Tuition bill may look big, but real cost of education is often bigger
College students and their families may get a sinking feeling with every report of rising college costs, but research is under way that aims to show them what colleges do with all that money.
The National Association of College and University Business Officers (NACUBO) is doing a school survey to devise a formula for calculating the cost of educating undergraduates, from faculty salaries to heating classrooms.
The preliminary result, presented last week at NACUBO's annual meeting in New York, suggests that most any school, from low-cost community college to the big-ticket private elite, tends to spend more educating undergraduates than tuition covers.
"The economics of education are backwards," says Gregory Fusco, a former university administrator who is directing the college-cost project.
Colleges generally spend more on their product (graduates) than they charge the customer (students and families), Mr. Fusco says. That's because education is subsidized by other sources, including federal aid, donations, invested endowments, and, in the case of public institutions, local and state government.
The amount of borrowing for college can "get a little scary," Fusco says. "If people knew the 50 cents they're paying for a dollar's worth ... they would understand what they're getting a little better."
In the effort to come up with a formula to find true college costs, NABUCO surveyed more than 140 colleges and universities, including about 10 community colleges. They omitted costs of housing and feeding students.
While too few to be a representative sample of the nation's roughly 4,000 institutions, the results suggest dramatic contrasts. All figures are costs for the 1999-2000 school year:
Community colleges spent $5,000 to $9,000 per student, costs that exceeded tuition by $3,000 to $7,000.
Public universities spent $7,000 to $15,000 per undergraduate - some up to $20,000. Tuition fell shy of that by $4,000 to $10,000.
Private, four-year schools spent $10,000 to $40,000 (and at least two spent more than $50,000). Most surveyed said costs surpassed tuition from zero to $20,000; two schools said tuition covered more than their cost per student.
Once the cost formula is worked out next year, results will be made public.
"It does enable both individual schools and large groups of schools - all of us - to have some framework as to why costs are changing over time," says Richard Spies, chief financial officer at Princeton University and chairman of the NACUBO panel.
Princeton University, he adds, spent more than $40,000 for each undergraduate during the survey year, when tuition was $24,600.
