Higher Education Scam: Why College In The United States Is So Expensive

• The Daily Caller News Foundation analyzed the nation’s 20 most expensive and the 20 most affordable public universities
• The more expensive universities spent $11,346 more on instruction per student than the affordable universities
• Public universities often disguise research as an instructional expense

Universities that offer less faculty compensation, perform less research and have lower tuition rates are more likely to have engaged and effective professors, according to a Daily Caller News Foundation analysis.

Spending at American colleges is out of control. Students and their families have been shouldering the burden of rising college costs in the form of tuition increases that have outpaced the rate of inflation for decades.

But not all universities are the same. Some have managed to keep costs down. Others, not so much.

For example, the University of California at Los Angeles, which has an undergraduate enrollment of 30,873, charged out-of-state students $41,763 in tuition and fees in 2017, placing it among the most expensive public universities in the country.

Situated less than 30 miles away from UCLA is California State University, Los Angeles, which has an undergraduate enrollment of 24,074 and charged out-of-state students $18,512 in tuition and fees in 2017, making it one of the most affordable large universities in the country.

Cases like UCLA and CSULA are commonplace throughout the country. Why are some universities so much more expensive than others?

To find out, The Daily Caller News Foundation analyzed the expenditures of 40 public universities across the country in an effort to discover why some institutions can keep their costs down while others break the bank. TheDCNF analyzed the 20 most expensive and the 20 most affordable public universities that enroll more than 15,000 students, as identified by College Board.

TheDCNF chose to rank universities based on out-of-state tuition rates because it’s a much more consistent measure of tuition. In-state students do pay less tuition, but taxpayers pay the difference.

The 20 most affordable universities analyzed charge between $12,426 and $18,881 in out-of-state tuition and fees in 2017, far below the nationwide average of $25,620, according to College Board. The out-of-state tuition rates at the 20 most expensive universities were much higher, clocking in between $34,661 and $47,476 in 2017.

Where’s the money going?

The 20 cheapest public universities analyzed by TheDCNF spent an average of $18,338 per full-time equivalent student enrolled in 2015-16.

The 20 most expensive universities nearly tripled their spending, shelling out an average of $51,406 per student.

Where is all this extra spending going? The most expensive universities outspent the more affordable universities in every spending category.

	20 Most Affordable Universities	20 Most Expensive Universities
Instruction	$8,236	$19,582
Research	$1,283	$12,436
Public Service	$322	$2,559
Academic Support	$2,190	$6,522
Institutional Support	$2,330	$3,872
Student Services	$1,822	$2,294
Other Core Expenses	$2,154	$4,184
Total Spending Per Student	$18,337	$51,450

The largest area of growth came in the form of instructional expenditures. The 20 most expensive universities spent $11,346 more on instruction per student than the 20 most affordable universities.

But it would be incorrect to say those extra dollars were actually going towards instructing students. Rather, the growth in instructional spending can be attributed more to the fact that expensive universities devoted $11,153 more per student in research.

Research drives up the cost of instruction

As previously reported by TheDCNF, an accounting trick at public universities allows institutions to “disguise” research as an instructional expense. (RELATED: High College Costs Driven By Deceptive Accounting Practices)

The $12,436 per student spending on research reported by the most expensive public universities only includes research activities funded by a federal, state or private grant, in addition to any “separately budgeted” university research.

All other “unorganized” research activity is considered departmental research, which is baked into the $19,582 per student spending on instruction at the most expensive institutions.

Lloyd Armstrong, a former Senior Vice President for Academic Affairs of the University of Southern California, says most elements of departmental research serves as the “seed corn” of organized research.

Put plainly, departmental research is effectively a fundraising mechanism for universities to obtain external research grants. Considering that American universities spent roughly $54 billion on externally funded research in 2016 alone, the “hidden cost” of obtaining a piece of that pie could be significant.

A 2011 Cato Institute study suggested that separating research from the cost of instruction would reveal the true cost of providing an undergraduate education is roughly $8,000 per student.

So it shouldn’t come as a surprise that the least expensive universities, which conduct very little research ($1,283 per student), spend an average of $8,236 per student on instruction.

But surely the quality of instruction delivered by the most expensive universities is better than the most affordable universities?

The answer, shockingly, is no.

