Why Does College Cost So Much? by Robert B. Archibald & David H. Feldman

Why Does College Cost So Much? by Robert B. Archibald & David H. Feldman

Author:Robert B. Archibald & David H. Feldman
Language: eng
Format: epub
Publisher: Oxford University Press
Published: 2011-09-14T16:00:00+00:00


Table 9.1 Revenue per Student at Year Institutions by Source in 2006 Dollars, 1987 and 2006

The first thing to notice in this table is that subsidies are very important for all types of institutions. Looking at the 2006 numbers, the total subsidy accounts for 77.56 percent of total revenue for private research universities and 76.6 percent of total revenue for public research universities. The percentages are lower at masters-degree-granting universities (masters universities), 32.1 percent for private and 65.4 percent for public, and they are slightly higher for liberal arts colleges, 54.5 percent for private and 68.7 percent for public. Subsidy percentages above 50 percent mean that students are paying less than half of the revenue collected by the colleges and university.

The second thing to see is that the source of the subsidies varies dramatically between private and public institutions. State support dominates the public subsidy. Using the 2006 data, state support represents 54.3 percent, 74.9 percent, and 70.4 percent of the total subsidy at public research universities, masters universities, and liberal arts colleges respectively. In contrast, the subsidies at private institutions are predominantly from private sources, namely gifts and endowment. In 2006, gifts and endowment represent 69.9 percent, 75.0 percent, and 88.5 percent of the total subsidy at private research universities, masters universities, and liberal arts colleges respectively.

Now compare the 1987 and 2006 data. Public colleges and universities of all types have become more dependent on tuition. At research universities, tuition accounted for 16.6 percent of total revenue in 1987, and this rises to 23.4 percent in 2006. The same comparison yielded 20.7 percent in 1987 and 34.6 percent in 2006 at masters universities, and 19.3 percent in 1987 and 31.2 percent in 2006 at liberal arts colleges. The reason why these institutions have had to increasingly rely on tuition is quite clear. The extra tuition dollars are making up for the fact that state support has not kept up with costs. The state subsidy to research universities accounted for 57.7 percent of revenues in 1987 but only 41.5 percent of revenues in 2006. The comparable numbers are 66.1 percent in 1987 and 48.9 percent in 2006 for masters universities and 64.1 percent in 1987 and 48.4 percent in 2006 for liberal arts colleges.

In contrast, dependence on tuition has not grown at all types of private colleges. At research universities, tuition accounted for 32.6 percent of total revenue in 1987 and 22.4 percent in 2006. The same comparison yields 65.7 percent in 1987 and 67.9 percent in 2006 at masters universities, and 52.6 percent in 1987 and 45.4 percent in 2006 at liberal arts colleges. Only at private masters universities are institutions becoming more reliant on tuition. The extraordinary growth in gifts and endowment at many private institutions allowed them to reduce their reliance on tuition.

Later data may show changes in these trends. The dramatic fall in the stock market in 2008 was very hard on the endowments of many private universities, and this has diminished their ability to subsidize their activities.



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