How Colleges Spend

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This is going to be major fuel for critics of traditional colleges like Iowa Senator Chuck Grassley and the for-profiteers.

A new study by the nonprofit Delta Cost Project demonstrates that American colleges are spending less of their money on actual education and more on administration and recreation. The study also shows that American colleges are very stratified financially. Elite colleges have gigantic reserves while many colleges struggle.

Community colleges spend about $10,000 a year to educate each student. Private universities, in contrast, spend about $35,000. According to an article by Sam Dillon in the New York Times:

…The trend toward increased spending on nonacademic areas prevailed across the higher education spectrum, with public and private, elite and community colleges increasing expenditures more for student services than for instruction, the report said.

“This is the country-clubization of the American university,” said Richard K. Vedder, a professor at Ohio University who studies the economics of higher education. “A lot of it is for great athletic centers and spectacular student union buildings. In the zeal to get students, they are going after them on the basis of recreational amenities.”

To a certain extent this is understandable. As students increasingly choose colleges nationally, schools feel that they have to spend on lavish gyms and other buildings to attract students. At the same time, the widespread American trend to see colleges as career training compels institutions to do more for things like career service, which is included in administration costs.

The report emphasizes that this trend is not sustainable. The recession has and will continue to lead colleges to change their spending priorities.

Read the Delta Cost Project study, “Trends in College Spending 1998-2008,” here. [Image via]

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer