New Report Details Systemic Failure of College Finance, Proposes Reforms

National Association of Scholars

New York, NY, March 4, 2021 – Colleges and universities have facilitated a massive transfer of wealth from American families to higher education bureaucracies through rising tuition and student debt, finds a new report by the National Association of Scholars.

Priced Out: What College Costs America details the spending habits of 50 universities and shares the worries, thoughts, and hopes of students, parents, and college administrators to investigate the psychology behind students’ decisions to take on overwhelming debt and the choices administrators make in spending that tuition. The report also offers recommendations to reform America’s student loan system by encouraging colleges and universities to have skin in the game, to focus on instruction, and to discourage credentialism as a stand-in for experience.

“Many colleges and universities spend beyond their means to attract more students and increase their institution’s ranking. This is wrong,” explained report author and NAS researcher, Neetu Arnold. “In an effort to fill budget gaps, colleges need to attract more students. They do this by spending more on facilities and administrators, but rarely on instruction. This necessitates tuition increases, which forces students who attend college to take on more debt. The feedback loop is further helped with government subsidies.”

Mrs. Arnold’s analysis of 50 colleges and universities found that:

  • Tuition increases at public universities far exceeded their losses in state funding; in other words, state disinvestment cannot be the sole cause of rising tuition. Administrators mostly used tuition increases to pay for increased university expenditures.
  • The total number of administrators and staff grew by roughly 50% between 1987 and 2018, driven by a 94% increase in the “Executives” and “Other Professionals” categories.
  • Universities devoted increasing amounts of their resources to government relations, marketing, and public relations, at the expense of undergraduate instruction.

Peter Wood, NAS president, noted: “Over the last four decades, tuition in American universities has grown exponentially in terms of what families make in yearly income. Worse, these increases in tuition have not equated to more or better instructors. These facts alone signal a system failure. Colleges and universities should act to reform themselves. If they are unwilling, Congress and state legislatures should step in to provide common-sense reforms.”

Priced Out concludes with 14 recommendations to refocus higher education on undergraduate instruction, to reduce administrative bloat, and to provide families with incentives to make more fiscally responsible choices as they decide which college students should attend and how much debt they should incur. These recommendations include:

  • Universities should consolidate offices and departments to reduce duplicate roles.
  • Universities, particularly public institutions, should create 2-3 year vocational tracks, with classes staffed by industry veterans.
  • Universities should have “skin in the game” when students borrow loans and assume responsibility for a portion of loans when students default.
  • Federal and state governments should cut funding to four-year universities that provide remedial education and related services.
  • State governments should make public university employee salary information publicly available and easily accessible.

In the wake of the financially devastating coronavirus pandemic, universities can no longer ignore their profligate spending habits. Higher education’s finances must be reformed.

NAS is a network of scholars and citizens united by a commitment to academic freedom, disinterested scholarship, and excellence in American higher education. Membership in NAS is open to all who share a commitment to these broad principles. NAS publishes a journal and has state and regional affiliates. Visit NAS at www.nas.org.

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If you would like more information about this issue, please contact Chance Layton at [email protected]

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