If you want to know why tuitions at American universities are rising, don’t look at the likes of me: faculty compensation isn’t going up. Felix Salmon explains what you might guess:
spending on faculty compensation is never more than 40% of total spending, and “has remained steady or decreased slightly over time”. Then have a look at the numbers.
Overall, if we exclude for-profit schools, which were a tiny part of the landscape in 1999, we have seen tuition fees rise by 32% between 1999 and 2009. Over the same period, instruction costs rose just 5.6% — the lowest rate of inflation of any of the components of education services. (“Student services costs” and “operations and maintenance costs” saw the greatest inflation, at 15.2% and 18.1% respectively, but even that is only half the rate that tuition increased.)
The real reason why tuition has been rising so much has nothing to do with Baumol, and everything to do with the government. Page 31 of the report is quite clear: “except for private research institutions,” it says, “tuitions were increasing almost exclusively to replace losses from state revenues or other private revenue sources.”
In other words, tuition costs are going up just because state subsidies are going down. Every time there’s a state fiscal crisis, subsidies get cut; once cut, they never get reinstated. And so the proportion of the cost of college which is borne by the student has been rising steadily for decades.
The Edge of the American West 
1 comment
November 21, 2011 at 12:58 pm
kathy a.
students are getting screwed. there is a long history here, going back to california’s decision to obey the “no tax” blowhards at the expense of what was once a public education system that was the pride of the nation. (and the expense of everybody else, truthfully, except the already-rich. even though they, by the way, benefit from infrastructure and well-educated employees and civil servants and etc.)
back in the olden days, it was possible for students to get by with part-time and vacation jobs, maybe some grants, and a manageable amount of loans at 3% interest. (i graduated from UC hastings in 1982, and had under $10,000 in loans, even though i was completely unsupported by parents, and even though law school was more expensive than undergrad.) now, it is close to $30,000 per year for UC berkeley undergrads who live off-campus and thus save some bucks; perhaps a bit less at some other campuses. federal loans are over 8%. and there aren’t many jobs to come by, with so many others competing these days — part-time during school, or after graduation.