The High Cost of College

Kelly Byer

Credit: DKS Editors

Source: University Budget Office

Credit: DKS Editors

Tuition rates have risen over the past 30 years, along with concern about rising costs. Since the 2004-2005 school year, tuition at Kent State increased $1,222, with 64 percent of the university’s revenue coming from students.

How much the state contributes is the biggest factor in how much students will have to pay, said Curtis Lockwood Reynolds, assistant professor of economics.

“That is the main determinant of tuition at most public institutions,” Reynolds said. “The reason for that is that if you add up the all the costs for educating a student for a year, that is much higher than the tuition that students are charged.”

Reynolds said a lack of state funds could cause tuition to rise.

“Those state appropriations per student have been decreasing over time,” he said. “So that has been driving up the tuition to fill the gap between the costs.”

Reynolds said Ohio’s support of higher education isn’t as extensive as other states’, but that’s because it has multiple obligations. Being in the Rust Belt doesn’t help.

“State revenues have not been good because it’s a bad economic climate here,” Reynolds said. “If the economy in the state’s not doing very well, you don’t make much money off taxes, you don’t have much money to put toward things like higher ed.”

Gregg Floyd, vice president of finance and administration, said although the state has given more money recently to lower costs, state appropriations still only account for about one-third of the university’s budget.

“Ohio is no different than any other state,” he said, adding that Ohio has faced the same economic problems.

As a result, Floyd said the university has become more self-funded, relying more on tuition fees.

No reason to cut the costs

Richard Vedder, director of the Center for College Affordability and Productivity and distinguished professor of economics at Ohio University, said tuition continues to rise because universities have no incentives to lower costs.

“The colleges have raised the cost of going to school so much simply because they can get away with it,” Vedder said.

Universities, which are mainly nonprofit, don’t operate as the competitive market does, he said.

“There are enormous incentives in the traditional market sector to keep costs down,” he said. “Those incentives are much less intense in higher education.”

Floyd said incentives do exist in the way of sustainability and energy initiatives, and the university buys items in bulk to save money.

Floyd said resources guide the budget. If resources are limited, the budget is, too.

“Over the years, we’ve probably cut too deep,” Floyd said about lowering operating costs by reducing staff and faculty. “We’ve got to keep the faculty in the classrooms.”

An annual study by the National Center for Education Statistics, part of the Education Department’s Institute for Education Sciences, shows that instructional staff decreased at many universities, but administrators and support staff grew during the 2008-2009 academic year.

Vedder said universities haven’t drastically changed how they operate because nothing has enticed them to do so.

“Universities are crying the blues,” he said. “But it’s sort of been business as usual.”

Meanwhile, as the payoff for having a degree increases, the demand for higher education has increased, Reynolds said.

“We generally think that when the demand for something increases, it pushes up the price,” he said.

Factor in inflation

The cost of products and utilities needed to operate the university isn’t immune to inflation, either, and that causes an increase in tuition.

“The university has to spend money on instruction for the faculty, dormitories, student services, maintenance,” Reynolds said. “All these things cost a lot of money.”

Floyd said the inflation of supplies and costs of heating pales in comparison to personnel salaries, but it does have an impact. Administrators reference the Higher Education Price Index, which tracks inflation costs of higher education, when they set tuition costs.

But income rates aren’t rising as fast as tuition, Vedder said. Although most goods and services get cheaper with time, higher education has become more expensive.

“With a couple of exceptions – there were two or three years of exceptions – the cost of tuition has gone up faster than the inflation rate every year,” Vedder said.

Reynolds said this 30-year trend has also caused concerns about financial aid.

“There’s an increasing concern that it’s climbed faster than financial aid,” he said, “so that the financial aid dollars that are available, to some extent, are covering less and less of the cost of college.”

Floyd said the state reduced funds for the Ohio College Opportunity Grant, which gives financial aid to students, but President Lester Lefton helped budget other university funds to continue aiding Kent State students.

The ‘academic arms race’

The majority of the tuition fee is spent on instructional expenses, which include faculty salaries and other teaching costs.

“Those costs are predominantly employment costs,” Floyd said. “When the value of the education is dependent on the faculty, you don’t want to cut corners.”

But Vedder said universities are also spending money in an “academic arms race.” Facilities and services unrelated to instruction are added to attract students.

“There’s a bit of a country club dimension to universities these days,” Vedder said. “They’re all trying to keep up with their competitor. So they each feel they have to have nicer and nicer facilities, and that adds some to the cost.”

Vedder said some universities have lost sight of their mission, neglecting research and instruction in favor of nicer facilities.

“Their main mission is providing instruction to students, particularly undergraduate students, and their secondary mission is research,” he said. “Everything else is extra.”

Because there are a lot of students who pay for services they don’t use, Vedder said he is an advocate of letting students vote on paying those fees.

“What universities do is bundle several services,” he said. “There’s nothing wrong with all of these other things, but the other things are sort of dominating now.”

The second largest amount of tuition goes toward athletics – mainly athletic scholarships, Floyd said. And because of that cost, Floyd said people often criticize the program.

“The cost of our (athletic) program is very reasonable, and perhaps low, compared to other universities,” he said.

Still worth it

Reynolds said the costs could impact the number of students attending college and the retention rate.

“There’s very real concern and very real evidence that high college costs make it much less likely that people are going to finish a college degree,” he said.

The sustainability of higher education’s current economic system is also questionable.

“Tuition can’t keep outstripping inflation forever without something changing,” Reynolds said. “Something has to change, but it’s not clear what that is.”

But Reynolds said a college degree is still a worthy investment, and it increases the probability of finding a job and receiving higher pay.

“Remember that a recession is temporary,” he said. “If you have a degree, that’s going to pay off when you get a job. Even if you don’t have one for a little while, but you get a job in the future, you’re still going to get the return.”

Contact enterprise reporter Kelly Byer at [email protected].