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College Students Are Paying More, But Many Schools Are Spending Less On Them

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For the past 30 years, U.S. colleges and universities have been increasing tuition costs by 2% to 5% per year. But that doesn’t mean all those dollars are allocated for increased school spending on student education. Despite the tuition hikes, education spending is flat or falling at many public and private institutions. With revenue streams like state subsidies drying up, colleges aren’t relying as heavily on those means to pay for the cost of education—they’re making students and families pay for more of it themselves.

The percent of subsidies spent on education declined through the 2000s and hit a decade-low in 2011, according to government data collected by the Delta Cost Project, a non-profit, non-partisan organization that performs yearly studies of education spending.

The situation appears to be more acute at public schools than private ones, Delta Cost Project data from 2002 to 2012 suggests. On average, private institutions are increasing their education spending along with the tuition hikes, but not so at public institutions. While students are paying more for their education, public colleges and universities are spending less money on them—less bang for more buck. One reason public schools are relying more heavily on students to pay for their own education can, in part, be traced back to the 2008 recession.

“States knew that higher education does have another source of revenue—students—compared to lots of [other] functions of the state like prisons and roads,” says Donna Desrochers, deputy director of the Delta Cost Project.

But that doesn’t mean tuition hikes at public schools will slow down once states fully recover from the recession. After the economy picked up post-2001 recession, Desrochers says, tuition cost continued to increase at the same pace.

Regardless, there’s no sign that interest in a college education is on the downfall. “More and more students are attending college,” Desrochers says. “We haven’t reached the point yet where students have said they’re not going to go. Currently the data is saying it’s still beneficial to get college a degree and it’s more costly not to get a college degree.”

The bright side in all this for colleges and universities is that the cost per degree is falling. While schools are spending roughly the same on their students’ education, more students are attending over time, so students are graduating at a lower cost to their institutions. The implications for the college student experience could be significant over time. Will the quality of teaching decline? Will increasing financial strain lead to more college drop-outs?

The graphs below outline how much money colleges and universities are spending on student education, broken down by different types of education spending (instruction, student services and a catch-all called “academic and instructional support, operations and management.”) The thick line on each graph is net tuition, indicating what students are paying for that education—a line that’s been increasing dramatically over time.

Public liberal arts colleges (typically awarding bachelor’s degrees) have seen a huge increase in tuition money spent on education over the past decade. Instruction and student services spending has remained flat, but the catch-all category containing other education expenditures has fallen. In the upcoming years, students might be spending more on their own education than their colleges are spending on instruction.

Public research universities spend more on student education than public liberal arts schools, but they’re also using more student money to do it. Students on average paid over $3,800 more on their own education in 2012 than 2002.

Private liberal arts colleges (typically awarding bachelor’s degrees) are spending much more on their own education than they’re getting back in instruction, student services or other education spending. There was a slight decline from 2011 to 2012 in student tuition dollars spent on education in private schools, but whether that’s an anomaly or a new trend will have to be seen in the years to come.

Private research universities are spending roughly double on education compared to public research universities. But unlike public schools, private research institutions are actually matching their tuition hikes with increases in education spending. Also, while spending on student services has been basically flat for public schools, private schools (both liberal arts and research universities) are spending more on student services over time, which includes things like counseling and stress relieving activities.