There’s no other way to look at it, the cost of a university or college education is high! Even though we knew it was high and getting higher, we were still shocked by how much tuition increased in just the two years between when our oldest started college and our second child started the same college. Why does college or a university education cost so much? Where does all that money go?
Why the cost of college goes every higher – the math
As every parent trying to save for college knows, college tuition is sky high and going higher every year. A decade ago costs were so high that I was hopeful that something catastrophic would cause costs to go down before our own kids were ready to go to college.
Costs where higher. Way higher.
And even though we looked at all the numbers and knew tuition would go up by a certain percentage between our kids 1 and 2, we were still caught by surprise by the rise in tuition when our second child started college.
Through the wonder of percentage mathematics, even when a college and universities like to boast that their costs only rise by a small percentage each year, every year the actual rise in college is based on a higher and higher number. This means that the rise is actually a higher and higher dollar amount each year.
The rise in college costs like compounding interest on your investments, in reverse!
What your college will tell you if you ask why the price of college is so high
I have heard all the usual arguments. Dorms are nicer. Student life facilities are nicer. We have to keep the buildings open 24 hours a day. (To which I say why? Do you really expect that it’s healthy to encourage the students to study 24 hours a day? But that’s another problem.)
But I don’t think those are the real answers.
That suspicion is confirmed when I see articles like this.
A real reason the cost of college is so high
I mean really. Bill McRaven was being paid more than $2.5 million per year! And even his base pay was over $600,000. And don’t tell me about the pay of CEO’s of companies. They’re overpaid too. I know they have important jobs, but really. Are they worth this much? Especially when a university has more than one administrator at a similar level – as you’ll see in this article that they do – that adds up.
Why do you not hear much about how high salaries in university administration affect the cost of college? (Through the article above, I did find another story, Pay is Climbing Fast for Texas University Leaders, in the Texas Tribune about political discussions. I just can’t believe we hear so little about it.)
State and Private schools both over pay their administrators and raise the price of college
And it’s not just the state schools. From the article: “In 2016, the most recent year for which data about private colleges is available, former Baylor University president Kenneth Starr was the top compensated. He received nearly $5 million that year, most of it from a severance package he received in the wake of a sexual assault scandal at the Waco school.”
As a former graduate with two students at Baylor, I have followed the sexual assault scandals. Regardless of what you think about this issue, there’s no denying that mistakes were made. The impact is still being felt by employees and students at Baylor in services and costs.
I have a problem when people are rewarded for being leaders when catastrophic mistakes are made. This reminds me of all the bank and financial CEOs that made out like bandits after the banking crises of 2007-2008. It makes me uncomfortable to point this out. But until more of us get outraged about this type of CEO pay, it’s going to continue.
High executive pay is bound to contribute to the cost of college.
Why you can’t find out the real reason that the cost of college is so high
Ironically, the people making these outrageous salaries are the very people in charge of rationalizing to us why the cost of college is so high! There the ones telling us that it’s the nice dorms and student amenities.
University and college administrator pay is out of line with other employees of the schools
Still think that the executive pay can be justified for these rarefied individuals that lead our universities?
Take a deeper look into university salaries in general and check out The Texas Tribune Government Salaries Explorer: The University of Texas at Austin.
Here’s what I think is eye-opening. Just look at the comparison between the top ten salaries ($600,000 to over $3 million) and compare them to the median pay of all the other departments below. Most of the median salaries range from the low $40,000 to the mid $100,000 range. That is a big difference! We’re talking from multiples between 20x and 75X. And that’s even when you are only looking at base pay, which as the article from the Texas Tribune explains, is just the tip of the iceberg.
University and college administrator pay is out of line with other highly-talented employees
Still think you might be able to justify the high administrator salaries because these people are so skilled?
Take a closer look at compensation of what are bound to be some of the most highly intelligent and capable people employed by the university, faculty in the Department of Computer Science and Engineering. (I bet I’m not exaggerating about their intelligence. Most likely UT-Austin tells you in their own literature that these are some of the most brilliant people in the world.) Median compensation is still only around $130,000. And even the compensation for the highest paid professor, at $350 K is only half of what the 10th highest paid administrator earns.
The cost of a university degree is high because of the number of University Employees
But even those lesser salaries add up.
The University of Texas at Austin is one of the largest employers in Austin. Estimates of the number of employees range from 23,925 employees in 2018 to over 24,000 employees for over 51,000 students in 2018,
In contrast, Austin Community College, with over 65,000 credit and non-credit students, employed just 5000 people in 2018. In another estimate, the number of people employed by Austin Community College was just 3,553 in 2018. I know you can’t make a direct comparison between a research university and a teaching community college, but that still is a major difference!
And for another comparison Texas State University (which is also research university), employed 4,873 people in 2018 to educate 38,661 students.
To compare the numbers between the local college and the universities, let’s use the numbers that come from the same source, the Austin Chamber of Commerce estimates covered by the local news channel KVUE. and enrollment numbers given by each of the schools themselves.
Using those numbers, Austin Community College, with 40,799 enrolled students in the fall semester of 2018, uses less than a tenth of am employee (0.09 of a person) to educate each student. I’ll admit that a greater number of those students are likely to be part time compared to UT Austin.
But Texas State University, with 38,661 students, also manages to educate each student using only slightly more than a tenth of an employee (0.13 of a person).
In huge contrast, the University of Texas at Austin, with 51,832 students, somehow needs more than two whole employees (2.2 people) to educate each student!
No wonder tuition is so high. How do they even manage to cover the salaries of even two employees with each student’s tuition? (Spoiler alert! Tax payer money. And heavily recruited donations. And we haven’t even gotten into the costs of building maintenance… And somehow through the magic of taxpayer money, I guess, tuition at both universities manages to be about the same.)
Regardless, any way you look at it, UT Austin still uses more employees per student by a factor of over 15X.
The other hidden way university administrators justify their high salaries, organizing massive donation campaigns
At one point when I was fairly deep into the numbers, some poor UT Austin undergraduate was assigned to call me and get a donation. (Yes, I also have a degree from the University of Texas at Austin.)
She got a very lengthy but civil instruction about some of the things I think are wrong with education finances. Ironically, much of the length was driven by questions she continued to ask, mostly from the standard question sheet she had been given to entice alumni to donate. I had an answer for how I felt the university was mishandling money at every step of the way.
Basically the concluding argument that I made was that I would make a donation to UT-Austin when the administrator – who had orchestrated this major donation drive under the altruistic justification of making medical school education more affordable or free – took a pay cut as his own donation! (At the time, through my research I knew the salary of this particular administrator. Maybe it was this guy in this article, but I can’t remember.)
Sky-high salaries are part of what’s wrong with university finances and the cost of college
In the end, looking into the numbers even further just illustrates how obtuse university finances are. The better to hide those high salaries in the cost of tuition. How many other excesses are hidden in all those numbers?
So next time you wonder why college costs so much, take a good hard look at what the administrators are making. And how many employees they have supporting them at work to lessen their burden. In fact, all of us parents should be asking them directly when we meet them at student orientation.