How do we make college cheaper?

[Recursion]

I picked my mom's alma mater, UT Austin (go Longhorns!) because it's public and the numbers were pretty accessible.

http://www.utsystem.edu/cont/Reports_Publications/summaries/2015/FY15BudgetSummaries.pdf

(Scroll down to page 17 for UT Austin)

Their revenues were:

Tuition and fees: 484,287,227  
Federal programs:  444,215,721  
State programs: 51,326,352
Local and private programs:  92,168,341
Net sale of educational activities:  223,232,195  
Net auxilliary: 280,389,695
Other:   2,939,688
Total:   1,578,559,219  

Their expenses were:

Instruction  697,537,645
Academic Support 281,619,342
Research 472,509,313
Public Service 93,022,506
Institutional Support 135,615,975   
Student Services 58,210,041  
Operations and Maintenance of Plant  149,757,141
Scholarships and Fellowships 162,865,967
Auxiliary Enterprises 284,538,810
Depreciation and Amortization 312,000,000
Total Operating Expenses 2,647,676,740  

Operating Surplus/Deficit   (1,069,117,521)

Just to be clear: that's a $1 billion operating deficit for this one university.

So, it should be pretty clear from this that there are three main revenue centers for UT:

1. Tuition
2. Federal funding
3. Educational and auxilliary sales (this is the money they make from people taking one-off classes as well as athletics -- athletics are a net earner here)

It should also be pretty clear that there are three cost centers for UT:

1. Instruction
2. Research
3. Amortization

That said: let's say we wanted to cut tuition by 1/3rd while maintaining the operating deficit of $1B. That means finding $161,000,000 in either lower costs or new non-tuition non-fee revenues in that list. Where does it come from?

[DetlefK]

1. Two ideas where I would look into:

I assume they have sports-team? "Longhorns"? I made a quick full-text-search but neither "sport" nor "football" yielded hits.
Under which section are the costs for the sports-program billed?
What are those costs?

How large is the administrative staff? (Administrative staff, not instructors or educators.)
What are their salaries?



Wild assumptions:
1. There is a costly football-program with a high-maintenance stadium.
2. There are managers nobody needs but who get Wall-Street-level pay.

[Recursion]

3. Their net revenues to the University are noted under "Net sales of auxilliary activities"

Like I said, they're a revenue source for the college, not a cost sink.

[Laura PourMeADrink]

5. Revenue from football.

According to our research engine:
The The University of Texas at Austin Football team in Austin, Texas made the following profit:
Men's Team Expenses: $29,814,804
Men's Team Revenue: $121,382,436
Men's Team Profit: $91,567,632

http://college-sports.pointafter.com/q/14583/3448/How-much-profit-does-the-The-University-of-Texas-at-Austin-Football-team-in-Austin-Texas-make

Texas has been college football’s most valuable team since 2009, when it usurped Notre Dame’s top spot with a value of $119 million. The team’s unprecedented value is built on the back of the nation’s most dedicated fan base, which has helped Texas lead all schools in merchandise sales, secure the most lucrative school-specific TV deal and become the only college football team in history to cross $100 million in revenue, which the Longhorns have done for the last two seasons.

Last year Texas had income of $109 million; no other team made more than $90 million. The biggest source of revenue was ticket sales, which contributed $34.5 million last season, an increase of more than $2 million from the previous year. Texas football also collected $30 million from contributions and another $15 million from Big 12 and NCAA distributions.
http://www.forbes.com/sites/chrissmith/2013/12/18/college-footballs-most-valuable-teams-2013-texas-longhorns-cant-be-stopped/#278b9702720b

[ShrimpPoboy]

26. And this is after a decade of the team being mediocre/crap

Of course, with that kind of cash and arguably the biggest fan base in college football it's only a matter of time for them to make a come back. I hope so too. My second favorite team.

[Warren Stupidity]

2. It seems you don't understand that the proposal

has the federal government covering public university tuition. Instead you have once again crafted an argument built on false premises buried in mountains of truthy looking facts.

[Recursion]

4. Ah, those damn facts

Again, which rows do you want to be higher (revenue-wise) or lower (expense-wise)?

[Warren Stupidity]

6. Again nothing changes.

Tuition is not zeroed out.

[Recursion]

7. I'm not asking it to be zeroed out; I'm asking it to be lowered by 1/3rd

And I'm asking where that $161,000,000 comes from. Is it from higher revenues somewhere else, or lower expenses? And in either case, which one?

[pnwmom]

22. Tuition's been rising much faster than inflation. How will be government be able

to afford to keep up with that?

