Comment by mazelife | Hacker News Reader

Comment by mazelife | Hacker News Reader

This reads like a press release written by York University administrators, or pretty much college administrators everywhere. Some facts that offer a useful corrective:

1. Rising college costs have massively outpaced inflation in the last 2 decades [0]

2. Salaries for tenured professors have not seen anything even close to that kind of growth in the same time period [1]

3. Most institutions actually employ fewer full-time faculty than they did 20 or 30 years ago, shifting more and more to part-timers and adjuncts who get paid a pittance [2]

So...college is massively more expensive than it's ever been, but full-time professor salaries have not risen significantly and there are actually fewer of them overall. So where has the money gone?

In the US, I don't know that there is a complete answer on that, but there are definitely some suspects:

* offsets to deal with slashed state funding (although federal funding has risen significantly in the same time period)

* university endowments

* university administrators [3]

* building sprees and tons of shiny new facilities

[0] http://www.bloomberg.com/news/articles/2014-11-13/college-tu...

[1] http://nces.ed.gov/programs/digest/d13/tables/dt13_316.10.as...

[2] http://nces.ed.gov/programs/digest/d13/tables/dt13_315.10.as...

[3] http://www.bloomberg.com/news/articles/2012-11-14/bureaucrat...

Agreed. University administrators definitely have an effect. There has been a doubling[0] in the number of administrative posts in the US and they cost a lot[1]. It seems to be a continued corporatization of the tertiary sector, whereby management and administration slowly swallows the old system of a university run by faculty. A good reporting on this is in [2].

[0] http://www.huffingtonpost.com/2014/02/06/higher-ed-administr...

[1] http://www.washingtonmonthly.com/magazine/septemberoctober_2...

[2] https://www.insidehighered.com/news/2011/07/14/new_book_argu...

Administrators and staff is the likely answer. From 1975 to 2005 there was no change in faculty-to-student ratios, but students per administrator dropped from 84 to 68 (and pay increased) and students per professional staffer dropped from 50 to 21. Source: http://www.amazon.com/The-Fall-Faculty-Benjamin-Ginsberg/dp/...

Thanks for the useful information, but do you have a source for the university endowments claim? Are their schools where tuition funds go towards expanding the endowment? At my alma mater it was the other way around (endowment made billions a year and paid some of that out to operate the school) and I thought it was similar at most schools with sizable endowments.

Mostly anecdotal, which is why I said "suspects". I'd love to see a comprehensive comparison of university endowment growth over the last few decades. I suspect the data's all there, but nobody's pulled it together. I've come across a number of articles discussing large increases in endowment size and a number of universities of late, seems to be a common theme as more and more people are starting to ask why college has become so expensive. For example there was recently a story in the Washington Post about Washington and Lee University which covered how it had gone in the 90s from a school with a relatively paltry endowment to land in the top 30 overall.

These two sources are interesting:

http://www.jbhe.com/features/57_pellgrants.html

http://en.wikipedia.org/wiki/List_of_colleges_and_universiti...

The first source leaves little question that it's happening at top tier universities, but I'm interested in the trend and second- and third- tier schools.

edit: As another commenter points out, most schools aren't sitting on large endowments. There probably isn't a single unified cause to explain rising costs. Endowments are probably part of the story for higher-profile schools, but not so much for others.

I think you're getting a bit mixed up here. For example, I went to Harvard, which has a large endowment which has grown substantially. But the endowment definitely didn't grow by moving tuition money into the endowment (it goes the other way around, with parts of the endowment helping to fund financial aid). Endowments tend to grow through donations and hedge-fund style management.

It may be the case that some universities are pulling less from their endowments to cover certain costs, covering those costs with increased tuition, and leaving the endowment free to grow more quickly, but I'm pretty confident that universities aren't just siphoning money from tuition straight into the endowment.

I think you'd have to show that universities are spending a smaller fraction of the earnings from their endowments, rather than just that the endowments are growing.

I'm not getting mixed up about the direction the money flows; see my quote down-thread: "endowments come from donors by definition"

When asking why is tuition growing, I was saying exactly what you state: that for universities that are focusing on increasing the size of their endowments, something has to cover the costs that would formerly have been funded by endowments, that "something" being tuition.

I misunderstood you; thanks for the correction. I still think the useful data here is the fraction of the endowment income that goes towards expenditures, rather than the raw size of the endowments, but I definitely see where you're coming from. I wonder what fraction of the rise in tuition has to do with this.

