The chart above bears out that contention. We saw in the first panel of this chapter that average tuition at a public institution in 1995-96 was about $2,000, yet we see from the chart that it cost the public university nearly $20,000 to educate a student that year. Tuition at a private university in 1995-96 was about $12,000, yet it cost the university $37,200 to educate the student.
Between 1980 and 1995, college expenditures per student rose at all types of institutions at rates ranging from 17% to 55%, while state appropriations declined. These increases are related to increases in instructional, administrative, and research costs; scholarships and fellowships; student services; and plant operations and maintenance. At hearings before the Senate Governmental Affairs Committee in February 2000, educators cited the cost of complying with government regulations, recruiting faculty, and building facilities as other factors in driving up college expenditures.
Education is labor-intensive. The "better" the college, i.e., the more its faculty is paid, the more prestigious its research facilities, the more generous the financial aid it offers to attract the "best" students, the finer its library and computing capabilities, and so on, the more the college spends. Yet, as the table shows, average annual increases in spending by colleges5 have been relatively modest.
Average Annual Percent Increase Previous 5 Years in Per Student Educational and General Expenditures: 1980-1995
| Public Sector | Private Sector | |||
| Year | University | Other 4-Year | University | Other 4-Year |
| 1995-96 | 1.6 | 2.2 | 2.6 | 2.3 |
| 1990-91 | 1.6 | 0.3 | 3.5 | 2.7 |
| 1985-86 | 1.9 | 1.4 | 3.3 | 2.9 |
| 1980-81 | 0.4 | 1.0 | 1.1 | 0.7 |
D. Bruce Johnstone wrote about these data: "Although the data are limited, [they do] not seem to support the notion of 'out of control' instructional costs," as critics of the spending policies of higher education institutions often claim. Johnstone opined: "Faculty and administrators of many colleges and universities feel as though they have been living amid almost perpetual financial challenges, constantly cutting, reallocating, downsizing, outsourcing, and chasing new revenues."
In 1997 the public outcry over the rising cost of college led Congress to appoint a National Commission on the cost of Higher Education to find out what could be done to rein in tuition costs. The Commission was unable to explain why the cost of college has risen so fast. The Commission's extensive report complained of the "veil of obscurity" that many institutions have allowed to settle over their financial operations and warned: "If colleges and universities do not take steps to reduce their costs, policymakers at the Federal and state levels will intervene and take up the task for them."
Some states have frozen tuitions. Others are contemplating tuition caps. But analysts say that these are temporary solutions and that higher education financing must be restructured so that it does not rely so heavily on tuition.
In the next panel we look at enrollment trends to find out who our new professionals are.
Source: Chart and Table: U.S. Department of Education. National Center for Education Statistics. Study of College Costs and Prices, 1988 - 89 to 1997 - 98, Volume 2: Commissioned Papers, NCES 2002-158, by Alisa F. Cunningham, Jane V. Wellman, Melissa E. Clinedinst, and Jamie P. Merisotis. Project Officer: C. Dennis Carroll. Washington, DC: 2001; primary source: NCES, 1999, Condition of Education 1999, Washington, DC: U.S. Government Printing Office, Supplemental Table 40-2; retrieved 3/12/02 from http://nces.ed.gov. "Straight Talk About College Costs and Prices: Report of the National Commission on the Cost of Higher Education," January 21, 1998; retrieved 3/21/02 from http://www.acenet.edu/. Tony Pugh, "No Answers on Why College Costs Are Increasing So Fast…" Philadelphia Inquirer, Feb. 11, 2000.
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