According to U.S. News & World Report, the average cost of a four-year private college is $38,185 per year and state colleges (for out-of-state students) is $22,698. Adding the cost of room and board - about $15,000 - means that college tuition at a private university can easily cost in excess of $200,000 over a four-year period of time. The cost varies by state, with Massachusetts having the highest average yearly tuition of $47,980 for its private institutions, excluding room and board.
Why so much? It’s because of bloat.
Mark Perry of the American Enterprise Institute shows the cost of a college education has increased about 170% (and the cost of college textbooks increased almost the same) since the year 2000, a rate surpassing all other consumer costs other than health care.
“If college costs increased at (the) rate of inflation over (the) last 50 years, the cost today (tuition, fees, room/board) would be less than $10K,” he tweeted a few years ago.
According to a report in Forbes, spending on administrative activities at universities comprised just 26% of total educational spending in 1980-1981, while instructional spending comprised 41%. But by 2017, the two categories were almost even: Administrative spending made up 24% of schools’ total expenditures, while instructional spending made up 29%.
Research site bestcolleges.com says that full college professors in the U.S. made an average of $143,823 in 2021-22. And yet, faculty generally spend only about 40% of their time on teaching-related tasks, according to a report in Inside Higher Ed. And they get the summers off. A study from the American Council of Trustees and Alumni finds that from 2010 to 2018, “non-instructional spending - including student services (29%) and administration (19%) - grew faster than instructional spending (17%).”
Last week – and a mere three months before a crucial mid-term election - President Joe Biden announced a student loan forgiveness program. Many on the right are complaining about the program’s potential deficits and long-term costs to taxpayers. Those on the left are saying it doesn’t go far enough. But lost in all of this is the reality about who’s really at fault for these costs: The colleges and universities in this country.
They could be forced, as part of the president’s plan, to cap overhead expenses in order for their students to be eligible for federal aid. They could be mandated, by industry standards, to maintain a certain level of administrative to teaching costs, obligate more teaching time and get rid of their out-of-touch-with-reality tenure system, where some professors literally get guaranteed a job for life, regardless of their productivity.
Colleges and universities could transition from four to three-year programs like many other countries, saving students and families 25% of their tuition. They could move to a 12-month schedule of classes like the rest of the real world. They could provide more options for lower-cost online and self-study options to achieve credits. They could raise more money for student tuition reimbursements and financial aid instead of building giant football stadiums, luxury dormitories with hot-and-cold running toilets and cafeterias that serve 24/7 sushi. But they don’t. And who in the end suffers?
It’s not just the people that are paying tuition. Or the taxpayers footing the bill for the president’s program. It’s the people that are forced to bear the additional costs created by that naïve student waving her useless diploma: The business community.
Most small businesses like mine avoid hiring children right out of college. Why? Because these students, these graduates, these scholars…they know nothing. They have little real-world work experience. Finance graduates have never done a weekly disbursement run, a detailed investment analysis or even know how to create advanced macros in Excel. Marketing grads don’t know how to operate a simple customer relationship management system or send out a mass email marketing campaign. Engineering students aren’t familiar with the actual designs of actual projects. Developers have never worked with a development team. Many say that their internships – if they had that opportunity – were much more valuable than the classroom instruction they received from out-of-touch professors teaching theoretical principles that just don’t apply to the real world.
So who has to deliver the actual education that our colleges ignore? Corporate America.
This is why companies like Google, Microsoft and Amazon are not requiring college degrees in order to gain employment. It’s why a recent McKinsey study found that only one out of four employers believe that traditional universities are “doing an adequate job of preparing graduates for the workplace.” And it’s why about one-fifth of recent graduates said their college education “did not provide the skills necessary for their first job,” with “about half deciding not to apply to entry-level positions because they felt they were not qualified.” This is according to a new survey administered by Cengage, a publisher and education-technology company.
The president’s forgiveness plan addresses none of this. It enables our university system to just keep doing the lousy job that it’s been doing – and expecting American businesses to pick up the tab.
I can understand the need to help students get out from under the massive debt they’ve accumulated. But what about the perpetrators of that debt? What about the universities with excessive overhead and bloated infrastructures that are raising tuition to astronomical levels and then producing students that aren’t equipped to do any actual work? What’s holding them to account? Unfortunately, not the president.
So it isn’t just the taxpayers that have to bear the burden of this ill-advised loan forgiveness program. It’s businesses - both big and small - that are forced to step in and provide the necessary training and education that our colleges don’t. No one mentions them. And yet they’re the ones that suffer the most.
• Gene Marks is a CPA and owner of The Marks Group, a technology and financial management consulting firm specializing in small- and medium-sized companies.