Do Colleges Really Subsidize Tuitions?

Back to one of my favorite themes… It is an article of faith in the higher education industry that tuition falls far short of what it costs to educate a student. The Dartmouth College Fund, for instance, claimed in fund-raising material that it charged only $49,974 for undergraduate tuition, room and board even though it spends $104,402 per student per year.

The fallacy in that logic, write the authors of “Who Subsidizes Whom? An Analysis of Educational Costs and Revenues,” is that not all college spending is used for instructional purposes. Colleges do many things other than educate their students, most notably conduct research. After adjusting for student aid, the authors estimate that Dartmouth receives $23,079 in tuition-related revenue per student. But after adjusting for the amount of time that professors actually spend teaching, the cost of providing the education is only $13,000 per student (of which only $9,100 can be attributed to faculty compensation).

Conclude the authors: “Between 52% and 60% of students attend institutions that are paid more than they spend to educate them. If wasteful spending is disallowed, the figure rises to 76%. At four-year institutions, it is between 59% and 87%. In other words, not only are most students not being subsidized by their college, but most colleges are able to divert money towards non-educational activities, all the while claiming that this spending is for the benefit of students.”

How does this apply to Virginia institutions of higher education. Frankly, I don’t know. But these are the kinds of questions that members of the General Assembly should be asking — and the State Council for Higher Education in Virginia should be analyzing. There is probably a better match at Virginia’s public universities between what students pay in net tuition and what it costs to educate them than in other university systems. But who knows for sure? How can we hold Virginia colleges and universities accountable unless we find out?


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