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Comment by ARandumGuy | Hacker News Reader

Most universities have really messy financials. A lot of money gets spent on projects and programs that don't directly benefit the education students receive, or the research output of the university. Things like sports investments, ballooning administration staff, or flashy construction projects. At the same time, TAs, grad students, adjunct professors, and other staff are frequently underpaid and overworked.

There's a lot of room to debate on what colleges should spend their money on, and what they should be providing. But American universities are not strapped for cash, and should be spending more of it on things that directly benefit students and researchers.

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The US federal government should do the same thing to public universities (US definition) that they did to insurance companies via the ACA -- cap administrative overhead.

For every dollar in tuition, >Y% must be spent on qualifying direct educational expenses. E.g. teaching faculty salary, etc.

If a college fails to meet that threshold, and spends too much on non-qualifying costs, they are required to rebate the difference to students.

If a college refuses to do this, they're no longer eligible for federal educational money (Pell grants or loans, etc).

Then let colleges optimize themselves to get under the limit.

It caused a lot of scrambling and long-overdue efficiency improvements in another legacy, slow-to-change industry (health insurance).

The colleges will just respond in the same way that the insurance companies did, by jacking up prices. Raising the amount they're charging for premiums / tuition allows them to still maintain or grow their total overhead amount, even at a lower rate.

One would hope consumer choice would come into play and students would start shopping around for the best deal.

This didn't work in the same way it doesn't work with insurance: students are limited by more than just price alone. Location matters a lot (a student may be staying with their parents). And also if all univiersities raise their prices in this way, there's nothing the students can do.

Doubtful.

The only reason the cost of college is high is because 18 year olds that know nothing about finance don't have to pay for it now because they can get loans.

You take away the loans, and you take away the ability of the college to charge whatever it wants and kids keep paying.

Are 18 year olds today significantly less smart than 18 year olds 50 years ago? No. So why is tuition so much more expensive? In 1970 tuition at University of California schools was about $1000, inflation adjusted. You could easily make that at a summer job.

So what has changed? States have stopped funding for schools. A lot of tuition used to be covered by tax money, which spreads out the cost to everyone and over many years. Now, it is a very abrupt cost to a small group of people.

The prior funding model also had the benefit of a progressive tax system. Wealthier people paid into it more than poor people. Now, students have to rely on unpredictable financial assistance like grants and scholarships, and take on predatory loans to cover the difference.

> So what has changed? States have stopped funding for schools.

Yes - but more importantly, schools got more expensive, because people had more access to debt.

That's not an issue particular to university funding, though. Access to - and use of - debt has gone up across the board, for any and all big-ticket items, both for private and public purchases. There's a problem far larger than expansion of credit access, and it has to do with attitudes at the uppermost reaches of the planning of our economy as to how to distribute wealth - not just by geography or interest, but even by temporally. Decisions made 40-50 years ago to put the cost burden on future generations are literally paying interest today.

I'd question whether insurance companies jacking up prices for purposes of growing headcount was a major trend.

In the ACA aftermath, I believe you saw more insurance companies exit markets because they couldn't be competitive and profitable on prices with standardized plans.

Which is its own problem and led to a lot of limited-insurer markets, but a different one.

I stopped reading after the first sentence.

Our current health insurance laws should NOT be a model for anything, ever!

What would you have done differently, in an attempt to evolve a complex, layered, and ossified industry that absolutely cannot stop providing service for even a day?

I'd start by removing the subsidies and special rules around student loans. That makes colleges compete on price again which puts downward pressure on tuition.

Repealed the McCarran-Ferguson Act at the time instead of waiting until 2021 to do it?

You made it past "The US federal government should"?

I only know a little dirt about the one I worked in and it was pretty bad. The redirection of funds, the word games, and so on ... I would have a better chance of making improvements I desired by making little paper airplanes out of hundred dollar bills and trying to hit areas I though needed help.

> I would have a better chance of making improvements I desired by making little paper airplanes out of hundred dollar bills and trying to hit areas I though needed help.

It was certainly an amusing visualisation lmao

The waste is unreal. When I was in Uni, I used to sit outside and work in a little side-of-a-building park area where, every spring, I'd watch the grounds crew pull up perfectly good looking flowers and plant slightly better looking ones in the days before a "parents weekend" or a big admissions event.

They would just toss the "old" flowers in the dumpster

Corporations do the exact same thing before shareholder’s meetings.

> sports investments, ballooning administration staff, or flashy construction projects

Construction projects are typically the result of specific earmarked donations and sports investments often create lots of income. NCAA Division I programs should be thought of as a side business that generates revenue for the university.

Administrative staff is the major problem here. It’s also where most organizations tend to dump their excess revenue, and since the US has been aggressively subsidizing demand for universities for decades, they’ve had a ton of excess revenue to dump into administrative staff.

> TAs, grad students, adjunct professors

Most academic fields produce significantly more Ph.D.’s than there are tenure track positions or other full time professional careers. As a result, the grad student or Ph.D. exists in a competitive-verging-on-exploitative labor market. The typical grad student or adjunct is in the same position as the aspiring actor who has a day job in LA waiting tables. People always claim that this is because there aren’t enough tenure track positions, but I think that’s backwards. Why would you open up a tenure track position when you have a plethora of Ph.D’s who are apparently willing to work as adjuncts? If the universities didn’t produce as many Ph.D’s in the first place, the labor market would be more competitive and they would need to offer tenure track positions.

Universities shouldn't have side businesses, don't they have some non-profit status that's specific to education? They should be heavily restricted to education and research alone.

I’m not a huge fan of the NCAA system myself. A lot of universities don’t have major sports programs, and that’s a respectable choice on their part. But NCAA sports are tremendously profitable for the universities that invest in them. No Division I school would actually save money, in the long run, by defunding their football and basketball teams.

And when it comes to side businesses, sports pale in comparison to endowments.

Edit: Just to clarify, my only point here is that criticizing these Division I schools for how much they spend on their sports programs is fallacious. If you have a different criticism of college sports, that's fine but I'm not sure why you're addressing it to me.

Yea same I’m a big hoop nerd but the mainstream collegiate sports especially basketball make my eyes bleed. Literally infuriating to watch idk how people do.

But something like Duke Basketball has been tremendously beneficial to Duke–in terms of brand awareness. Same with UT Austin and their football brand ($7mm on new locker room is insanity tho).

>No Division I school would actually save money, in the long run, by defunding their football and basketball teams.

Tulane might be a counterexample to this especially since the 80s (although not lately)

Who cares about making money or not, plenty of ways to make money, but that's not the purpose of a non-profit organization dedicated to education.

Less revenue for the school means higher tuition costs for everyone and less scholarships.

No, more revenue means that revenue goes to paying for non educational stuff, admin bloat, etc.

> or flashy construction projects

My experience discussing this with some Deans of (large, top 10ish) institutions is that space and (qualified, tenure track) faculty are basically the hardest things to find, and space is probably harder. Lots of things require space (including, for example: student services), but space is limited, and classrooms and research and administrative space often take priority. And creating space is difficult, it takes years to build a building.

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