Posted on 03/17/2016 9:39:41 AM PDT by SeekAndFind
This is how colleges finance themselves
There’s a lot of general confusion about how colleges fund and finance themselves. The difference in funding for colleges is fairly simple. Public schools get most of their money from tuition and state and local governments. Private schools rely more heavily on tuition and private charity than public schools do.
Why college tuition costs are skyrocketing
A clear reason for the rapidly rising cost of college is hard to pin down. There are a lot of answers to this complicated question, many of which contradict each other. Here are a few of them:
Limited state funding and increasing admissions
Most figures point to the amount of state funding for schools decreasing at the same time as enrollment rates have been increasing steadily. Following the onset of “the Great Recession,” states seriously cut their funding to public post-secondary schools. The money lost from these cuts couldn’t be covered by old tuition costs and resulted in even higher tuition. However, even the increased price of tuition at these 4-year public institutions failed to supplement the money lost from lowered state funding. Because of these factors, at least within the past decade, the rise in tuition costs and the economic downturn of the late ’00s have been nearly inextricable.
Personnel Costs
In recent years, many schools have been spending a lot of money on the salaries and benefits of their personnel and staff. Many would logically assume that the immediate beneficiaries of this increase in spending are professors, the people directly responsible for enriching the young minds of students attending colleges, but this is not the case. Colleges have actually been significantly decreasing the amount of full-time professors over the past forty years, with just under half of the people currently teaching classes at America’s universities being temporary “adjunct” professors (essentially the college equivalent of a substitute teacher). And the salaries of most full time professors at universities have increased only slightly, if at all.
The real reason for the increase in personnel spending is the trend of “administrative bloat.” Colleges and universities increased their amount of administrators by 60% in the 16 year period between 1993 and 2009. While a slight increase in administrative faculty over the years is sensible in response to the increase in enrollment, the increase that has occurred at many colleges is astronomical and without excuse. The amount of money that schools are spending to pay all of these additional administrators’ six-figure salaries is a contributing factor in the spike in tuition costs.
Overspending on expensive amenities
Colleges have been spending billions of dollars on amenities that they believe will draw in more students. Gourmet food, water parks, and video gaming stations are among the amenities some colleges are adding to their roster. College’s motivation for taking part in the so-called “amenities arms race” and adding these extravagant amenities isn’t wholly negative. When colleges get more students, they get more tuition money. But if all of the tuition money is being spent on building projects for amenities, then the immediate benefit is negligible.
What does all of this mean for students?
Colleges’ financial problems can have a big impact on future students and college admissions. The difference in the way colleges are funded is fairly simple but the ways that they adapt to changes in funding is more nuanced. Some, especially private four-year institutions which need to rely on tuition a lot more than their public counterparts, have turned to extending admission exclusively or mostly to students they believe can easily pay the tuition or complete their four years of schooling. This is an unfortunate consequence of colleges losing money (or overspending), and disproportionately discriminates against lower income people who might need financial aid or loans. Beyond leading to discrimination against people of lower income, college's financial problems can impact student’s quality of education. Schools having serious financial issues tend to make sweeping cuts to faculty and classes, while raising tuition to compensate for the money they’ve lost. The result is that students end up paying more money for less choices and quality of education.
Once the business world began using colleges as gatekeepers for good employment the ability of colleges to exploit students was inevitable. Break that connection and the cost of college will drop.
Tuition increases do not go to faculty pay. Some of it certainly goes to faculty health-care benefits, which in our case are very good. But we have had a very minor, virtual cost-of-living wage increase for the past 10 years.
On the other hand, new buildings are going up like crazy, cuz donors can put their names on buildings.
Track tuition inflation against any common commodity, the cost of a box of corn flakes, for example.
Anything between that steep rise in tuition and the more modest rise of a retail box of corn flakes is almost entirely due to the availability of easy loans and federal grant dollars.
Nobody but a fool leaves money on the table when it is there for the taking.
A number of years ago, I enrolled a USC off-campus program in systems management, a multi-disciplinary Master’s Degree sort of thing. It was aimed at active duty service personnel using VA benefits. Each year, as the VA benefits increased, the USC tuition matched it dollar for dollar.
Shock, shock.