More large classes at the most expensive universities

Despite spending nearly triple per student, the 20 most expensive universities had only a marginally better faculty to student ratio than the 20 most affordable universities

Even with a more favorable student to faculty ratio, the most expensive universities offer more larger-sized classes than their cheaper counterparts, according to institutional data collected by U.S. News & World Report.

	20 Most Affordable Universities	20 Most Expensive Universities
Median Student to Faculty Ratio	22 to 1	18 to 1
Percent of courses offered with 50 or more students	10%	21%

This is a puzzling development. It would be reasonable to expect the universities with more faculty members per student would offer fewer courses with 50 or more students. The opposite is true.

There are more faculty members per student at the more expensive universities, however, they tend to devote less time to instructing undergraduate students. This is a direct consequence of the most expensive universities incentivizing professors to prioritize research over instructing undergraduate students. (RELATED: University Professors Get Paid More To Teach Less)

Faculty members at research universities typically teach only two courses a semester in order to devote more time for research, according to Southern Methodist University associate professor Michael Harris, whose research focuses on the characteristics of institutions of higher learning.

Faculty who don’t have a research requirement typically teach three or four courses a semester, as is the case for the bulk of the professors at the 20 most affordable universities.

Since the most affordable universities devote much fewer resources to research, their professors are able to spend more time instructing, resulting in fewer lecture-hall style courses than the most expensive universities.

Quality of undergraduate instruction goes down as the price of tuition goes up

The most expensive universities have the least qualified instructors, according to undergraduate engagement indicators collected annually by the National Survey of Student Engagement (NSSE).

The NSSE conducts annual surveys of more than 1,600 colleges and universities to assess the quality of undergraduate interaction with faculty. Institutions surveyed are ranked according to their Carnegie Classification — a method of categorizing universities based on the type degrees offered and the amount of research performed.

The more research performed and more Ph.D. and Master’s programs offered at a university, the higher up the Carnegie Classification it gets placed.

Carnegie Classification	Description
Doctoral Universities	Institutions that award at least 20 doctoral degrees each year.
Master’s Colleges and Universities	Institutions that award at least 50 master’s degrees, but fewer than 20 doctoral degrees each year.
Baccalaureate Colleges	Institutions that award primarily bachelor’s degrees.

The 20 most expensive public universities with more than 15,000 students enrolled are all considered Doctoral Universities with the highest research activity, the highest level classification under the Carnegie system.

Professors at these research-intensive institutions earned the lowest ratings from undergraduate students in both effective teaching practices and student-faculty interaction, according to students surveyed from 2013 through 2017.

The majority of the 20 most affordable universities are categorized as Master’s Colleges & Universities. Faculty at these universities earned higher ratings from undergraduate students in both effective teaching practices and student-faculty interactions from 2013 through 2017.

The highest-ranked undergraduate professors belong to Baccalaureate Colleges with an arts and science focus, according to the NSSE. These institutions place little, if any, emphasis on research and focus primarily on undergraduate education.

	Average NSSE Student-Faculty Interaction Rating from 2013-2017	Average NSSE Effective Teaching Practices Rating from 2013-2017
Doctoral/Highest Research	22.56	38.90
Doctoral/Higher Research	23.36	39.56
Doctoral/Moderate Research	22.68	40.76
Master’s — Large	23.56	41.06
Master’s — Medium	25.48	41.24
Master’s — Small	26.00	41.16
Baccalaureate — Arts & Science	30.64	43.08
Baccalaureate — Diverse Fields	25.38	41.22

Despite being the least qualified instructors, according to NSSE, the average pay for faculty at Doctoral universities is significantly higher than faculty at Masters and Baccalaureate institutions.

The average salary for faculty at Doctoral universities in 2013-14 was $85,851, according to the Department of Education. Faculty at Master’s and Baccalaureate colleges earned an average of $68,737 and $61,145, respectively.

The takeaway — undergraduate students are more likely to have engaged and effective professors at the universities that offer less faculty compensation, perform less research and have lower tuition rates.

This phenomenon is reflected in data found on RateMyProfessors.com, a web service used widely by university students to provide public feedback on their professors on a scale between 1 and 5.

Many in academia hold a skeptical view of the professor ratings found on RateMyProfessors, but a 2011 study found that the service provides statistically useful feedback about instructor quality in the aggregate.

