Colleges Seriously Need to Consider Scaling Back Costs

American higher education is in trouble, and needs to downsize. Thus far, most of the changes made by universities have been quiet, but the closure of a few institutions has brought more attention to the fact that the years of excessive higher education spending may be coming to a close. In the past, colleges have spent millions of dollars on amenities, athletics, and non-teaching staff that do not have a direct impact on the quality of a student’s education. Colleges have mostly been able to continue this spending and justify it as a way to attract new candidates — students are more likely to choose the university with the best campus culture or the most competitive sports team. But this spending has resulted in a significant increase in the price of tuition — the price of tuition for a private nonprofit four-year institution was $17,010 in the 1988-89 academic year, and $35,830 in the 2018-19 year — which has meant students have become more dependent on loans to finance their education.

The Burden of Tuition Increases

The college admissions scandal highlighted another key issue in higher education: that those who are wealthy can buy their way into the system. After the scandal, colleges started to receive a new level of national attention, and were scrutinized by students, parents, and policymakers for their admissions standards, and their spending. Excessive college spending has caught the attention of Congress, as the student debt burden has continued to increase at an accelerated rate — there are over $1.6 trillion of outstanding student loans in the U.S., owed by over 44 million people. Senator Lamar Alexander of the Senate Health, Education, Labor, and Pensions Committee is working on a new accountability system for college programs which would withdraw federal funding from schools whose student loan repayment rates are low. This is intended to ensure that colleges keep costs low, as students with lower debt burdens are more likely to make consistent repayments on their loans.

Reducing the burden of tuition has become a national issue, and many presidential hopefuls have made fixing student loans part of their platform. Senator Elizabeth Warren has proposed a plan that would forgive up to $50,000 of student loans for those making under $100,000 per year; people making up to $250,000 per year would be eligible for partial forgiveness. Senator Bernie Sanders has also proposed a similar debt forgiveness measure that would wipe away all outstanding student loans. Both have proposed a free college plan as well, which would provide students with free access to public colleges under varying terms. Indeed, these policies will eliminate the burden of student loans and will ensure that everyone who is interested in attending college can do so, but they do little to address the real underlying issue: colleges are spending too much.

Adjuncts and Administrators

There are a few ways in which higher education could effectively scale back their costs without harming their core services — education and research. The first, and perhaps most obvious place to start is teaching and administrative spending. The rising cost of tuition has meant that fewer people have been able to afford to go to college — indeed, enrollments are in their eighth year of decline. Therefore, this would be an opportune time to reconsider how colleges are staffed. The most important thing that should be addressed is the amount of adjunct professors that universities hire. Adjuncts are often given many of the same roles professors have — teaching, grading homework, et cetera — but are paid significantly less for their work. There has been more attention brought to this problem in recent years, as more adjuncts are having to work second-jobs and are being treated as if they were in an academic underclass. Adjuncts often end up teaching many different courses at one time to make ends meet.

In order to reduce academic spending, colleges should consider reducing the size of their adjunct team, and offer better benefits to those who are adjuncts in the future. Adjuncts are usually non-tenured employees. Reducing the size of the adjunct team would make it easier for colleges to reduce the size of their faculty without causing full-time professors to worry about their jobs .This would be beneficial for both universities, and — arguably — the adjuncts themselves. Adjuncts who are asked to leave would not have to worry about working many jobs — they could instead move away from academia, or pursue a full-time role and draw on their past experience. Indeed, they may even be preferred candidates for full-time positions in universities, and would receive more favorable salaries if they moved to a full-time position. For universities, reducing the number of adjuncts would be an easy way to significantly reduce spending, without necessarily harming the quality of their education or research functions.

In addition to reducing teaching spending, schools should also revisit how much money they spend on administration. Universities, especially over the last few decades, have invested more dollars in building their brand and cultivating a positive public image. As a result, the amount of administrators hired by universities has increased significantly. For example, between fiscal years 2012-13 and 2015-16, the University of California’s Office of the President’s administrative spending increased by 28 percent — or $50 million. Between the 1980-81 and 2014-14 academic years, total administrative costs had risen to $122.3 billion in academia. For context, public and private schools spend $13 billion on academic support and administration in the 1980-81 school year. Those in academia would argue that new students need access to more services, but it is hard to justify the amount spent on college administration. A typical four-year school has more professional staff who are not teaching than staff who do teach. Around one in five of them are working on things which do not help the school teach more effectively.

Reducing the number of administrators would not necessarily impact the quality of teaching or research, although professors may have to do slightly more work themselves. Administrators are hired to fulfill a variety of functions in universities, from working on diversity and inclusion to helping the university develop policies that will help them save the environment. Yet colleges are institutions of higher learning. The money spent on anything else that does not directly affect the quality of research or teaching is almost unnecessary. Perhaps colleges could reduce the number of assistants to provosts and presidents, streamline their diversity operations, and eliminate staff which do not serve a crucial role in the university. 

