almost impossible to do, is measure performance, measure outcomes,” said Vedder, director of the Center for College Affordability and Productivity. “Are the students learning? We have very limited -- almost no -- measure of outcomes.”

So where is all the money going? At most types of institutions, an increasing share of “education and related” spending goes toward administrative support and student services, while instruction -- including faculty salaries -- is falling as a percentage of those expenses. Administrative expenses made up the most significant share of “education and related” expenses at private bachelor’s institutions, where 44.2 percent of the cost of educating students was devoted to administration in 2006, according to the report.

Data Brings Sunshine

The greatest value of the Delta Project’s report may yet to be realized. Leaders of the project, which is funded by the Lumina Foundation for Education, plan to create a Web-based function that will allow users to look at the spending and revenue data of individual institutions. While the raw data is already public through the federal data clearinghouse for higher education, known as the Integrated Postsecondary Education Data System (IPEDS), the Delta Project hopes to create a function that adds context and meaning to the often dizzying IPEDS numbers.

Charles Miller, who chaired the U.S. Secretary of Education’s Commission on the Future of Higher Education, said he welcomes the greater sunshine that the Delta Project is bringing to postsecondary education.

“Unless you have data that’s in this kind of form, it’s very hard to make decisions and policy judgments that are objective,” he said.

After reviewing the report, Miller said the Delta Project had made a data-driven case for reform, without having to use the sometimes tough language that’s found in many such reports, including the one Miller’s own commission presented.

“It doesn’t say ‘Here are the failings of the system,’ and a lot of the report is going to avoid doing that, but [Wellman] implies it,” he said.

In an interview with Inside Higher Ed, Wellman noted that the lack of transparency in higher education is a problem in and of itself. Institutions are reluctant to engage in much introspection about costs, because it raises “uncomfortable questions,” she said. At a time when state support and private giving are sure to keep declining, however, it would behoove college leaders to closely examine exactly where they’re getting money and spending money, Wellman said.

“We’re robbing Peter to pay Paul,” she said. “We better find out who Peter and Paul are.”


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