Why are liberal arts colleges so expensive?

Great Debates
1

I was speaking with a co-worker whose son is a HS senior. She said he just was accepted into William and Mary, to study history, and it might cost $60k/year.

Now William and Mary and other “historic” colleges might have some special cachet warranting an elite tuition. But it made me wonder why there couldn’t be low cost liberal arts colleges.

I’m all for folk receiving liberal arts educations. Just wondering why it is so expensive. The essential cost is faculty, correct? Why couldn’t you attract a top notch faculty to - well, low cost space, and pass the savings along to the customers/students?

To what extent is it simply that small LA colleges charge “what the market will bear.” And are people so ignorant that they think a college that charges less is worth less?

Are there cheap LA colleges such as I describe whose degrees are highly valued?

2

William and Mary is a public school, so the issue there is just that it’s out of state tuition.

Private schools in general charge a fortune for the same reason doctors have a default bill of way more than anyone really pays–in the end, they will actually accept the negotiated price with various insurance companies, but they don’t want to start the negotiations out too low. Private schools have generous need-based and (for all but the top) merit-based aid; the only people paying full price are generally very wealthy students who are below the academic averages for the institution. So yes, it’s basically charging what the market will bear, with very finely tuned price discrimination.

ETA: if he was “just accepted”, it was off the waitlist. There’s a lot less financial aid for those kids because generally it’s all been distributed.

ETA2: I see that William&Mary has an average cost of attendance (after aid) of $19K, which is in the range of public schools.

3

Thanks. I admit I started this thread following a very brief discussion. And I appreciate my question likely reflects my ignorance. I know very little about William & Mary, and the co-worker said she did not yet know what aid would be available. (My impression - on previous brief discussions, is that they are making the college search A LOT more involved that I ever did personally or WRT my kids, and that they were considering various “top name” out of state colleges. But I have not discussed any of this in any depth.)

I regularly attend a music camp at a VERY SMALL private college. From searching on-line, total costs are approx. $40k/yr, and they assay ALL students receive SOME fin’l aid. So I have no idea what it really costs. But to my eyes, the place is - um - pretty run down w/ meagre facilities.

Also, I attended a state school, as did my 3 kids - so I have no idea what it REALLY costs to attend various colleges. When my kids were in college, our annual household income was somewhere between $75-150k, and the state schools cost around $30k/yr all in. Given that income, do you have any idea what it would cost to send one of our kids to a highly ranked private college?

4

When I started work for city government I was introducing to the concept of dual operating and capital budgets. The operating budget is what most people think expenses are, salaries and supplies. But not just salaries. Health care, pensions, and other benefits add huge percentages to base salaries that outsiders don’t include.

The capital budget is everything else and can equal or exceed the operating budget.

Colleges are a collection of buildings, laid out in grounds. All this forms the infrastructure and might as well be paved with dollar bills. Buildings have to be built, to be maintained, to be heated and cooled, to be repaired, to be updated. Dorms are needed, and dining halls, and clinics, and administrations buildings, and libraries, and auditoriums, and athletic facilities, and operations buildings, and garages, and heating plants. Inside the buildings are seats and desks and a library full of expensive books and journals and computers and labs that have to be kept up to date and copiers and projectors and every other amenity needed to fulfill the course work of dozens of majors. Then there are the roads and driveways and parking lots and grassy areas and plantings, also requiring the same maintenance, repair, and upgrading, along with all the equipment needed to do the work.

That’s just the basic stuff I think of off the top of my head. You can probably come up with much more. I didn’t account for taxes either.

Infrastructure is far more expensive than people realize. Every year our department would make up a list of our top priorities and give them to the budget department to be mixed in with all the top priorities of all the other departments, including fire and police. You can’t imagine how few would get included in the final budget. But every one was needed, and pushing it off to the next year made it more expensive when it became too critical to ignore.

Cities can’t raise taxes too much. People rebel. Private colleges are in a much better position to do so because they know that only a small and rich minority of parents will have to pay full fare. That makes them one of the few truly progressive institutions in America. You should be cheering at the high price of liberal education. It’s fundamentally American

5

First we would have to define what is meant by a liberal arts college. Are we including large public universities where liberal arts are part of what they offer but that may also have a business school, law school, etc?

Let’s take the example you gave of of William and Mary. A quick google search shows an enrollment of 8,617 in 2016. Even at a cost of only 20k per student that comes out to around 172 million. I don’t know what the salaries break down for full professor, associate professor, grad students that teach, etc., but I doubt that it averages out to more than 100k per year per instructor. This works out to around 1,720 instructors. I don’t know how many instructors they actually have, but I highly doubt that it’s one for every five students. Of course there is other staff, but I doubt that accounts for the surplus. My guess is that most universities actually overcharge by quite a bit relative to their expenses.

