[rendang]

It's typically the opposite of what you say - the true expenses/student that a private university pays is much higher than even the richest kid pays (difference made up for by the endowment's income)

So the better question is why they don't raise prices such that the rich kids have to pay the true full price & have more money for aid for the less-rich.

[StressedDev]

I have a hard time believing this. Every course I took in college had at least 15 people and usually 30-50 people. Large classes like Calculus 1-2, Linear Algebra, and Differential Equations had at least 300 people. There is no way you cannot pay the salary + legitimate overhead for 1 profess, and 1-10 TAs with these class sizes. My guess is a lot of the money does not go to instruction but goes to administration, sports palaces (stadiums), luxury dorms, etc. Colleges used to be MUCH cheaper in the 1950s, 1960s, and 1970s. The education was just as good but cost far less.

The big problem with colleges today is they are "non-profit" in name only. Instead, of giving profits to shareholders, they are giving them to employees and insiders. This hurts students and the United States. However, colleges do not care because they, their employees, and friends benefit.

[brianwawok]

How much has state aid changed in 40 years? That’s also big

[wakawaka28]

Sports more or less pays for itself in most cases and even brings in profits. That's why even public colleges have active sports programs. You are right about other luxury amenities. But even basic facilities cost pretty serious money, even if they are only built every 50-100 years or so. If I had to estimate, I'd say no school currently pays more than 25% of tuition on actual teaching. Administrators and luxury facilities account for most of the other spending.

The real cause of these escalating costs is easy credit for tuition. There would simply be no big market for the current overpriced programs if people couldn't get loans regardless of outcomes. I would like creditors to have to prove how the students will pay for the median salary of a person with the same degree before loaning the money. You should not be able to borrow hundreds of thousands of dollars for stupid stuff that will never pay off.

[onlypassingthru]

There is exactly 1 college sport that typically pays for itself and every other sport at the university, with the slight possibility of a second sport contributing to the coffers ONLY if the college is a D1 school and competes regularly in March Madness.

For those unfamiliar with American college athletics, American Football is the money maker via shared revenue from broadcasting rights and Men's Basketball can be a net cash flow positive also via broadcasting if they're an elite team. Every other sport is a net cost for the school because nobody watches all the other sports shown on ESPN Ocho.

[wakawaka28]

Football is the most profitable and most colleges do make money on it. https://sports.usatoday.com/ncaa/finances Not only is sports usually profitable on the surface but it draws donations and new students. Administrators aren't as stupid as you think. Sports need not cost a huge amount of money. Stadiums used for one sport can easily be used for other purposes instead of letting it lay fallow in the time between football games.

It always amazes me that people simultaneously say that colleges are sharks when it comes to maximizing tuition and minimizing expenses, while also saying that sports are objectively a waste of money. They aren't stupid. If sports wasn't a desirable thing to invest in, they wouldn't do it. We could make the same complaint about luxury amenities too. The fact is that colleges have to compete with each other, and they charge enough to pay for everything.

Could tuition be lower if not for all of these luxuries? Maybe so. Should core education get more money? Perhaps. It certainly used to bother me that sports got more money than academics. But I really get that it's a legitimate business decision to allocate some money to sports. I don't even like sports much but I would not cut it out if I were them.

[ecshafer]

sports only pays for itself in a minority of highly successful schools, and even then typically only Football or Basketball. So sure Penn State and Auburn football pull a profit, but the vast majority do not. Last I checked on these, the number of schools was <20 that were profitable.

[wakawaka28]

You're wrong about that. See this for example: https://sports.usatoday.com/ncaa/finances

Not only is sports usually profitable on the surface but it draws donations and new students. Administrators aren't as stupid as you think.

[Vegenoid]

> If I had to estimate, I'd say no school currently pays more than 25% of tuition on actual teaching.

Is this based on anything at all? Any direct experience you have, any sources?

I don’t mean to be rude, and I don’t expect everyone to have expertise on something just to talk about it - but when people start using numbers as evidence for their claims, I think a higher standard is warranted.

