Cost of Higher Education

"The goal is to increase graduates and socioeconomic mobility"

Ryan CraigLos Angeles, CA (USA), November 2021 - Ryan Craig is the author of "College Disrupted" (2015) and "A New U: Faster + Cheaper Alternatives to College" (2018). He is a Managing Director at Achieve Partners, which is reimagining the future of higher education and creating new pathways from education to employment. At OEB Global, his presentation is entitled "Identifying and Addressing the Barriers to Reducing the Cost of Higher Education".

What types of hurdles do you envision when you talk about reducing the cost of higher education?

Ryan Craig: The primary hurdle in America is that university boards of trustees and governing bodies do not evaluate the performance of leadership based on metrics that matter most for students (i.e. learning and employment outcomes), but rather based on the metrics that are easiest to track and report. We call these the four Rs, and they’ve been driving up the cost of American higher education for the past 40 years.

1) Rankings

Rather than being penalized for high cost of operation, colleges and universities are rewarded. U.S. News and other rankings evaluate colleges based on spending per student, so it seemed sensible to build up the administrative infrastructure, particularly if new administrators could positively impact other rankings metrics.  This kept virtually every college and university from taking a step back, looking at the big picture, and taking action to stem and reverse the growth in their cost base in order to address affordability.

2) Real Estate

In the U.S., many campuses today look like Disneyland. Suites are airy and well lit. Every room has broadband. Colleges are fully decked out with fitness centers, dance studios, and amenities more suited to cruise ships than universities. Students eat in dining halls serving all local, seasonal, and sustainable food employing menus designed by Alice Waters of Chez Panisse.

The same forces that led to a rapid rise in the number of administrators have created an arms race in facilities.

  • In fall 2010, the University of Michigan opened the $175M North Quad dorm that features a television production studio and two coffee shops. The new North Quad has been awarded gold status by the National Association of College and University Food Services for its salmon filet, tortellini with walnut pesto sauce, lamb, and even shark (hopefully not from Lake Michigan).
  • Down in Charlottesville, at another public flagship, UVA spent $220M on construction in 2011, including four new dorms.
  • Out in California, UCLA spent $5.1M to open a dining hall that offers exclusively Asian food from China, Japan, Thailand, Vietnam, Korea, India, and Hawaii, pairing two countries at each meal. UCLA chefs designed the menu after visiting leading ethnic restaurants across Southern California and serve up dishes like spinach and seaweed rolls, Indian potato croquettes, Buddha’s delight, Japanese soba noodles with asparagus, washed down with Korean ginger and rice punch. In case students don’t realize this isn’t typical cafeteria fare, they are welcomed by hosts in several Asian languages and video screens broadcast cable news shows from Japan, South Korea and India. The renovation allowed UCLA to install a stone oven for flatbreads. 
  • To ensure students in the heartland don’t miss out, the University of Missouri has launched a dining hall where chefs prepare each student’s order individually.

It’s not difficult to find apologists for such extravagance. UCLA’s residential food and beverage director calls today’s college students "much more food savvy. They are used to going out to eat and more used to restaurant environments and restaurant quality of food."
The dining services director at University of Kansas says, "Experiencing good food in a nice setting can influence a student's choice of a college and continuing relationship with it."
And at UVA, the Director of Facilities ponders "the big question of how is it that students learn?  Is it just the classroom, or is it in the halls between class? Or is the environment part of the teaching tool? I would say the environment is part of the teaching tool and Mr. Jefferson felt that very strongly."

3) Sports (Rah!)

  • Unfortunately, nothing in U.S. higher education inspires the general public (and especially alumni) more than Division I football and basketball. Division I schools with football spend over $90,000 per athlete on sports – seven times the average spending per student. Universities claim much of this spending is for additional student aid, but the data show only 16 percent goes to student aid. A full 84 percent goes to athletic staff salaries, game expenses and – increasingly – pro-level facilities to attract top recruits.

4) Research

  • For years, critics (mainly conservatives) have derided the research output of colleges and universities. Depending on the discipline, anywhere from 45 percent (sciences) to 98 percent (arts and humanities) of published research is never cited in any other publication. A 2009 report from the American Enterprise Institute pointed out that over the past five years, the number of published language and literature articles had risen from 13,000 to 72,000.
    This outcome is predictable and highly formula driven. Administrators determine faculty promotions and salary increases based on the quantity of publications - counting articles rather than reading them. And don’t forget the rankings, all of which include a research component, and most of which are research heavy.
    These formulae ensure that teaching is subordinate to research at nearly all traditional colleges and universities, including community colleges. This is as true in the UK as it is in the U.S.  A report from the UK Minister for Universities estimates that for UK institutions established more than 50 years ago, 60 percent of total faculty time is allocated to research, whilst only 40 percent is spent teaching students. The report concludes that “The pendulum has swung too far away from teaching,” particularly when UK tuition has now increased to market levels (i.e., £9,000 p.a.). Back in the U.S., a 2005 study in the Journal of Higher Education showed an inverse relationship between amount of time spent in the classroom and a faculty member’s salary.

What role does edtech-assisted instruction play in achieving this?

Ryan Craig: Online instruction is effectively unbundling the degree bundle that allows universities to charge exorbitant tuition.
We saw the ramifications of this last year when universities were forced to go online only: hundreds of thousands of students signed petitions demanding tuition refunds, and hundreds actually brought lawsuits against their universities claiming they were not receiving the full value of the bundle they had contracted for.

How high could the cost reduction actually be?

Ryan Craig: On average, course delivery only accounts for between 27 and 31 percent of total spending by U.S. universities. So unbundling via edtech-assisted delivery could reduce costs by 70-80%.

Would there be a direct correlation between this type of cost reduction and the number of students participating in higher education?

Ryan Craig: The question is not accessibility, but rather learning and employment outcomes. The goal is not to increase enrollment, but to increase the number of graduates and socioeconomic mobility.
Whether edtech-assisted delivery can accomplish this remains to be seen. It can reduce cost and increase access, but it has not yet shown the ability to achieve significantly better learning and employment outcomes, particularly for at-risk, underrepresented minority and first-generation students.