6

My nephew graduated from high school last year. He’s a brilliant kid, math prodigy, high honor roll, great ACT and SAT scores, the works; he is also an exceptionally talented singer.

He was accepted to the University of Illinois at Urbana-Champaign (i.e., the most prestigious public college in our state), but was offered zero financial aid. He was also accepted at Valparaiso University, a small liberal arts school; the amount of financial aid which Valpo offered him came very close to covering the substantial difference in tuition costs between the two schools.

Additionally, though he’s majoring in computer science, he very much wanted to continue to sing (and take classwork around music). Valpo was happy to let him do that (I think, but don’t quote me on this, that he’s minoring in music); U of I pretty much told him “it’d be one or the other.” So, he’s at Valpo, and thriving in both programs.

7

Most schools have a estimated-price calculator, where you can put in your information (or any information you want) and it will tell you what they would expect your actual cost to be. They are pretty accurate.

But note–that’s for need-based aid. Mid-range private schools also offer a ton of merit aid; they need to have a way to attract kids who would have a better offer elsewhere. So, for example, USC has what I call their “Ivy-eligible” scholarship: they off a LOT of kids half-off tuition and quite a few full-tuition. This is pure merit aid–it’s explicitly aimed at very well-off kids who might well get into Dartmouth or Brown, and who could pay the $70k/yr to go there, but might not really want to, and would be willing to “settle” for USC at $15k/year.

So if your kids wanted to attend a private school (LAC or otherwise) where their SAT scores and grades put them in the top 25%, or if they had some other quality the school really wanted (even things like geographical diversity), the offer might be substantial. IME, private schools in an area are VERY aware of what the best state school is likely to cost a particular kid, and will often makes offers that are very close to that. It’s business: you pay for the strongest kids to come and raise your average SAT scores so that the other kids–the weaker ones that can pay full price–will want to come and be willing to pay it, because they will be glad they got into such a prestigious school.

8

Ha! This:

was posted while I was typing this:

I also want to mention that financial aid is negotiable: I had a kid haggle a top Ivy to more than double their initial offer (she had a very legit argument AND some very good competing offers).

It’s a lot LESS negotiable May 9th. May 1st was decision day, so anyone talking NOW is coming off a waitlist, and that’s not a position of strength: they obviously don’t want you that badly. They also want to resolve the WL really quickly, so they aren’t going to haggle long–they will move on.

9

Are you assuming that virtually all tuition goes to pay faculty salaries?

“Of course there is other staff”—there are administrators, advisers, librarians, admissions staff, food service workers, athletic staff, buildings and grounds maintenance and custodial staff, registrars, financial aid staff, mental health and disability assistance counselors, etc. etc. And they all get paid benefits beyond their base salary. That adds up.

Plus there’s all the infrastructure expenses that Exapno mentions.

I’ve tried to do a little googling to see if I could find any real info on the actual budgets of colleges and universities, and how much of their expenses are what. I did find this, that claims “On average, 75% of the total costs associated with a college degree are employee wages, benefits, and etc. College employees include faculty, administration, and staff.”

Also possibly useful: this 2012 article about a “new analysis [that] compares the differences and similarities of spending at liberal arts colleges with more wealth (and higher tuition rates) and those without.”

10

Thanks all. As I think of it, I think one of my kids was accepted to an out-of-state public school, and another to a private school. Both offered to cut tuition (I don’t recall about total cost) to our in-state state school (UofI).

Kenobi - hope the computer program at Valpo is comparable to UofI’s. My son studied engineering at UofI, and when his job paid for him to get a master’s, he was amazed at how basic the material was compared to what he had previously studied. And my another kid studied microbio at UofI, but was able to sit 2d chair bassoon in the 2d concert band (the highest open to non-music majors).

I guess in my ignorance, I thought LAS education did not require great expenditures in terms of labs/equipment like engineering/sciences. And I imagine that in attracting faculty in business and sciences schools are competing against industry - didn’t suspect and liberal arts “teachers” would be as expensive. I perceive that several colleges - large and small - are marketing themselves sorta like spas/resorts - with elaborate rec facilities and such. At this school I go to camp at, the facilities are Spartan.

I guess I thought an opportunity might exist to have a school that occupied the cheapest space available, maybe even as a commuter school in a large city, and put all of its money into the faculty, and passed the savings to the students and family who were primarily interested in the education.

11

Easy money leads to inflation in that market.

12

LACs generally have everything but engineering and, importantly, graduate programs. Hard sciences are liberal arts. And they want faculty with research cred.

Much of what a LAC degree represents is things outside the classroom: research opportunities, cultural opportunities (lectures, drama productions, art shows). You’re supposed to have a lot of office-hours appointments where you go over your essays and get feedback. All of that takes infrastructure and funding. It also really demands that kids be close, because you aren’t going to commute back for a 15-minute essay conference, or to go to a guest lecture, or to attend the art show your room mate is in. You can’t have a college radio station if there’s no sense of a college.

