How do Colleges Spend Their Money?

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What are colleges spending their money on? We take a closer look at how university spending drives up the cost of college.

If you follow trends in higher education, you may have spotted recent coverage about university spending--or, to put it bluntly, wasteful college spending.

 

In No College Kid Needs a Water Park to Study, the New York Times outlines how public universities are increasingly spending money on “nice-to-have” perks--while staying static on financial aid and academics--in the service of attracting more students in an ever-demanding competition for enrollment. Singling out new lazy river attractions at the Universities of Alabama, Iowa, and Missouri, as well as at Louisiana State University, writer James V. Koch makes the case that student fees are being unwisely funneled into wasteful amenities that do little to increase access to underrepresented students, improve the quality of education, or boost student outcomes.

Similarly, with How Rich Universities Waste Their Endowments, Washington Monthly calls out the University of Texas for irresponsible management of its large endowment. Reporter Neena Satija discovered that instead of spending money on affordability via financial aid or tuition management, University of Texas endowment funds were allocated to the nebulous pursuit of “excellence,”: specifically branding plans, real estate transactions, and massive open online courses (MOOCs).


At Edmit, we get it—the higher ed landscape is tough right now. There is more competition than ever to impress potential students, not to mention alumni, donors and trustees. Shiny amenities certainly add to the “wow factor” on a college tour for potential students, and are a way to take the edge off tough exams, papers, and research for current students and faculty. But we agree with Koch and Satjia--if money isn’t going toward affordability and academics, it’s not money well spent for the colleges, and not a good investment for you as a consumer. (Unless, that is, you’re looking for an internship and/or a career in recreational facilities or water park management.)

 

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As consumers, we may not wield as much influence as, say, a board of trustees. But by being selective in our enrollment criteria, en masse, we can put market pressure on colleges to focus on reducing the cost of college by adjusting their spending accordingly--specifically, to improve affordability, as well as graduation rates and career placement outcomes. This means investment in academics, sustainable financial aid (covering both need-based and merit-based aid), and career placement services.


If you’re concerned a school you’re considering is spending on frivolous amenities, here are a few questions to ask the admissions and financial aid counselors:


  • How is the university endowment allocated? Is a generous portion dedicated to increasing affordability and providing financial aid?
  • How does the university approach financial aid beyond freshman year? Can students expect similar (or improved) financial aid packages during all four years they’re enrolled?
  • What percentage of students graduate on time? You may want to drill down even further, asking about graduation rates within your intended major. If the answer is not satisfactory, inquire whether the school is investing in improving their graduation rates.
  • What percentage of students find full-time employment after graduation? Does the school invest in robust work-study, internship, and co-op programs, as well as post-graduate career support?
  • Does the university have a five-year plan or similar long-term capital plan that they’re willing to share with students and their families? (This will provide additional insight on future spending and where the university is planning to invest.) Once you’ve reviewed it, do the plans align with your values?

Based on the feedback you get from the admissions and financial aid teams, you can determine whether the school makes good spending choices—and similarly, whether that school is a good investment for both your time and money.


Lastly, if you’re passionate about university spending and want to go the extra mile, you can also get involved with your local government and media--especially if you’re interested in a public university or college that receives taxpayer support. “Our nation’s governors must also play a role,” Koch says in the Times. “As they appoint public university trustees, they can and should mandate training to make university boards responsible to taxpayers and students.” Take action by reaching out to your governor or state representative, or write to your newspaper’s editorial board to express your support for similar policies at your local public colleges and universities.


And remember, when you’re on a college tour or reviewing a college brochure, keep your emotions in check. Sure, fancy perks may be alluring...but do your due diligence. Is your potential college spending on style instead of substance?

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