The Surprising Causes of Those College Tuition Hikes

Why has college tuition been rising so high and fast? Will college costs ever drop back to more affordable levels?

Those questions have been frustrating parents and students for years. A new report provides some surprising answers that will, unfortunately, probably only frustrate and anger them even more. At public colleges, tuition has generally been driven up by rising spending on administrators, student support services, and the need to make up for reductions in government subsidies, according to a report issued by the Delta Cost Project, a nonprofit based in Washington, D.C.

In some cases, such as at community colleges (which educate about half of the nation's college students), tuition has risen while spending on classroom instruction has actually fallen. At public colleges especially, the current economic troubles will likely only accelerate the trend of rising prices and classroom cutbacks, says Jane Wellman, the author of the report. After analyzing income and spending statistics that nearly 2,000 colleges reported to the federal government, Wellman concludes: "Students are paying more and, arguably, getting less in the classroom."

Among the more surprising findings:

• The main reason tuition has been rising faster than college costs is that colleges had to make up for reductions in the per-student subsidy state taxpayers sent colleges. In 2006, the last year for which Wellman had data, state taxpayers sent $7,078 per student to the big public research universities. That's $1,270 less (after accounting for inflation) than they sent in 2002.

• Public universities have been reining in overall spending per student in recent years. Flagship public universities' spending per student has risen from about $12,400 in 1995 to $13,800 in 2006 after accounting for inflation. But since 2002, spending at public colleges has generally not exceeded inflation.

• Increases in spending were driven mostly by higher administration, maintenance, and student services costs. Public universities spent almost $4,000 per student per year on administration, support, and maintenance in 2006, up more than 13 percent, in real terms over 1995. And they spent another $1,200 a year on services such as counseling, which was up 23 percent. Meanwhile, they spent about $8,700 a year on classroom instruction for each student, up about 9 percent.

• Big private universities, powered by tuition and endowment increases, have increased spending dramatically while public schools have languished. Total educational spending per student at private research universities has jumped by almost 10 percent since 2002 to more than $33,000. During that same period, public university total spending was comparatively flat and totaled less than $14,000 a year.

That growing gap between rich schools and poor schools worries observers like Wellman. The cost of attending a public university, even after subtracting out aid and inflation, rose more than 15 percent in the last five years, according to the College Board. But almost all of the recent price increases at public universities are "backfilling for cuts in state funds," Wellman says.

Some college presidents say the report shows they haven't been raising prices irresponsibly.

"Virginia Tech" explained David Hodge, president of Miami University of Ohio. "Everybody expects us to do a lot more security. Students are coming with more physical disabilities and emotional needs. There are greater expectations for career services," he says. And that kind of administrative and support spending "is a really good investment. It helps the students."

In addition, public schools tend to serve many low-income students and minority students who need more remedial classes and extra counseling services than better-prepared students who attend elite private universities, says F. King Alexander, president of California State University—Long Beach.

One of the reasons that Duke University costs about $51,000 a year is that the elite schools are in a bidding war for top faculty and better services for students, says college spokesman Michael Schoenfeld. In addition, competition for the best students forces schools to offer bigger and bigger scholarships, which means few students actually pay the full sticker price, he notes. Duke's record-breaking flood of applications for the next academic year shows there's still plenty of demand for what private universities offer, he says.

But as more and more states facing budget crises consider further subsidy cuts and tuition hikes for public schools, parents and students are increasingly objecting to price increases for any reason. "Enough is enough," says James Boyle, president of the College Parents of America. A tsunami of applications at lower cost schools such as the California State University campuses shows that students and parents are voting with their feet. "The changing market for higher ed will cause colleges to hold down their expenses and state legislators to increase their subsidies," Boyle predicts.