Americans worry incessantly about the inflation in medical costs—and with good reason. But what has escaped their notice is that the inflation in college and university costs has been even greater. Colleges and universities across the country have been raising tuition at a rate four times faster than the overall inflation rate. From 1978 to 2008, the cost of living doubled, and medical costs inflated roughly six-fold, but college tuition and fees saw a nearly ten-fold increase. Even after adjusting for financial aid, the amount families had to pay for college has skyrocketed 439 percent since 1982.
How do students afford these constant increases in college costs? The answer to that question is easy: credit. And lots of it—mainly from the government. In 2012-2014, student loans totaled $248 billion, with federal aid making up roughly $171 billion of that amount. The average debt of college seniors who graduated in 2012 was $29,400 in federal and private loans combined. Will all those students be able to pay? The evidence is not promising. The default rates in recent years have begun to climb upward toward 20 to 25 percent, boding ill for the future. And the consequences can be serious for those who default.
So why do consumers continue to tolerate these constant price increases so far in excess of the inflation rate? Perhaps it is because when such increases are announced, they are said to be needed to preserve or increase the “quality of instruction.” Indeed, the willingness to sacrifice for the education of their children is one of the deepest and most widely held values among America’s parents. But is instruction really where all the money is going?
The Bureaucratization of the Academy
In the ten years before our current economic collapse, public research universities ramped up spending on lawyers, senior-level administrators, and accountants at nearly twice the rate of expenditures on faculty and instruction. Thus, between 2002 and 2006, while the average tuition at public research universities increased by nearly 27 percent, spending on each student only went up by 1 percent. As an article in Inside Higher Education put it: “Most college students are carrying a greater share of the cost of their education, even as institutions spend less on teaching them . . . tuition hikes have resulted in little if any new spending on classroom instruction.”
A recent Goldwater Institute Report shows that schools are creating new administrative positions all the time.
Arizona State University, for example, increased the number of administrators per 100 students by 94 percent [between 1993 and 2007] while actually reducing the number of employees engaged in instruction, research and service by 2 percent. Nearly half of all full-time employees at Arizona State University are administrators.
What do all these new bureaucrats do? Well, according to that same report:
Included in this category are all employees holding titles such as business operations specialists; buyers and purchasing agents; human resources, training, and labor relations specialists; management analysts; meeting and convention planners; miscellaneous business operations specialists; financial specialists; accountants and auditors; budget analysts; financial analysts and advisors; financial examiners; loan counselors and officers; [etc.].
In short, they engage in all manner of activities, none of which has anything to do with teaching. The number of employees engaged in the most traditional faculty support—clerical work, like that of the tried-and-true full-time departmental secretary—has actually been decreasing, even as the number of mid-level bureaucrats to which faculty report has been increasing. America’s universities now have “more full-time employees devoted to administration than to instruction, research and service combined.”
Soaring Administrative Salaries
Of course, “administrators” are always supposed to make more than mere laborers, and faculty are increasingly seen as “the labor” by top administrators. As a result, even though the rate of increase in pay for faculty has barely kept pace with inflation, the pay for administrators has skyrocketed. The median salary for college and university presidents at institutions of all types is now $370,940. The median at doctoral institutions is nearly $100,000 more, coming in at $465,618. December 2014 figures show that thirty-six private university presidents are now paid in excess of a million dollars per year, and another twelve make more than $900,000 per year. Altogether, there are now 106 private university presidents making over $500,000 per year.
Salaries are somewhat smaller further down the administrative pecking order, but the sheer volume of the list of bureaucrats is dazzling. Here is a partial list, with the median salaries at doctoral institutions:
Chief Business Officer: $250,000
Chief Athletics Administrator: $238,736
Chief Development/Advancement Officer” $248,373
Chief Enrollment Management Officer: $171,652
Chief Extension/Engagement Officer: $198,430
Chief External Affairs Officer: $200,069
Chief Human Resources Officer: $158,750
Chief Information/IT Officer: $208,959
Chief Student Affairs/Life Officer: $202,995
The list goes on and on—Chief Audit Officer ($129,480), Chief Health Affairs Officer ($539,537), Chief Institutional Planning Officer ($187,733), Chief Institutional Research Officer ($118,418)—and we haven’t reached anyone who deals with actual academics yet.
Of course, each of these important officials couldn’t be expected to do his or her crucial work without a sufficient staff. When a friend of mine began working at his major mid-western research university years ago, the dean’s office was a single room on the first floor of the classroom building. The dean and his attendants now occupy a whole suite of offices that extend down the hall and takes up a large portion of the floor. In earlier days, the dean had one secretary. His staff now numbers over forty.
