Why is College so Expensive?

The Rio Grande Foundation has previously analyzed and criticized higher education spending. While this sector is particularly bloated in New Mexico, the problem is not limited to our state. In fact, the cost of college is rising nationwide.

That’s why the National Center for Policy Analysis recently studied the cost of higher ed and found some interesting facts:

Where Is the Money Going? Much of the increased spending is going outside the classroom. For example, according to economist Richard Vedder, at four-year U.S. colleges and universities:

The ratio of teachers to students remained relatively stable, at about seven teachers per 100 students from 1976 to 2000.
In contrast, the ratio of nonteaching staff members to students doubled from three to six per 100 students from 1976 to 2000.

This suggests that less money is being spent on students’ education and more is being spent on noninstructional activities, such as administration and faculty research.


Institutional spending per fulltime equivalent student for student services – such as student organizations, intramural athletics and career counseling – rose more than 36 percent at private research universities from 1998 to 2008, after adjusting for inflation.

By contrast, institutional spending on instruction increased only 22.4 percent at private universities.
At public research universities, student services spending increased 20.1 percent and instructional spending rose just 10.1 percent over the same time period.

The reason I (and many others) believe higher education to be in a “bubble,” much like the real estate bubble is that students are being forced to take on ever-greater levels of debt:

The average amount of a federal student loan increased 180 percent from 1990 to 2008, after adjusting for inflation.
Students borrowed $1,637 in federal loans (in 2008 dollars) during the 1990-1991 school year, on the average.
By contrast, students borrowed an average of $4,585 during the 2008-2009 school year.