> at most schools with sizable endowments.

Well there's your problem, most schools don't have sizable endowments. Endowments for rich schools have performed fairly well over the last couple decades, not so much for those with smaller endowments. So if you use tuition and fee money on things that might have previously been funded through endowments while you attempt to build (or re-build), it's really the same thing.

This is particularly true for universities like York University. (For those who didn't read the article, it's a university in Toronto and is the subject of the article.) Born in a more socialist era, the University put little effort into building up an endowment fund, since the government (i.e. "the people") would simply provide all of the money necessary to run the institution. As government funding has decreased over the last few decades, they're making greater efforts to build larger endowments, however, it'll take them a long time to catch up.

The tuition and fees are being used for things that have traditionally been funded by endowments rather than for things that have been previously funded by endowments. Schools with small endowments are expanding via fees in areas where other schools have used endowments to expand in the past.

For example, Ben Hill Griffin gave money to the University of Florida [endowed school] to expand their football stadium. Down the road in Orlando, University of Central Florida used student fees to build an on-campus football stadium. It did not have one previously -- nor a football team to fill it until relatively recently (the DI team was also built largely based on student fees).

All that construction requires fundraising and together generate lots of administrative positions, and that's where rising fees and tuition go.

I know that most schools don't have sizable endowments, but I also don't think most of them are diverting tuition towards their endowments.

Significant to massive drops in state funding is a major reason at my university (resulting in freezes, furloughs, and tuition increases over the last 5-6 years). Federal funding doesn't offset that since it can usually only be used for research staff (and small portion of faculty salaries).

Support for new buildings usually doesn't come from the same budget and in most cases, new buildings are needed to handle the increased enrollments.

There's a secondary source of government funding beyond earmarked grants to universities: the tuition assistance it offers to students, which then goes straight into the pocket of the school. Consider pell grant spending, which has grown about 8x since it was established in 1975: https://www.americanprogress.org/issues/labor/news/2011/07/2...

Even if we factor in the number of students receiving the loans (which has grown), the average amount awarded to students roughly doubled since 1994.

It does vary a lot by school. Total cost-per-student has risen substantially at many universities, but is closer to flat at others. The University of California system is one that has had kept per-student costs close to flat, and in their case, tuition rises do seem roughly equal-and-opposite of state funding cuts. Last time I ran the numbers (2012), per-student state funding had dropped from historical levels of $25-30k/student to $13k [1], which explains where the ~$15k/student increase in tuition over that period could've come from.

[1] http://www.kmjn.org/misc/uc_funding.txt

In all aspects of education, from primary school to university, the growing swarms of administrators soak up the budget. In some school systems, they vastly outnumber the actual teachers, have better pay, and yet contribute nothing to the operation of the schools.

So where has the money gone?

Baumol's Cost Disease: http://www.amazon.com/Why-Does-College-Cost-Much/dp/01902141...

If it was Baumol's cost disease was the explanation you would expect the higher costs to show up almost entirely in higher faculty spending. However, the parent post (#2 and #3) show that isn't the case. It isn't that the same production factors have gotten more expensive, instead it is that the mix of spending has changed radically -- with ever increasing shares of the budget devoted to ever increasing numbers of non-instructional staff.

Briefly (for the benefit of every else) Baumol's cost disease is the idea that if many professions in a society experience large increases in productivity due to technology, but some don't, those professions that don't will face equivalent increases in labor costs (and thus much higher increases per unit productivity) because those professions must compete for new entrants with the more productive professions.

Take a look at the linked book, Why Does College Cost So Much; it appears that much of the cost increase goes to benefits, especially health insurance, and even if the superficial cost remains the same the efficiency can go down relative to other parts of the economy (which is part of Baumol's Cost Disease).

Archibald and Feldman discuss these hypotheses in-depth in the book.

Can tuition enter endowments?

No, endowments come from donors by definition. The question is—for schools that are sitting on large endowments—why is tuition so expensive? And why are there so many cutbacks to things like number of full-time faculty when the school is sitting on a 1.5 billion dollar endowment?

The answer to that is very simple: most endowment gifts are earmarked, seems that donors don't grant blanket trust to to the administrators of institutions. And then there's Princeton (https://www.google.com/search?q=princeton+wilson+school+endo... and why am I not surprised Wikipedia has no coverage of the most infamous college endowment diversion case in modern history?).

Tuition is golden, for it can be spent on anything. And gifts earmarked for tuition relief....

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