[Laura PourMeADrink]

8. Very interesting topic, R !

http://www.theatlantic.com/business/archive/2014/01/heres-exactly-how-much-the-government-would-have-to-spend-to-make-public-college-tuition-free/282803/

Update—Friday Jan. 3, 3:45 PM: Just to clarify, because some readers have asked, making tuition free in 2012 would have required $62.6 billion on top of what state and local governments already spend subsidizing public colleges, as well as some of the federal spending that doesn't go towards financial aid. Again, you can find a detailed breakdown of how our colleges are funded in the Department of Education's data.

For anybody interested in reading more about the idea of making public college tuition free, and the vast array of economic considerations that would entail, here's a lengthy piece I wrote last year.

Update—Friday Jan. 3, 4:31 PM: One more update to answer another good question I've received. Technically, you could say the additional cost of making college tuition free would be even cheaper than $62.6 billion. How come? Because most Pell Grant money is already spent at public colleges. In 2011 - 2012, state school students received $21.8 billion in grants. So, if you subtract that from the total needed to completely eliminate tuition, it the sum would be closer to $40 billion. (Apologies for not teasing that point out earlier. I'd noted it in a previous article and didn't think to repeat it.)

[Recursion]

12. I keep reading about adjuncts on SNAP, and thinking "why the hell was I paying so much, then?"

Is there a way for the people actually teaching classes to not need food stamps, that does not involve increasing the already extortionate tuition and fees I paid?

[pnwmom]

24. And no one's talking about the cost of room and board, which many students

have to pay, even for state universities.

[Recursion]

25. Yup (nt)

[DetlefK]

9. Let's just compare it to a german university:

https://en.wikipedia.org/wiki/Karlsruhe_Institute_of_Technology
Academic staff 7,177[2]
Administrative staff 3,848[2]
Students 24,528
Budget €844 million

https://en.wikipedia.org/wiki/University_of_Texas_at_Austin
Academic staff 3,071[4]
Administrative staff 21,000
Students 51,313

Compared to the german university, UT Austin has 2x the students, 0.5x the professors, 5.5x the bureaucrats and 4x the budget.

[Recursion]

10. Thank you! Great numbers. So where do we cut UT Austin's budget?

Do you have line items for Karlsruhe like the ones I posted for UT?

[DetlefK]

17. There doesn't seem to be a budget online. Sorry.

[MgtPA]

11. Ask your Mom what she paid in tuition - many state colleges were free or close to free in the 1970's

Off the top of my head, California and Hawaii provided tuition-free college to their residents. Many others were virtually free. Private colleges weren't overly expensive either. My brother mowed lawns in the summer and that paid for his tuition at a private university. In the mid-1970's, Temple University's tuition was $40.00/credit hour, and I thought that was expensive at the time. I'd like to see the above numbers broken out in more detail, alongside the corresponding numbers from the 1970's, just to see what exactly the tuition is paying for.

[Recursion]

13. She had a math scholarship (one of the first women to receive one there)

Even when she switched her major to Latin American History she got to keep the money.

I'm assuming that came out of state funding, though I don't actually know that for certain.

[MgtPA]

14. Nice! My Mom was a math major too (in the 1930's).

[cab67]

19. Public universities had much larger state subsidies in 1970.

The loss of state support is as much a reason for higher tuition as the over abundance of administrators.

[Iggo]

29. LOL...burn.

[Sunlei]

15. cut the loss from Research 472,509,313. increase sports revenue.Start online CREDIT degree-prerequi

prerequisite classes with 'Labs' & testing on campus & at testing centers.

Online classes can be much lower cost for locals, yet bring in Global students at a higher fee. Basic level-1/2-prerequisites. Pay and increase some teacher salaries out of online classes.

[cab67]

21. Easier said than done.

They've been pushing us to design more online classes for years. But they expect us to maintain our regular classroom teaching loads and do the research and admin we usually do.

[Sunlei]

27. 21,000 paid? 'Admin' & many less actual teachers. They need to cut thousands of those admin.

That's why tuition is so high,actual teachers are paid crap, and the college is in the red.

I bet thousands of those Admin. are some kind of 'for profit' directors for private interests, Corps.- who leach profits off Americas colleges.

[cab67]

39. I was referring to the administrative work faculty members do at most universities and colleges.

Academic departments are basically self-operated.

[Odin2005]

16. The whole comercialization of college and campus life needs to be reversed.

And the source of this commercialization is the subsidized student loan system, which is essentially gobs and gobs of free money to the universities that now only care about getting as many students as possible and are in an arms race to pack their campuses full of expensive perks in order to attract students and that drives up costs. This needs to be abolished and replaced by a system of grants that are awarded based on academic ability.

Also, college bureaucracies are seriously bloated.

