Many universities today, stung by growing public criticism of college tuition hyperinflation, have engaged in public relations efforts highlighting their attempts to curb tuition growth. This is understandable. There is only one problem: A new study argues that tuition increases nationwide continue nonetheless to outpace inflation.
According to the study, performed by the tech finance outfit, Self, “in the last 5 years, after inflation the cost of university has risen by 2.9 percent on average per state. This means that the cost of a university education is outpacing the increasing costs of other goods and services nationally, to the tune of $807 more per year for aspiring students.” Self’s data comes from a subset of institutions represented at represented at https://www.collegetuitioncompare.com.
Commenting on the new study’s findings in an interview with The College Fix, Self CEO James Garvey offered a withering critique: “While it is somewhat understandable for universities to increase costs in line with inflation . . . the price hikes we have found in some states are double (if not triple) the rate of inflation; posing the question of where is this money going” (emphasis supplied).
To clarify the price hikes as well as reductions that the study “found in some states,” it also provides a helpful, state-by-state comparison of tuition increases over the past five years. This allows readers to learn not only which states are, on average, most expensive, but also “which states have seen prices rise faster than any other and exactly what that price increase was for.” This provides a reader-friendly way to “instantly see which states are beyond the norm.”
The study identifies three states significantly “beyond the norm” in tuition increases relative to inflation: Montana was the worst, with average costs spiking upward 12.93 percent. Alaska was second, with a 9.31 percent increase. Maryland comes in with the third-highest average cost increase, at 7.61 percent.
On the positive side, the study finds that eleven states managed to reduce cost increases relative to inflation over the same period. Nevada takes first prize, cutting overall costs by 5.37 percent. Arizona (-2.66 percent) and Florida (-1.4 percent) are second and third. Other cost-cutting states are Utah (-1.25 percent), New Jersey (-.70 percent), Iowa (-.58 percent), South Dakota (-.41 percent), Kentucky (-.12), Kansas (-.06 percent), North Dakota (-.03 percent), and Illinois (-0.3 percent).
The higher education establishment has defended itself in the past by arguing that tuition hyperinflation is primarily the product of “state disinvestment”—of declining state legislative support for higher education, in the face of which colleges and universities have had no other option but to hyperinflate tuition charges.
But this well-worn mantra has outlived its usefulness. My colleague at the Texas Public Policy Foundation, economist Andrew Gillen, recently published a study debunking the state disinvestment rationale. In his “The Myth of State Disinvestment in Higher Education,” he finds the following: “There has not been any convincing upward or downward trend in state funding of higher education over the past 38 years (the typically yearly change in state funding is between -$21 and +$19 per student per year).”
Moreover, argues Gillen, “Any given year’s value is determined more by cyclical factors (the state of the economy) rather than any underlying trend.” Aside from recessions, “state funding has typically been between $7,400 and $8,400 per student per year for 38 years.”
Gillen’s analysis reveals other trends that give the lie to the state-disinvestment thesis: “Steady increases in tuition revenue ($116 to $133 per student per year) combined with flat state funding (-$21 to +$19 per student per year) yield an upward trend in total revenues.” In fact, Gillen argues, “colleges have never had higher total operating revenue than they do right now ($14,600 per student)” (emphasis supplied).
His measured conclusion is thus: “Depending on the data used, there is only a weak or non-existent relationship between cuts to state funding and increases in tuition.”
The truth about the relation between state funding for higher education and university tuition increases, then, is this: When state legislatures reduce higher education funding, universities raise tuition. And when state legislatures increase higher education funding, universities raise tuition.
The deepest cause, in my view, of college tuition hyperinflation (440 percent average increases nationwide over the past quarter-century), is the massive growth of campus bureaucracies. That is to say, many universities have established on their campuses the Therapeutic-Welfare State that the country is becoming, or has already become.
Benjamin Ginsberg’s The Fall of the Faculty: The Rise of the All-Administrative University and Why It Matters, finds that, 50 years ago, faculty outnumbered administrators and staff by roughly a 2:1 margin—which is to be expected in institutions whose defining mission is teaching and learning. But today, Ginsberg demonstrates, the ratio between faculty and administrators has come down to approximately 1:1. This is the phenomenon known today as “administrative bloat,” and it appears to be the driver primarily responsible for tuition hyperinflation—not the vicissitudes of annual state funding.
Happy to say, there is good news out there regarding the prospects of actually reducing college costs, and it comes from Purdue University. There, President Mitch Daniels has done better than merely limit tuition increases relative to inflation, he has frozen tuition for the last eight years. Today, a Purdue degree is cheaper than it was in 2013.
According to the state-disinvestment mythmakers, this could never happen.
But it did.
Hence, nationwide, prospective students and their parents are growing desperate to hear exactly what Purdue knows that the rest of our schools somehow do not.