When the first number is low or near zero, the second number is always going to increase. If you are, say, paying 50% of salary for retirement of past employees, that means for every two employees which retires, you've taken up the entire salary of a new employee.
If there was but one law I'd put into place and enforce that would cease most of this insanity, it would be: No promise, commitment, nor contract shall have any binding obligation on a future elected body unless duly passed by the voters and the obligation duly funded by bonds issued.
But that's only part of the story why prices are skyrocketing. The second critical component to a marketplace is scarcity. The only scarcity in colleges today is seat space - student funding through irrevocable debt means only imaginary limits on the cost of college.
And while there is plenty of administrative bloat, almost always those who float that excuse are those looking for more money for their pet in the show.
People are more than welcome to pull up your local university's budget - you'll see line items - buildings and facilities, administration, personnel costs - but the buried ever increasing and growing line item is paying for past retirements.
Honestly, every single public employee - that is an employee paid fully or mostly from public funds, should be paid a flat wage - they are welcome to buy retirements or medical coverage or whatever they please with that money, with zero promise of any future money to add to it.
We've long ago run out of other people's money. The average educational institution is paying more today for past employees than they are paying for current payroll. It is the worst ponzi scheme, as this one, the only one who loses is the taxpayer when guys with guns show up to collect from you the money to pay others.
That's why the price of cornflakes fluctuates in a manner that reflects underlying supply and demand, but these other things do not.
And I’d bet that there has to be a separate student union for every “oppressed” minority group out there.
Probably, but I don’t ever go to the union.
Another social distortion and leftist political advantage funded by cheap, unbacked money causing a huge increase in debt.
“The cost of college is skyrocketing—the average cost of attendance at a four-year public university has quadrupled over the past 35 years”
In private schools, the rise is similar. I started at Georgetown in 1979-80, and the tuition was $4,450/year. Now it is now a hair over $48,000. That’s about 11-fold in 37 years. Almost all colleges and universities, public or private, have followed this pattern.
The solution is simple:
1) Prosecute college officials nationwide for collusion to defraud the students and the federal government.
2) Decrease federal and state aid to college and grad students - massively.
3) Change the bankruptcy laws to allow student loans to be defaulted upon once again (as before 2005). Then banks will force students to a higher standard of proof that their intended course of study will actually produce some reasonable amount of income once they get out of school. No more $100,000+ student loans for Sociology majors who haven’t a snowball’s chance in Hell of paying it off.
4) Rinse, wash and repeat #1 about every 5 years.
Bump for later.
This is 100% accurate.
But what the article fails to point out is that many of these "administrative" positions with 6 figure salaries are because of Political Correctness and "Diversity."
Today, almost every college and university has a "Director of Diversity and Inclusion" - or some such laughable title. The job usually comes with a staff of flunkies.
These are people who are making six figures who are not qualified for any real job. They are a payoff to the race baiters and agitators.
There also seems to be a lot more administrative positions now than when I was in school. I guess you can’t give the faculty raises when you need to hire that third diversity coordinator at $90K plus bennies.
I absolutely agree. We have RICO laws on the books that would be used to prosecute colleges and universities. They have engaged in illegal activities to defraud the government and taxpayers.
However, Academia, like the Media, Entertainment, and the Race Hustlers, are one of the pillars of the Liberal Establishment. The laws don't apply to them.
This. Our pay increases for the last 10 years are about 1% a year, in the years we get them, and that's almost completely offset by how much they jack up our parking fees and health insurance premiums. In addition, I count a minimum of five administrative (not offering classes) programs focused solely on "diversity" in my building alone, and I don't work in a central administrative building. None of these five are the ubiquitous hyphenated-American student union programs, these are in addition to those.
At the big name schools, the salary can be as high as $125K and up.
Instead of #1, revoke the antitrust exemption given to accreditation agencies- then prosecute them for what amounts to collusion.
I was in the same USC program at Fort Campbell in the 80s. VA benefits get raised, cost of course goes up exactly the same.
When unlimited credit in the form of student loans is thrown at colleges, why would they leave any money on the table - prices always adjusts to what consumers can bear, and in this case, government intervention makes it unlimited.
Colleges in turn create exotic menu of liberal courses which on their own, can not financially stand on their own feet, but when pooled together with other bread and butter courses, they thrive and in the process bloat their budget. This is how liberal fat cats suck money from people and government.
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