[rachofsunshine]

I had the same reaction you did, so I looked up the state university budget breakdown [1] for my home state of Florida. In 2021-2022, the most recent year for which they have final numbers, 35.6% of expenditures went to "E&G". That's "Education & General", which according to them is defined as:

"The Education and General budget funds the general instruction, research, and public service operations of the universities. A large portion of the system’s 2022-2023 beginning fund balance reserves ($420.8 million) is dedicated to meeting the 7% reserve requirement set forth in Section 1011.45(1) of the Florida Statutes. Additionally, millions of dollars have been reserved by the SUS to cover the costs associated with the hiring of faculty, maintenance of facilities and equipment, the maintenance of each university’s financial software system, various research enhancement programs and initiatives, and the potential for budget reduction shortfalls."

So this includes both the "actual teaching" and research and other related spending.

We can get more information on page 45, which provides a breakdown of that 35%: 61% of it (~22% of total) is "instruction and research", i.e., at most 22% of the total budget (and probably much less, since FL's public university sector is fairly research-heavy) is spent directly on instruction.

That's probably a little unfair, since instruction needs things like facilities and other admin expenses even in a system that isn't bloated, but the previous poster's 25% number passes a sanity check at least to my eye.

In case you're wondering, the other two big categories of expenses are C&G ("contracts and grants" - so more research expenditures mostly) and "local funds" (a weird mix that includes things like student activities, athletics, and financial aid).

[1] https://www.flbog.edu/wp-content/uploads/2022/12/2022-23-OB-...

[wakawaka28]

Thanks for the numbers. It was honestly a lucky guess. I have thought about my own school when estimating it though. I once looked up salaries and tuition numbers and did a rough estimate.

[true_religion]

Most undergraduate degrees don’t really require much in the way of infrastructure.

I went to school as an English major. I struggle to see why the cost of tuition has gone from 6k per semester when I attended to 35k now 20 years later.

Did salaries grow 6x?

[wakawaka28]

No but the dollar is worth about a third of what it was 20 years ago, at best.

You might not even realize the infrastructure that the school uses. Those big buildings are expensive and use tens of thousands of dollars in electricity every month. If your school has shuttles to take people back and forth to the dorms or parking, that is also a constant expense. The library has to pay tens of thousands of dollars for access to academic databases. Computer labs, printing, internet, security, and so on. It all adds up quick.

[echoangle]

https://www.usinflationcalculator.com/ tells me the dollar is worth 60% of what it was worth in 2004, that’s a lot more than a third. Where did you get that figure from?

[lupire]

You not liking how the money is spent doesn't mean the money's not spent on the product being sold to you. Tuition grants you access to the campus resources.

I don't like the CEO of global corp making a billion dollars, but it's still part of the price of the globowidgets that I buy.

At expensive schools, those large classes are usually much smaller.

[lukev]

Given a typical professor's salary, it is... difficult to imagine that this is true, at least not without fantastically bloated administrative and overhead costs.

[CPLX]

> fantastically bloated administrative and overhead costs

Indeed. Go check the trends on the ratio of non-teaching staff to students at these major name colleges.

[ckrapu]

“non-teaching staff” includes all the research scientists, postdoc, and techs that help make the research happen. These universities are not especially good at teaching compared to SLACs. They are exceptionally good at research.

[CPLX]

That’s not what most of these people are doing.

https://www.mindingthecampus.org/2023/01/05/more-employees-t...

[seanmcdirmid]

Those people are paid for out of research grants, not tuition.

[gumby]

I don't know -- MIT's tuition and educational expenditures roughly match (it's a slight loss). Of course it's also a minor percentage of the budget.

Tuition at my partner's New York private high school (she graduated 35 years ago) just hit $61K. OTOH my own high school (also private) spends over 70K/student and charges 20K tuition, though tuition revenue/student is under 10K. This might be an example of the subsidy.

[floor2]

No that's not the better question.

If private universities are truly spending so irresponsibly and profligately that their sticker price isn't covering their expenses, then their entire administration should be thrown out and replaced. It's only incompetence or corruption that could excuse such costs.

[AgentOrange1234]

Throwing out the entire administration and then only replacing a small fraction of it would work even better!