Why Public Higher Education Should Be Free: How to Decrease Cost and Increase Quality at American Universities

Why Tuition Goes Up and Quality Goes Down at American Research Universities

1 Every year, tuition at American colleges and universities goes up, but virtually no one seems to know why. In fact, the average cost of higher education in the United States increases at twice the rate of inflation, and by going up  percent each year, the cost of tuition doubles every nine years.1 Meanwhile, educational institutions claim that they are losing money and that they have to rely increasingly on large lecture classes and inexpensive, untenured faculty in order to remain afloat.2 In other words, the cost is going up, but the money spent on undergraduate education is going down. And once again, no one appears to have a coherent explanation for this state of affairs. One possible reason for the financial difficulties of public universities and colleges is that since , states have been cutting their funding for higher education.3 In fact, if you listen to administrators at public institutions , they will tell you that if the states would just give them more money, all of their financial problems would disappear. Unfortunately, when administrators make these arguments, they are misrepresenting the situation . Although state budget cuts for higher education have forced schools to increase tuition, it is important to examine how universities and colleges spend their money.4 To prove this point, we can simply look at the fact that even the wealthiest private universities, many with multibilliondollar endowments, continue to increase class size, rely on graduate student instructors, and inflate tuition costs.5 Although the number of college administrators is increasing, and that obviously helps explain the increase 1 Why tuition goes Up and Quality goes Down at American Research Universities 2 WHy PUBlIC HIgHER EDUCAtIon SHoUlD BE FREE in costs, it is only part of the problem.6 A larger issue is how universities and colleges determine what they spend on each undergraduate student in a given year. We shall see that this calculation is the key to many different issues and helps us to explain why no matter how much these institutions charge, they never have enough money.7 The Department of Creative Accounting A famous economics professor once said that statistics are like bikinis because what they reveal is seductive, but what they conceal is essential. In the case of the use of numbers by universities and colleges, this combination of seduction and concealment gets to the heart of the matter. For example, in  the University of California (UC) declared that it cost close to $, to educate each additional undergraduate student for a year, and since the average student was paying $, and the state was chipping in $,, the university was losing $, for each student.8 After declaring that the state was failing to fund the full cost of educating undergraduates , the university decided in the same year that it would have to scale back enrollment by , students, raise student fees (tuition) by  percent, increase class size, and decrease the number of courses it offered. Once again, students would be paying more and getting less. Yet the numbers don’t add up. As Charles Schwartz, a retired physics professor from UC Berkeley, has shown, the numbers never add up in higher education because universities and colleges use a false and misleading method to determine the cost of undergraduate instruction.9 Most American research universities calculate this important figure by taking the total cost for all undergraduate and graduate instruction, professional school education, departmental research, facilities, services, and administration, and dividing that cost by the total number of students.10 Schwartz argues that this common method for determining cost is misguided since it assumes that all students will be taught by professors and that there is no difference between the cost of undergraduate and graduate education. In other words, when a university or state calculates how much it has to spend to educate each additional student, it includes in the costs the full salary of a professor—even though everyone knows that at research institutions, professors spend only a part WHy tUItIon goES UP AnD QUAlIty goES DoWn 3 of their time teaching undergraduates. According to Schwartz, parents are really paying for the cost of undergraduate instruction plus graduate instruction plus research plus administration. To be precise, undergraduates are subsidizing the cost of research and graduate education, and no one is willing to admit this fact. Moreover, although research universities often claim that their research is fully funded by external grants, we shall...