Vandy Takes On Federal Regs, Redux

University follows its controversial study on regulatory burden on colleges with an expanded analysis, and estimates the costs to all of higher ed.

October 19, 2015

The nation’s colleges and universities collectively spend an estimated $27 billion each year trying to comply with federal requirements.

Or so says the latest Vanderbilt University report aimed at highlighting the burden of federal regulation on institutions of higher education.

The report, which is being published today, comes several months after the university courted controversy over how its president represented the findings of an initial review of regulatory burden on its own campus. Vanderbilt’s assertion, repeated by congressional lawmakers -- that it spent some $11,000 per student on compliance costs -- was widely panned as misleading. Many of the costs the university counted were affiliated with its role in medical education and treatment, with far fewer costs associated with regulations from the U.S. Department of Education.

The new study expands on the original, and looks at how an additional dozen colleges and universities of varying sizes and missions dealt with federal regulations on their campus. Included, for example, were Belmont University, Rasmussen College, De Anza Community College and the University of California at Berkeley.

It then extrapolates, based on data from those 13 institutions and industrywide expenditure figures, that all colleges and universities collectively spend about $27 billion on federal compliance, $10.2 billion of which was related to research activities and $5.6 million of which was related to federal rules that aren’t specific to colleges and universities, like immigration.

The remaining $11.1 billion was attributed to regulations specific to colleges and universities, such as financial aid rules ($2 billion) or accreditation ($3 billion for regional, $3 billion for programmatic).

The new study is likely to again be controversial in higher education policy circles. Much of the programmatic accreditation listed in the report is not required of colleges seeking to access federal funds, for example. And it is not clear whether the group of institutions reviewed by the study, although certainly wide-ranging, are a representative enough sample of American higher education from which accurate national figures can be produced. The study includes, for instance, only one community college and one for-profit institution.

The study, which was completed by Boston Consulting Group, found that the 13 colleges and universities varied in how much of their budgets were consumed by compliance activities. Compliance with all federal requirements accounted for between 3 and 11 percent of the institutions’ operating expenditures, excluding any expenses associated with running a hospital.

Brett Sweet, Vanderbilt’s chief financial officer, said in an interview that the university’s goal was “to start a conversation at the national level of the cost of regulation and compliance at universities.”

“It’s not to point fingers at regulatory bodies,” he added. “We’re hoping schools themselves will question, ‘where do we fall on this?’”

Sweet said that one of the most significant findings was that small and medium-sized colleges are disproportionately impacted by federal regulations, with compliance eating up a much larger share of their expenditures than their wealthier peers.

Vanderbilt’s focus on the regulatory burden that colleges faces comes amid a debate in Washington over whether the federal government should pare back or streamline some of the requirements it imposes on colleges.

Colleges and universities have long said they think they’re spending too much time and money trying to comply with the federal government’s rules.

“While many regulations are useful and effective, others are unrelated to the mission of higher education. All regulations impose cost, however,” Thomas W. Ross, president of the University of North Carolina, said in a statement provided by Vanderbilt. Ross added, “We must truly come to grips with the reality of how federal regulation impacts our bottom line.”

Senator Lamar Alexander of Tennessee, the Republican who chairs the Senate education committee, has said that such regulatory relief for colleges is a chief goal as he works on a rewrite of the Higher Education Act.

Alexander tapped Vanderbilt’s president, Nicholas Zeppos, to co-chair a task force on higher education regulations last year.

Such efforts haven’t been without controversy, however.

Amy Laitinen, deputy director for higher education at the think tank New America, has been critical of efforts by higher education groups to roll back regulations.

She said that she worries the latest Vanderbilt report was “clearly intended to advance an antiregulatory agenda and paint a picture of an oppressive federal government role in higher education.”

While some regulations may well need to be eliminated or rewritten, she added, publishing large cost figures without showing the significant amount of federal dollars flowing to colleges is misleading. For example, the study says colleges nationwide spent some $2 billion on compliance with federal financial aid regulations, which govern the roughly $130 billion the Education Department doles out in student loans and grants each year.

“I worry that this push toward deregulation will dump them all together and we’ll eliminate much needed protections for students, of which we don’t have that many to begin with,” she said. “There needs to be some nuance around the conversation.”


Back to Top