So how about those who actually do the teaching? What was the median salary for, let us say, a tenure-track Associate Professor in English last year? Answer: $64,009. How about the median for an Associate Professor in the Biological Sciences? $72,104. In Mathematics? $68,510. Teaching students reading, writing, science, and mathematics is simply not as important in the modern university, it seems, as doing whatever it is a “Chief Extension/Engagement Officer” does.
Getting Rid of the Middle Man
It’s worth noting that the figures I’ve given above on median faculty salaries include only tenure-track positions. But as anyone who has spent time around higher education knows, colleges and universities are increasingly making use of adjunct faculty to teach basic courses. Indeed, according to the American Academy of University Professors, “today more than 50 percent of all faculty hold only part-time appointments,” and the situation is getting worse. “Non-tenure-track positions of all types now account for 76 percent of all instructional staff appointments in American higher education.”
Faced with ever-increasing costs, administrators in higher education have tended to ape their counterparts in the private sector by (a) downsizing their work force (but not their bureaucratic staff), and (b) making increasing use of technology.
Thus, items such as “computer technology” often get included under the budget category of “Instruction.” This is unfortunate, because computers do not instruct. And the expenses related to Informational Technology have their own dynamics. Most software must be updated every twelve to eighteen months, and hardware has to be replaced every two years. Once the campus becomes addicted to IT, it’s the gift that keeps on giving. You’ve got to update regularly, or else be stuck with a system that is no longer supported by the manufacturer. Thus, it’s not generally the faculty who are demanding the latest and most expensive IT; it’s the IT people who insist that faculty upgrade or lose all access to their electronic materials.
As academic administrators have increasingly adopted the techniques and mindset of their corporate counterparts, they have sought to do what all managers do: get rid of the middle man. And many academic bureaucrats, who are more and more estranged from the professoriate, increasingly see faculty as the middle man in the business of managing what they take to be essentially an “information delivery system.”
This strategy might work if (a) the problems with rising costs were largely due to the increased cost of faculty, which the evidence suggests it is not; and if (b) faculty had very little to do with the outcomes for which these institutions are being paid, which they do. Teaching, I would suggest, is not really a species of “information delivery system,” any more than what mid-wives do is simply a species of “baby delivery system” that could easily be replaced by a computerized machine. Some things simply need to be done in person.
A New Model of University Management
But let’s imagine for a moment a different model of university management: a small educational institution in which the buildings are modest, but fully financed. By “fully financed,” I mean not only that the costs of their construction are paid off, but that their financing covers depreciation and maintenance as well. When such endowments are not built into the cost of new buildings—and sadly, they rarely are—then the moment new buildings are opened what should be an asset often ends up becoming a financial liability.
What, then, on our little ideally financed campus, would the basic costs of instruction be? Let’s say we set the salary for faculty at $75,000 per year, which is near the current average. To that rather generous salary, we’ll add another 20 percent to pay for benefits—also generous, but this is what private contractors are required by the government to put aside. The total would be $90,000 dollars per year. Let’s say that we asked our professors to teach three classes per semester, with an average of twenty students per class. In that case, faculty members would be teaching roughly 120 students per year.
Here’s where it gets interesting. To make the $90,000 we need to pay our faculty—and remember, we’ve got the lights and electricity and all the rest taken care of—we would only need to charge each student $750 per course. If each student took five courses per semester, tuition per student would be $3,750 per semester, or $7,500 per year. That’s it.
Now, clearly there are important jobs that need to be done on a campus in addition to instruction. We would need a Registrar, for example. And groundskeepers have traditionally been a necessity. But all this implies is that, along with “fully financed” buildings, we would also need to limit operational expenses to what we can pay for out of the institution’s existing endowment.
So, let’s say that on our ideal campus we started with this figure of $7,500 per year in tuition and then forced ourselves to justify each dollar we added to that amount based upon a rigorous analysis of whether it would (a) bring about a substantial educational benefit for the student, and (b) be worth the added debt burden to their future?
It’s hard to imagine many administrators thinking about costs in this way. Not only is it not in their own self-interest to do so, but they’re also not being forced to do so by the market. Administrators can continue to augment their salaries, benefits, and staffs year after year, as long as the government and other lenders continue to help finance their ever-increasing appetites for money in the form of generous grants and easy credit to their students.
When these forms of financial largesse begin to default at levels that burst the Housing Bubble in 2008 and produced the “Great Recession” that followed, significant portions of America’s impressive academic infrastructure are likely to face severe financial strain. They may even fail, as did many of the nation’s seemingly solid financial institutions. When that happens, plenty of former students—and all of America’s taxpayers—are going to be left paying the bills for the lavish perks currently enjoyed by America’s top-level academic bureaucrats.