The 'real reason' behind rising tuition, according to an economist

Don't blame lavish student amenities

Reduced state funding, not administrative budgets or student amenities, is the biggest factor contributing to rising tuition across the country, Doug Webber writes for FiveThirtyEight.

Webber, an assistant professor of economics at Temple University, says that popular media have led many to believe that skyrocketing tuition can be blamed on extravagant student amenities, administrative bloat, and higher salaries for faculty. While those factors all may play a small role in soaring tuition rates, Webber argues that a decline in state appropriations is undoubtedly the biggest driver.

According to Webber, diminished state support for higher education accounts for nearly three-quarters of increasing college costs.

Among Pennsylvania's public research institutions, for example, the average tuition revenue per student grew by $5,880 between the 2000-2001 and 2013-2014 academic years. Meanwhile, state appropriations per student dropped almost $4,000 during that period, from about $7,750 to $3,900. That means that if Pennsylvania funded higher education at its 2000 levels, the state's public research institutions could cut tuition by about $4,000 without changing their budgets. While students could save $1,380 if those institutions cut per-student spending for student services, administration, and instruction, they would miss out on benefits that are directly related to their success both in college and after graduation.

The outlook is similar for public four-year institutions nationwide. In South Carolina, a decline in state funding can be attributed to 81% of the increase in tuition revenue. Alaska, North Dakota, and Wyoming have all managed to keep higher education funding aligned with inflation and enrollment growth, but those states are far from the norm.  

"The overarching message is that there is no single cause of the tuition boom," Webber concludes. "The reason for rising costs differs based on the type of institution and the state it’s in, and even varies over time. But, at least among public institutions, the dominant factor has been a steady decrease in support for higher education on the part of state legislatures" (Webber, FiveThirtyEight, 9/13).


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