Report: Regulations Are Hiking Up College Tuition Costs

Ninety-two percent of Americans agree that college tuition is too expensive, a free-market think tank found, but why is it so costly?

A report authored by the American Action Forum’s Sam Batkins and Chad Miller indicates that the rising level of regulatory paperwork burdens placed on postsecondary institutions may be one of the leading causes behind the past decade’s tuition hikes.

According to the study, the Department of Education creates 85 million hours of paperwork dealing with 465 federal education forms — including 120 forms related to postsecondary education.

The largest chunk of paperwork requirements stem from financial aid applications — or the Free Application for Federal Student Aid (FAFSA). The various forms affiliated with FAFSA accumulate into an annual 26.1 million burden hours — 31 percent of the Department of Education’s total.

These regulatory obligations leave higher education institutions little choice but to ramp up administrative staff, which comes with a hefty price tag.

But like other federal agencies, the Department of Education does not calculate the monetary costs of its paperwork, so the actual dollar burden can only be estimated.

By taking the mean wage of a regulatory compliance officer ($32.10 per hour) and the agency’s 85 million hours of paperwork, AFF projected that the dollar burden exceeds $2.7 billion annually.

The authors explained in the report that the administrative teams at postsecondary institutions grew as the paperwork obligations climbed.

Over the past decade, general administrative staff increased by 31.5 percent, growing from 148,190 in 2003 to 195,000 in 2012. Despite the economic downturn during the financial crisis, 10 percent of that growth occurred between 2009 and 2012.

Much of the administration growth over the last ten years (32.8 percent) was a result of an uptick in the hiring of “compliance officers,” with 18 percent of the spike occurring between 2010 and 2012.

The cost of wage and credit counselors was particularly alarming, increasing from $142 million in 2003 to more than $508 million in 2012 — a 256 percent increase.

Looking at the growth in administration costs and the rising price tag of tuition, AAF found that the two monetary burdens grew at almost exactly the same rate.

“If you look at the parallels between tuition costs and the growth of administrative staff they are pretty strongly correlated,” says Batkins.

According to the College Board, as of 2013 tuition costs have mushroomed to $30,094 at private colleges, $8,893 for state residents at public colleges, and $22,203 for out-of-state residents attending public universities.