What's the real cost of red tape? No one knows.

The most common statistic is vague

How much does it cost a school to comply with the industry's federal regulations?

In February, a report by the American Council on Education (ACE) reported that Vanderbilt University spent $150 million per year.

That $150 million estimate has been cited by industry experts, lobbying groups, and the U.S. Senate. Some activists calculated that the cost would average out to $11,000 in additional tuition for each student per year.

The report used the $150 million figure as evidence that current regulations on colleges create "unreasonable" costs and suggests the Department of Education may be guilty of "overreach."

But the details of where that estimate comes from are not clear, according to an investigation by Jon Marcus of the Hechinger Report.

Marcus was able to obtain some details from Vanderbilt about where its money goes:

  • $14 million on industry-specific regulations (including $9 million on accreditation);
  • $14 million to comply with anti-discrimination and immigration rules; and
  • $117 million on "research-related regulation" (including $61 million on grants and contracts).

A spokesperson for Vanderbilt declined to provide more specifics, such as how much is dedicated to salaries or software.

Vanderbilt is among the many universities that receive special funds from the government to cover "indirect costs" for research, Marcus reports. Schools report that this funding is lower than the real cost of operating their research divisions. Vanderbilt receives $57 for every $100 in grant money, slightly above the national average of $52.

But research expenses tend to be kept separate from compliance expenses, one expert on higher education finance told the Hechinger Report.

There is evidence that the federal government underestimates the cost to colleges of complying with regulation. At most of 22 schools investigated by the Government Accountability Office, staff spent twice as much time on compliance as the federal government estimated they would need.

However, Marcus says all of these estimates miss one major point: colleges would probably do a lot of this anyway, even if it was not required. There is no way to know exactly how much time staff would spend collecting and reporting data for the school's own use. Additionally, it is challenging to estimate the hours put toward compliance by staff members who work on it only part of the time.

The burden of compliance becomes so spread out through the university that it becomes impossible to parse the exact cost to each school, Marcus concludes (Marcus, Hechinger Report, 7/16).

Thoughts on the story? Tweet us at @eab_daily and let us know.

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