Amenities

Another way in which schools could reduce their spending would be to reduce the amount spent on non-essential amenities for students. Indeed, over the last few decades colleges have been spending more on amenities such as new and modern buildings, better student dorms, and other things which do not directly impact the quality of a school’s educational or research offerings. In the 19th century, students usually lived in neighboring houses — most colleges did not have the money to build full dormitories. However, in recent years, schools have been investing a large amount of money in high-quality on-campus student housing. Dorms often have their own bathrooms, and include ample space for the people who are living in the building — in the past, dorms were smaller and often shared amenities such as bathrooms. Students who decide to live in dorms do not need many of the things offered to them today. The dorm is supposed to be a simple place for a student to live while they attend college, but now they have become a major selling point for universities — students will likely weigh the quality of an institution’s dorm in their decision over where to go to college.

Reducing the amount of spending on student housing would have a big impact, but there are other amenities some schools offer that need to be addressed. At Louisiana State University, students can swim in a 565-foot lazy river which is shaped in the form of the school’s initials. This amenity cost the institution $85 million. Lazy rivers and other such amenities are becoming even more common, as academia continues to look for ways to attract new students. The University of North Florida introduced a new on-campus housing option that includes a lap pool, a putting green, and, of course, a lazy river. These expenses have no impact on the quality of a students’ education, and are a prime example of unnecessary college spending. The competition over prestige has been around since academia began, but in recent years this has started to manifest itself on the balance sheets of universities. Expenses such as lazy rivers, better dorms, new student clubs, and more, can be easily justified by universities. They claim these are an investment in student success, but hold an ulterior motive: to help the university attract more and better students.

Athletics

Finally, most colleges should also get out of the athletic game. Indeed, college sports is a big deal, and helps professional sports teams identify their next best players. College sports teams have become a symbol of institutional pride — students can come together to reach one common goal, support their team. However, many smaller institutions are investing large amounts of money into their sports programs with the hope they can be featured alongside larger names in college sports. In 2016, James Madison University spent $47 million on athletics, and had recently spent $62 million renovating their football stadium. These expenses are very common in higher education, as institutions compete for top rankings in college sports. Most sports programs cost universities millions which are often subsidized by student tuition dollars. That money would be better spent on essential academic services such as teaching, student support, and research. Expenses on sports teams can be justified using the same reason other amenities are explained: they will help the university attract more and better students. For many institutions, their sports teams are a core part of their branding, but for smaller colleges with low rankings, diverting more funds to teaching and research would be prudent.

All of these expenses have been allowed to grow because colleges and universities have very little accountability. Employers value the students’ degree more than the specific knowledge they have acquired. Therefore, colleges are free to spend more money on things that will help them make the college experience more pleasurable for their students which, in turn, may help them attract more students. Colleges have long used the argument that they are not just in the business of teaching, but rather enriching young people and helping them cultivate critical interpersonal skills. But things are changing.

College Accountability and the Future of College Spending

Policymakers are looking for new ways to hold colleges accountable, and recent increases in tuition have meant many people have avoided going to school altogether. Many students have dropped out because they can no longer afford to take out student loans to finance their education. Colleges do not have any skin-in-the-game, and the government has largely failed to oversee spending in colleges. That being said, recent Congressional proposals are starting to address this problem directly. Senator Josh Hawley has proposed a system that would make schools pay for student defaults; a bipartisan group of Senators has also proposed ISA Student Protection Act which would legislate Income Share Agreements, a type of risk-sharing-based student financing mechanism.

Reducing the amount of money spent by universities will be difficult. The current university system has succeeded in providing a good quality education to students, and the research produced by American universities has been widely respected. Therefore, convincing colleges to reduce their spending in any way may be difficult to achieve. Further, administrators and bureaucrats are at the center of excessive spending in college, who are likely to defend their jobs as much as they possibly can. As discussions over reducing faculty sizes loom, administrators will likely help each other keep their jobs. In addition, any downsizing measures would have to address unnecessary spending like athletics.

This is important to note as some universities like the University of Tulsa have considered reducing academic spending in the name of preserving athletics teams. The University of Wisconsin at Stevens Point also serves as a cautionary tale of how complex downsizing can be — their history department was disproportionately affected by downsizing, whereas other unnecessary expenses like administration were not addressed. If universities are not careful, they could significantly harm their research, and educational services. Universities could become expensive social clubs if downsizing is not taken seriously.

Higher education has been under intense scrutiny in recent years, but we should not lose sight of the fact that universities still play a critical role in developing the American workforce. That being said, if tuition increases are allowed to continue at this rate, schools will continue to lose high-quality applicants who can no longer afford to attend, which will have a direct impact on the quality of academia. Reducing the amount spent on adjuncts, administrators, athletics, and non-essential student services like better dorm rooms and lazy rivers are all reasonable suggestions which academia could make work, if done correctly. Either way, universities are now under more pressure to streamline their operations, and if they don’t act soon, perhaps Congress will intervene.