Grade Inflation
The more we spend on higher education, the more we spend on higher education.
When it comes to reforming Big College, give the federal government a C+. Throughout 2010, grade grubbers in Congress, the White House, the Department of Education, and the Government Accountability Office (GAO) worked hard to investigate and regulate the booming for-profit college sector. Among other sins, they accused the schools of predatory recruiting practices, inflating grades to keep students eligible for federal aid, and charging too much for degrees that ultimately have little value in the workplace.
Given that the approximately 2,000 for-profit colleges in the U.S. rely on federal aid for a huge portion of their revenues, such scrutiny is clearly warranted. Still, the $25 billion in federal grants and loans that flows to them each year represents just a fraction of the $113.3 billion the government made available to higher education as a whole in 2009–10. And not all of the $89 billion or so that non-profit institutions collected in federal aid went toward teaching the nation's youth such career-enhancing skills as how to deconstruct soap operas from a Marxist perspective.
Indeed, while college tuition and fees keep rising, it sometimes seems as if the higher education industry is investing in everything but education. Cornell brags about its "remarkable" 4,800-square-foot climbing wall, which "is the largest indoor natural rock climbing wall in North America." Rutgers, Carnegie Mellon, and many other universities have all invested in eSuds, an "innovative online laundry system" that allows students to see if their socks are dry without leaving their dorm room.
The continent's biggest indoor climbing facility is unique, but costly amenities have become typical college perks these days, along with rec center jacuzzis, registered dieticians, and even tanning salons. So it may come as something of a shock that college is actually more affordable today than it was five years ago.
Yet according to the College Board, a nonprofit membership organization that creates and administers the SAT and other tests, that's indeed the case. In part, this is because institutional grant aid from colleges has increased from $26.2 billion to $33.3 billion since 2005–06. But the federal government has been even more generous, increasing Pell Grants from $12.7 billion in 2005–06 to $28.2 billion in 2009–10 and converting the program into an entitlement. In addition, the government guarantees hundreds of billions in student loans and has increased tuition tax credits for low- and middle-income families. Because of these goodies, the average net cost of tuition and fees for a college student at a public four-year college was $1,540 in 2010–11. In 2005–06, the average net cost, adjusted for inflation, was $2,080.
Long before gourmet meals and high-tech laundry surveillance entered the higher education canon, college was a pretty fun way to spend four years. And its benefits to individuals and society at large remain widely touted. Education Pays 2010, a report issued by the College Board, states that "median earnings of bachelor's degree recipients working fulltime year-round in 2008 were $55,700, $21,900 more than median earnings of high school graduates." Americans with a college degree also do more volunteer work, vote more often, and have lower blood pressure than those who don't.
But while it may be an American tradition to pay for the nuts and bolts of higher education—the salaries of instructors, the construction of libraries and classrooms—is it really a national priority to ensure every 19-year-old has equal access to luxury dorm rooms and top-notch diversity coordinators?
In a 1992 essay for Commentary, the economist Thomas Sowell identified a disturbing trend: The cost of college was going up not because the cost of teaching students was going up but rather because "colleges and universities [had] been greatly expanding what they do." Between 1975 and 1985, Sowell noted, college professional support staffs increased by more than 60 percent. Universities were opening campuses in Europe, building costly research facilities that had nothing to do with educating students, and paying for chauffeur services and wedding receptions for administrative bigwigs. "The availability of federal grants and loans to help students meet rising tuition costs," Sowell wrote, "virtually ensures that those costs will rise."
In the face of the Internet and other technologies that have made information and instruction cheaper and more accessible than ever, you might have predicted that the ever-expanding multiversities of the 1980s and 1990s would suffer the same fate as the music industry and the newspaper business. Instead, scope creep has functioned as an ingenious survival mechanism. In August 2010 the Goldwater Institute, an Arizona-based think tank that monitors government spending, released a report titled Administrative Bloat at American Universities. At the 198 colleges and universities included in the study, the number of full-time administrators per 100 students increased by 39 percent from 1993 to 2007, while the number of professors and researchers increased by only 18 percent. During this time, Wake Forest increased its spending on administrators by 600 percent, while Harvard increased its spending by 300 percent.
In September 2010, a USA Today investigation found that fees charged for athletic funding, which had increased 18 percent since 2005, were a "key force in the rapidly escalating cost of higher education." Among 222 Division 1 public schools during 2008–09, students were charged approximately $795 million in athletic fees.
According to the trade publication College Planning & Management, total construction costs for the nation's colleges ranged from $6 billion to $7 billion per year in the last half of the 1990s. Then there was a construction boom, with $113 billion in new construction occurring between 2001 and 2009. Based on a survey of new buildings completed in 2009 or underway in 2010, the magazine found that physical education and athletic facilities were more popular than performance venues, which were more popular than libraries.
And while the average pay for full professors rose to $108,749 in 2008–09, according to the American Association of University Professors, little of that money goes toward teaching students. In their 2010 book Higher Education?, Queens College sociologist Andrew Hacker and New York Times columnist Claudia Dreifus report that "the bulk of the undergraduate teaching at our nation's colleges and universities is performed by part-timers," many of whom end up making little more than minimum wage.
But so far, it's mostly for-profit institutions such as the University of Phoenix and Kaplan University that have inspired federal skepticism about questionable practices. Perhaps sensing that English lit cannot be taught online as well as it can be on a world-class climbing wall or in a lecture-sized hot tub—a legendary jacuzzi at Washington State University reportedly has room for 53 students—the U.S. Department of Education proposed plans in July 2010 to make for-profits more accountable for the results they deliver to students. Under the proposal, called "Gainful Employment," institutions who graduate a large number of students with excessive debt-to-earnings ratios or who fail to repay their loans on time will lose access to federal grants and loans.
It's true that for-profit institutions are raking in huge profits in large part because of federal subsidies. (The CEO of the holding company behind Strayer University made $41 million in 2009.) But it's also true that few if any for-profits are using federal money to finance lengthy sabbaticals for high-paid professors who teach a handful of classes a year, or the athletic pursuits of undersized linebackers who should have hung up their cleats after graduating high school. Non-profit institutions of higher learning have been using federal money to make sure American college kids are the tannest, best-fed, most vigorously administrated students in the world for decades now. For a little extra credit, our elected officials should start holding them more accountable too.
Contributing Editor Greg Beato writes from San Francisco.