NBC News: Tuition, fees, continue to rise

[Hibush]

My hunch is that the institutions that are most selective, and thus have been least affected by the changes to the general student population, have probably seen real wages rise by more than the average, for that reason. The places taking the weakest students will have seen below average real gains.

This is an idea worth exploring more.
One thing you see a the low end is that the schools are underresourced and go for the cheapest possible instructors to keep their revenue and accreditation. Graduate outcomes and learning are low priorities. Those have very frustrated faculty, whether permanent or contingent.

If that category of institution were to go bust, would their erstwhile students not go to college and find something better to do or would they be trying vainly to compete for slots at somewhat better schools? The distribution there would affect the pay structure at the remaining schools. Under what conditions would economic models indicate an increase?

At the high end, there may be less cost for some kinds of student support, but more for others. Mental health care can be a big-ticket item for instance. Student research opportunities are expensive. I looked up what the University of Southern California reports to IPEDS at their "cost of education", and it was north of $100K per student per year. That doesn't even include paying for the football program.

Where are the costs most reduced when one moves from a school that has a lot of unprepared students to one where the students are prepared but retaining a similar mission?

In my opinion, the USC number is inflated quite a bit by the basic research costs at an R1 being journaled under education rather than research. That way they appear to lavish resources on students while having high research productivity. But they--like other research universities--lavish resources on students relative to the underfunded schools. 

[Parasaurolophus]

So, uh... all this discussion goes to show that Baumol's is an inadequate explanation. (Not surprising, TBH.)

[dismalist]

So, uh... all this discussion goes to show that Baumol's is an inadequate explanation. (Not surprising, TBH.)

No, inadequate understanding and discussion in part.

[Durchlässigkeitsbeiwert]

For me this thread shows that:
1) There appears to be an agreement that primary cost centre in academia lies outside the classroom. Whether this is "administrative bloat" or "amenities students are willingly paying for" or "use of tuition to subsidise research" is a separate and institution-specific question.
2) There is a notion that having poorer, less academically-prepared students increases costs for the institution. Personally, I find it surprising as a) I would expect poorer students to be less demanding in terms of amenities; b) underprepared students are more likely to take more "easy" courses = generally lecture-based generic courses that are much cheaper to teach than a lab-intensive high-level engineering.

[marshwiggle]

For me this thread shows that:
1) There appears to be an agreement that primary cost centre in academia lies outside the classroom. Whether this is "administrative bloat" or "amenities students are willingly paying for" or "use of tuition to subsidise research" is a separate and institution-specific question.
2) There is a notion that having poorer, less academically-prepared students increases costs for the institution. Personally, I find it surprising as a) I would expect poorer students to be less demanding in terms of amenities; b) underprepared students are more likely to take more "easy" courses = generally lecture-based generic courses that are much cheaper to teach than a lab-intensive high-level engineering.

This depends on whether departments can set their own admission standards or not. Institutions often decide how many warm bodie$ they want to take in and will do that regardless of department recommendations. That, along with the Dunning-Kruger effect, means that there can be lots of unprepared students admitted into demanding programs, with the attendant cost in class size bloat, remediation staffing, etc.

[apl68]

For me this thread shows that:
1) There appears to be an agreement that primary cost centre in academia lies outside the classroom. Whether this is "administrative bloat" or "amenities students are willingly paying for" or "use of tuition to subsidise research" is a separate and institution-specific question.
2) There is a notion that having poorer, less academically-prepared students increases costs for the institution. Personally, I find it surprising as a) I would expect poorer students to be less demanding in terms of amenities; b) underprepared students are more likely to take more "easy" courses = generally lecture-based generic courses that are much cheaper to teach than a lab-intensive high-level engineering.

This depends on whether departments can set their own admission standards or not. Institutions often decide how many warm bodie$ they want to take in and will do that regardless of department recommendations. That, along with the Dunning-Kruger effect, means that there can be lots of unprepared students admitted into demanding programs, with the attendant cost in class size bloat, remediation staffing, etc.

A lot of complaints I've seen at the Fora, particularly on the teaching threads, suggests that this can be a real problem with some institutions and departments.

[Stockmann]

Even if we grant that faculty are luckier than average in having seen a 9-10% total increase in real wages over fifty years, that almost certainly just shows that huges swathes of the economy really suck for people. It's very unlikely that will show that things are generally hunky-dory.

A 10% increase in real wages means "relative to other workers".

No, it doesn't. It means relative to prices, for which wages are just one input, and depending on productivity it's possible to have rising wages not drive costs through the roof. It's perfectly possible, even historically common, to have broad real increases in wages. In fact, the recent-ish American trend of economic growth and rising productivity with wage stagnation is actually unusual.

[quasihumanist]

2) There is a notion that having poorer, less academically-prepared students increases costs for the institution. Personally, I find it surprising as a) I would expect poorer students to be less demanding in terms of amenities; b) underprepared students are more likely to take more "easy" courses = generally lecture-based generic courses that are much cheaper to teach than a lab-intensive high-level engineering.

