In pt. I of the conversation on the student debt crisis, one of the topics touched upon was holding higher education institutions accountable for their spending, especially when ostentatious campus development projects or excessive services are in question. The funding for many of these unnecessarily-expensive projects comes from the students themselves in the form of rising fees and tuition rates. Consequentially, these higher tuition rates leave many students with a lifetime of paying off their student loans, as the amount of national student debt continues to climb past $1.6 trillion. While the broader effects of decreases in funding and increases in schools’ expenses were discussed in pt. I of the conversation on the student debt crisis, it’s necessary to take a deeper dive into the more specific implications of why schools’ expenses are rising, as well as what can be done to control these increases in both expenses and tuition rates.

In a study done by the National Center for Education Statistics (NCES), higher education institutions (including 2-year and 4-year programs) spent a total of $632 billion. This figure is a combination of all operating and maintenance expenses, as well as campus development projects. So where exactly does all of this money go? Unsurprisingly, the study found that faculty salaries and benefits were among the largest piece of the “expenses pie” (National Center for Education Statistics). It is difficult to argue or advocate for cost-cutting in terms of faculty compensation, especially as many schools significantly underpay their faculty as is. For example, at the University of Michigan, professors and graduate students are comparatively under-compensated despite the university’s $377 million operating budget surplus (The Hechinger Report). While most universities shouldn’t be cutting costs from their faculty salaries and benefits, it is unacceptable for schools who have large operating budget surpluses, like the University of Michigan, to not only continue to underpay their faculty, but to pass the financial burden of faculty compensation onto students in the form of rapidly-rising tuition rates.

In addition to faculty salaries and benefits, another one of the largest pieces of the “expenses pie” came from a category in the NCES study called, “academic support, student services, and institutional support.” The study says these include, “expenses associated with noninstructional activities, such as admissions, student activities, libraries, and administrative and executive activities.” While one reason for the category’s high ranking is the due to the number of expenses grouped together, the expenses of student services and institutional support make up a significant portion of the pie regardless. One of the main reasons for this large and overly-general grouping comes as a result of one of the biggest sources of rising tuition rates: a lack of transparency from schools concerning their expenditures. Many higher education institutions offer data on their annual budgets, however this data is often vague, and means of reporting budget data is inconsistent across universities. This lack of transparency from schools concerning their annual budgets and expenses makes it difficult to hold these school accountable for unnecessary expenses. As a result, surveys and studies, like the one from the National Center for Education Statistics, cannot make specific conclusions or comparisons on spending data. For example, to revisit the “academic support, student services, and institutional support” category from the NCES study, some expenses like those for student activities or libraries directly benefit students. Other expenses in the category, like administrative and executive activities, can contain unnecessary expenses which unnecessarily inflate tuition rates for students. Without transparency concerning expenditures (especially those involving student tuition), there’s very little stopping higher education institutions from continuing to irresponsibly-use student tuition. However, despite these inconsistencies in reporting, more students and faculty than ever are taking initiatives to hold their respective schools accountable. For example, according to the Hechinger Report, “In Colorado, adjunct instructors at community colleges have used public-records law to dig through data showing vast disparities in pay.”

Regardless of where a higher education institution allocates its money and regardless of how student tuition is spent, universities’ primary focus (regardless of whether the school is public/private or non-profit/for-profit) should be on catering to the needs of students, as well as ensuring that students have the tools required for a quality education. Part of that task to cater to the needs of students should include offering financial aid to students. Revisiting the NCES study, one of the smallest contributors to the “expenses pie” was net grant aid to students. In fact, for many institutions, net grant aid made up less than 1% of the institution’s budget. Although the amount of grant aid given has increased in recent years, the portion that grant aid makes up in most schools’ budgets is still extremely low. While increasing grant aid would increase annual expenses for most schools, students who receive this grant aid will feel the positive impacts of the gift for a lifetime, especially in terms of minimizing student loan debt.

Tuition rates continue to rise at unprecedented rates, as the average price of an undergraduate education has risen nearly 30% in the past 10 years. While some of these increases are inevitable due to inflation, there are many areas where higher education institutions continue to irresponsibly allocate funds from student tuition. Rather than using the income to directly impact students, universities often allocate funds towards unnecessary campus development projects or excessive programs and services, directing a majority of the financial towards students in the form of rising tuition and fees. While certain expenses like faculty salaries and benefits shouldn’t be reduced, expenses like administrative and executive activities are often allocated unnecessarily-high amounts of funding. In addition, as a result of the lack of transparency and consistency surrounding many aspects of universities’ annual budgets expenditures, it can be difficult for students and faculty to hold their respective institutions accountable for irresponsible spending. While it’s important to pinpoint different expenses of a university’s budget that can be cut or reduced, it is also important to ensure that students remain the center of the conversation during the whole process, as expenses like grant aid directly benefit students in both the long and short run.

References (URLs)

“https://nces.ed.gov/fastfacts/display.asp?id=75”

“https://hechingerreport.org/increasingly-skeptical-students-employees-want-colleges-to-show-them-the-mon”

“https://www.bdo.com/blogs/nonprofit-standard/july-2021/higher-education-in-the-u-s-%E2%80%93-rising-costs,-enroll”