Room and Board Charges Rising Faster Than Inflation

American students, and their parents, have been complaining about the rising price of college since the 1980s, when schools began hiking annual tuition charges well above the rate of inflation. But rarely do we hear politicians or student groups railing against the sticker prices of college food and dorm rooms.

They should be.

Room and board fees, which average over $9000 a year, generally exceed tuition at public universities.  And they account for more than a quarter of the annual bill at private colleges. Like tuition, these housing and food charges are also rising far faster than inflation. Data from the College Board, which tracks college costs (in addition to administering SAT and AP exams), show that room and board charges rose 9 percent above the rate of inflation at public universities over the past five years. At private universities, they went up 6 percent over the rate of inflation. In nominal terms, without taking inflation into account, room and board charges rose 21 percent and 17 percent at public and private colleges, respectively.

The trend dates back to at least 1986-87, when the College Board began collecting this data. Over the past 30 years, room and board charges have gone up roughly 60 percent above inflation at colleges and universities (58 percent at private institutions and 61 percent at public institutions).

Often it’s much cheaper for a student to live off campus and buy his own food. The Department of Agriculture calculates that it costs a single male student between $188 and $376 a month to eat at home, depending upon how thrifty or extravagant his food tastes are.  The average asking rent on an entire vacant apartment was $766 a month at the end of 2014, according to the Census Department. That means that, on your own, food and housing together would cost roughly $1000 a month. But if you take the average public university charge of $9130 and divide by the eight months in an academic year, it comes to $1150 a month for a shared room and a communal dining hall. (And colleges often earn additional rent in the “off-season” for summer school and January terms.)

Avoiding these charges by living off campus isn’t always possible. In remote college communities, there aren’t many housing options. And many colleges — even public ones — require students to live on campus freshman year.

The Department of Education tracks every university and college’s room and board fees through its Integrated Postsecondary Education Data System (IPEDS). Forty institutions jacked up room and board fees by 50 percent or more in the five years between 2008-09 and 2013-14. They include large public universities, such the University of Texas in El Paso, the University of Wisconsin in Milwaukee and the University of Massachusetts in Lowell.

To be sure, many of those that raised fees the most are still charging below the national average. The priciest schools by room and board tend to be located where real estate is priciest — in New York, Boston and California (see a list of the top 20 here). Click here for our database to look up room and board charges for individual schools.

The big question is why housing and food cost more in the ivory tower than in the real world. Are universities hopelessly inefficient at running things?

To some extent, the answer is yes.  Too many schools failed to set aside rainy day funds to handle renovations over the years. That’s leaving them with giant construction bills today to renovate or replace antiquated housing stock from the 1960s, according to Beth McCuskey, vice president of the Association of College and University Housing Officers – International. To pay for that, schools are hiking housing charges.

But inefficient management is to blame too. Many universities allow each dining and residence hall to be managed separately and fail to take advantage of economies of scale. And many schools have gotten caught up in an “arms race” to provide students with endless choices of gourmet meals, extended food-service hours and fancy apartment-like residences with private bathrooms. All that luxury costs more.

Labor plays a role too. University employees are often unionized and paid more than restaurant workers in the private sector.

With the intense scrutiny over tuition bills, some economists wonder if schools are avoiding additional tuition increases by using room and board fees to subsidize other costs. Colleges deny it, saying that room and board fees are used only for room and board expenses. Proving otherwise is nearly impossible.

But Sandy Baum, a senior fellow at the Urban Institute, points out that schools are collecting more in “auxiliary services” revenues than they are spending. That’s the accounting category that higher education uses for housing and food. According to IPEDS data (here, here, here and here), public and private universities took in $2.7 billion more in auxiliary services revenue than they spent in 2011-12, the most recent year for which data is available.

This article also appeared here. 

[Cross-posted at The Hechinger Report]