The aggregate data shows that the average professor rating across the 20 most expensive large public universities on RateMyProfessors is slightly lower than the average rating for the 20 most affordable institutions.

	20 Most Affordable Universities	20 Most Expensive Universities
RateMyProfessor Average Professor Rating	3.78	3.73
Per Student Instructional Spending	$8,236	$19,582

The 20 most expensive public universities spent $11,346 more on instruction per student than their affordable counterparts, yet earned lower professor ratings on both NSSE’s undergraduate engagement indicators and on RateMyProfessor. This raises serious questions about whether that money is actually used for instructional purposes.

How does this affect students entering the workforce after graduation?

Starting salaries of students

Despite receiving lesser-quality instruction from their professors, graduates who receive a bachelor’s degree from one of the 20 most expensive public universities earn more coming out of college than those who graduate from one of the 20 most affordable institutions, according to PayScale.com.

	20 Most Affordable Universities	20 Most Expensive Universities
Average Early Career Pay	$48,055	$54,590

Can this discrepancy be attributed to the quality of education provided by the university?

After all, a 2014 study out of the University of Miami found that high school GPA alone is a strong predictor of future lifetime earnings.

It’s worth noting that the average high school GPA, SAT scores and ACT scores of the students admitted to the 20 most expensive public universities were higher than the scores of the students admitted to the 20 most affordable public universities.

Higher priced universities may point to average starting pay of their graduates as proof of their program’s success, but the data suggest those institutions are effectively stacking the deck in their favor by only admitting higher achieving individuals, who by nature are more likely to earn more over the course of their career.

What do the most expensive universities excel at?

The 20 most expensive universities excel in two key areas — campus life and research.

Much has been said about a so-called “amenities arms race” transforming college campuses into quasi-resorts and driving up tuition costs.

The most expensive universities benefit the most from the influx of recreational amenities, as reflected by the overall school quality ratings found on RateMyProfessor.

The expensive universities may have lower rated professors compared to the most affordable universities, but they score significantly higher in areas such as quality of their facilities, food, student social life and student happiness.

	20 Most Affordable Universities	20 Most Expensive Universities
RateMyProfessor Average School Quality Rating	3.67	4.17
RateMyProfessor Average Professor Rating	3.78	3.73

Is the campus high life worth an extra $15,000 a year in tuition?

Research is king

Above all else, research is king at the 20 most expensive public universities with more than 15,000 students.

Those 20 institutions alone spent a staggering $8.5 billion in “organized” research in 2015-16. That’s an average of $425 million per university, or $12,436 per full-time equivalent student enrolled.

Not counted in that figure is departmental research, the “hidden” cost of research baked into the $13.4 billion expensed by those institutions in the name of the instruction.

Put together, those 20 universities spent $21.9 billion on research and instruction, accounting for 62.3 percent of their total core spending.

Hidden research expenses could account for up to 40 percent of reported instructional costs at research-intensive universities, according to estimations by Oklahoma State University professor Vance Fried.

If Fried is correct, that would mean up to $5.4 billion of the reported instructional costs reported by those 20 institutions should be considered research expenditures.

To put that figure in perspective, $47 billion is the estimated cost of Vermont Sen. Bernie Sanders’ proposal to provide free public college to every student in the United States.

Separate research from instruction

The financial impact academic research has on undergraduate tuition is a critical but often-overlooked aspect of the rising costs of higher education.

The National Association of College and University Business Officers defended the practice of shifting research costs onto students in the name of instruction in a 2002 report, arguing that the “integration of research and education is a major strength of the nation’s colleges and universities and directly benefits undergraduates.”

The facts don’t support that claim. Rather, the quality of undergraduate instruction actually drops as universities spend more resources on research. Undergraduates at research-intensive universities are paying more and getting less.

The National Research Council (NRC) in a 2012 report recommended changes that would bar universities from hiding research expenditures in instruction.

“Arguing on principle for inclusion of research costs in instructional cost is tantamount to arguing that the sponsored research itself be included—which, in addition to being intrinsically illogical, would hugely distort the productivity measures,” the NRC wrote.

The Center for College Affordability and Productivity issued a report in 2011 arguing that the elimination of excessive academic research was key to bringing down the cost of college.

If the most expensive public universities in the country had any real desire to cut costs, perhaps the hidden cost of research would be a good place to start.

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