[Recursion]

18. Stop your clocks, people, because we entirely agree here.

My grad school, Boston University, once announced in a single email a tuition increase and the opening of a second gym, with a lazy river around the pool. Damn straight I laminated my homework and read it in an inner tube there (yes, seriously; I was paying for it).

[Odin2005]

20. Yep, it is disgusting how much colleges have turned into mere marketing machines.

They don't care about the students, they just want the sweet, sweet subsidized loan money.

That makes me think of another thing, subsidized student loans cannot be discharged in a bankruptcy, essentially meaning there is absolutely 0 risk to banks giving out as many student loans as possible. This is classic bubble economics.

[Recursion]

23. As I have said multiple times: if there is zero risk to the lenders, it is literally not a "market"

Like, literally, from an Adam Smith standpoint, that is no longer a "debt market". It's some other beast entirely.

Frankly (I catch hell for this), we need a lot more student loan defaults, not a lot fewer.

[Sunlei]

28. agree but the way those student loan contracts were written, they are in debt for life,can't defaut

Even if they die, co-signers will pay.

[GeorgeGist]

30. From the State of Texas.

Like in the good ol days, before Republicans and Reagan Democrats crapped all over US.

[QC]

31. Stop the stealth privatization of public higher ed.

This is the biggie.

In many states, nominally public universities now get single-digit percentages of their funding from the state government. Here in Florida, per-student funding was cut over 40% in the wake of the 2008 crash. A couple of big community college districts in Arizona recently lost all state funding. And so on.

A college can only cut back so much--they still have to pay the bills. So tuition has to go up. That's not a problem for the movers and shakers in the legislature, who spend more on their country club dues than a year at a public college costs, but it's a huge hardship for the students.

There are other issues, of course, like the rise of the corporate management model in higher ed (lots of managers, fewer workers) but the cuts in state support are the biggest factor.

[RadiationTherapy]

32. I am a 13 year Uni employee. It is a wealth-generating machine for admins, Regents, state politicos

and construction companies. You can cut costs by assessing Deans, provosts, presidents and professors. Go through the budget and look at every salary that is more than 2x the local median income and assess that individual's role and cost. Embrace digital education - or, as I call it, education.

With modern tech, there is no reason college should cost more than $10k-50k for an undergrad degree and an undergrad - and this is certain - should not take 4 years to complete. That is part of the heist.

[librechik]

33. Nationalize some of them and fix prices within that system

said nobody anywhere in the US Congress.

Yet they seem to do it effortlessly elsewhere in the world because they are sensible and rational. unlike US

[KamaAina]

34. UT's land grant turned out to have oil under it.

So they're in better shape than other public universities. This is among the worst-kept secrets in academia.

As for cutting a university's budget, Dean KamaAina would take the scythe to the administrative class that has infiltrated higher education over the past few decades.

[Recursion]

36. Really? I had no idea

That's interesting

And they're still losing $1B per year?

[hunter]

35. How do we make our national defense cheaper?

We could stop building turkeys like the F-35, and aircraft carriers named after rotten presidents. We could stop engaging in warfare that begets more warfare.

Most education is cheap compared to other human endeavors. Except for highly technical subjects that require modern labs, all you need is a teacher and a comfortable classroom.

Teachers work for cheap and are largely self-directed, requiring very little or no management. Education is not an industry or a business, although many of the worst elements of our society seek to monetize everything.

[Recursion]

38. That's easy: buy less of it

But I think we want to buy more education. At least I do.

[hunter]

40. Money can't fix everything and too much money can be poisonous.

That's what's wrong with many things in the U.S.A., including politics, medicine, the military-industrial-complex, urban redevelopment, and education.

Reckless educational lending and great disparities of wealth within the U.S. population have severely damaged education in the U.S.A..

The situation would be improved with steeply progressive taxation funding education free of charge for college and trade school students. Yes, "private" schools would have to compete directly with free state schools, and yes, with increasingly progressive taxes the pool of parents willing and able to pay $100,000+ annual tuition rates would be reduced too.

Socialized medicine and education are good things. Contrary to the propaganda, U.S. medicine is not the best in the world. Most people in the U.S.A., including wealthy people, have suffered mediocre, expensive, and sometimes wildly inappropriate or dangerous medical care.

The anti-socialism gangsters who have made medicine in the U.S.A. such an expensive catastrophe are doing the same thing to education.

The trouble with having "business" people in charge of essentially socialist endeavors is that they don't really care about costs or outcomes; all they care about is the volume of the money streams they control. The bigger the money stream, the more money they can siphon off to enlarge their personal wealth and political influence.

[DrDan]

37. more government funding of research projects

[dembotoz]

41. get your dad to buy your books for the new semester...my kid hit me up last night

seems amazon is cheaper than the book store...

it could be worse i guess