NCPA - National Center for Policy Analysis

Where Is the Money Going?

February 2, 2011

It may come as something of a shock that college is actually more affordable today than it was five years ago.  Yet according to the College Board, a nonprofit membership organization that creates and administers the SAT and other tests, that is indeed the case, says Greg Beato, Reason Magazine's contributing editor.

  • In part, this is because institutional grant aid from colleges has increased from $26.2 billion to $33.3 billion since 2005-2006.
  • But the federal government has been even more generous, increasing Pell Grants from $12.7 billion in 2005-2006 to $28.2 billion in 2009-2010.
  • In addition, the government guarantees hundreds of billions in student loans and has increased tuition tax credits for low- and middle-income families.

Because of these goodies, the average net cost of tuition and fees for a college student at a public four-year college was $1,540 in 2010-2011.  In 2005-2006, the average net cost, adjusted for inflation, was $2,080.

In the face of the Internet and other technologies that have made information and instruction cheaper and more accessible than ever, you might have predicted that the ever-expanding universities of the 1980s and 1990s would suffer the same fate as the music industry and the newspaper business.  But according to an August 2010 report from the Goldwater Institute:

  • The number of full-time administrators per 100 students increased by 39 percent from 1993 to 2007, while the number of professors and researchers increased by only 18 percent.
  • And while the average pay for full professors rose to $108,749 in 2008-2009, the bulk of the undergraduate teaching is performed by part-timers, many of whom end up making little more than minimum wage.

Source:  Greg Beato, "Grade Inflation," Reason Magazine, February 2011.

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