If you consider the output of education to be actual student learning (nevermind how you measure it), then I think it's pretty clear that less prepared students cost more per unit of output.

If you consider the output of education to be degrees, then it may very well be that less prepared students are cheaper, but I'll also remind you that, by that measure, diploma mills are the most efficient institutions.

[marshwiggle]

Even if we grant that faculty are luckier than average in having seen a 9-10% total increase in real wages over fifty years, that almost certainly just shows that huges swathes of the economy really suck for people. It's very unlikely that will show that things are generally hunky-dory.

A 10% increase in real wages means "relative to other workers".

No, it doesn't. It means relative to prices, for which wages are just one input, and depending on productivity it's possible to have rising wages not drive costs through the roof. It's perfectly possible, even historically common, to have broad real increases in wages. In fact, the recent-ish American trend of economic growth and rising productivity with wage stagnation is actually unusual.

Yes, but as I noted above, for services to become lower-priced while the people delivering them have real wage increases, it requires increases in productivity, so that fewer people can provide the same volume and quality of service for the same cost. For academia, this means ultimately being able to educate more students with the same amount of money. Even the "administrative bloat" that people talk of includes all kinds of student services like tutoring, counseling, etc., which are increased by taking in more (and thus weaker) students. That undermines potential productivity growth, whether those are good things or not.

[dismalist]

For me this thread shows that:
1) There appears to be an agreement that primary cost centre in academia lies outside the classroom. Whether this is "administrative bloat" or "amenities students are willingly paying for" or "use of tuition to subsidise research" is a separate and institution-specific question.
2) There is a notion that having poorer, less academically-prepared students increases costs for the institution. Personally, I find it surprising as a) I would expect poorer students to be less demanding in terms of amenities; b) underprepared students are more likely to take more "easy" courses = generally lecture-based generic courses that are much cheaper to teach than a lab-intensive high-level engineering.

I must belabor the point. One above is not completely explained.

Instructional expenditure amounts to about a third of higher ed institutions' spending. Thus, one cannot say that it is an unimportant contributor to costs. Now, productivity there is hard to measure adequately. If we take something crude like FTE Students to FTE faculty, we get

The ratio of full-time-equivalent (FTE) students to FTE faculty in degree-granting postsecondary institutions was 14:1 in fall 2018, a lower ratio than in both fall 1999 (15:1) and fall 2009 (16:1). (IES, NCES)

Thus, we exhibit a decline in productivity. I asserted stagnation because I had my eyes open when working. Turns out higher ed was one of Baumol's original examples.

It is true that over time the increase in costs cannot be completely explained by the increase in faculty wages. Rather, the addition is due to the administrative bloat and the higher quality of life of students.

So, compare two cost structures, one 30 to 50 years ago with one today. My assertion is that both suffer from the Cost Disease. The transition added more costs. And for the future,  the bloaters will also have stagnating productivity.

[Wahoo Redux]

From 2017:

Forbes: US Colleges: Where Does the Money Go?   --- Cursorily examines Colgate College. 

2018-19:

NCES: Fast Facts

2018:

The well known NY Times "lazy river" op-ed

2021:

Investopedia: How Colleges Make Money

[Stockmann]

Even if we grant that faculty are luckier than average in having seen a 9-10% total increase in real wages over fifty years, that almost certainly just shows that huges swathes of the economy really suck for people. It's very unlikely that will show that things are generally hunky-dory.

A 10% increase in real wages means "relative to other workers".

No, it doesn't. It means relative to prices, for which wages are just one input, and depending on productivity it's possible to have rising wages not drive costs through the roof. It's perfectly possible, even historically common, to have broad real increases in wages. In fact, the recent-ish American trend of economic growth and rising productivity with wage stagnation is actually unusual.

Yes, but as I noted above, for services to become lower-priced while the people delivering them have real wage increases, it requires increases in productivity, so that fewer people can provide the same volume and quality of service for the same cost. For academia, this means ultimately being able to educate more students with the same amount of money. Even the "administrative bloat" that people talk of includes all kinds of student services like tutoring, counseling, etc., which are increased by taking in more (and thus weaker) students. That undermines potential productivity growth, whether those are good things or not.

No, as long as there are costs other than labor involved, changes in those costs can offset rising wages (as is happening in parts of Asia). Or, for that matter, if other costs rise that can increase total costs even if labor isn't getting more expensive (as has been the case in parts of Latin America). Clearly, instructor pay accounts for a small fraction of what US college students are paying so changes in instructor pay or productivity make little difference either way.

[dismalist]

Clearly, instructor pay accounts for a small fraction of what US college students are paying ... .

A third or a tad less. That's not "small".

Never mind.

The point is that higher ed is a stagnant industry in labor productivity. Extra capital costs don't seem to matter.