13

Colleges charge a lot of money because the people who work there like money and they have an in demand product.

Last year almost 70% of high school graduates enrolled in college. This is much higher than it used to be. At the same time it is hard to start a new college and get enough prestige to attract students. When demand is high and supply is limited than prices rise.

The good news is that college enrollment has plateaued at about 20 million students and online universities are expanding. This will cause tuition costs to stop going up so fast.

14

Such an opportunity might exist, but it would still compete against the hundreds of established schools with known reputations and a network of alumni who steer students to those schools. Since all those schools also provide bountiful financial aid, it’s hard to see the actual rather than the list price tuition being markedly different.

They would also compete with the state school system. Many states do have exactly those commuter schools. They are not prestigious but provide openings to residents. A private school competing against a state-subsidized school would be at an additional disadvantage.

Mostly though, I think the notion of a top liberal arts school being nothing other than teachers and some texts in Latin is delusional.

15

US News and World Report - specifically College Rankings

College rankings created an arms race and their poor methodology made it worse. Typically how they work is not based on the quality of education provided, but rather the ‘outcomes.’ Outcomes are typically selectivity and graduation rates. What this means is that in order to raise your ranking, you basically have to attract the best students. Graduation rate highly correlates with high school GPA. High School GPA highly correlates with higher socio-economic status and either White or Asian. So rankings basically come down to ‘How can we get the wealthy White and Asian kids to come to our school?’ That means lots of things, but it typically takes the form of facilities and services. The days of 1970s and 80s cinder-block dorm rooms and group bathrooms are largely over. Residence halls have become resort communities. In the 1980s, the ‘rec center’ might have been a room in the basement of one of the dorms with a bike and a rack of dumbbells. Now, they are hundred million dollar facilities with climbing walls, multiple pools, hot tubs, indoor running tracks and amenities far beyond what existed 30 years ago. Wealthy White and Asian kids expect country club amenities and services, so universities have to provide them. They expect more tutors and more administrators to walk them through scheduling and there is a need for more hand-holding and that means more administrative staff.

Universities find themselves in the awkward position of not being able to say no. If say Penn State is to build a new 500 million dollar rec center, Ohio State can’t say “No, we’ll continue to provide a good education cheaply with no frills.” What would happen is that the wealthy kids would shift enrollment to Penn State and Ohio State would plummet in the rankings since they would now have to admit lower quality students who would graduate at lower rates. Despite the fact that they might have better professors and provide a better education, they would be a ‘worse school’ in the rankings just because they failed to attract wealthy Whites and Asians. That lower ranking then has a knock-on effect. Because it’s lower ranked, it becomes less prestigious, which means even fewer wealthy Whites and Asians want to attend and it could end up in a death spiral. So what do they do? They have to build the facilities. They have to offer the amenities.

Look at the ‘hockey stick graph’ of college costs and you’ll see that the bend of the stick starts almost as soon as the US News Rankings existed (about 1985, give or take.) If you want to know why college is expensive, that tells a large part of the story.

16

Thanks all for fighting my ignorance.

I think a lot of my misperception reflected my ignorance as to how few students ACTUALLY pay “sticker.”

Also, my limited experience where I go to banjo campo (make your jokes - I’ve heard them all! :D).
This dinky little school has a total enrollment less than my HS graduating class.
The campus is teeny, in the middle of bumfuck Michigan.
The dorms are absolute dumps - concrete block cells - only 1 dorm has AC.
The classes are all in 1 building.
The “science department” is 2 classrooms.
Another classroom (history? geography? PolSci?) has maps listing the USSR.
A Natural History room has a couple of moth eaten stuffed animals.
I’ve seen no signs of significant tech.

Just makes me wonder what someone thinks they are getting for $40k/yr.
But, if few actually pay that…

I dunno, you need more than a gathering of great minds? Seemed to work for Socrates! :wink:

17

If that’s a fair description, and there isn’t more to the story, I wouldn’t be at all surprised if the college you describe is struggling to stay afloat.

18

I really don’t know. Having gone to a huge state school, I have a hard time imagining why someone would want to go to such a small school in a small town (Olivet College BTW). At one point, someone told me they graduate a lot of actuaries, or folk related to the insurance biz - but I never looked into it. And several of the smaller schools in the area have religious affiliations - I know there is some kinds of a church, but the influence isn’t pervasive.

19

Looks like Olivet has an endowment of $14m. That puts them in the “destitute” column for LACs.

Even a sort of mid-range LAC, like Hendrix or Austin College, generally has an endowment in the $150m-200m range. It is endowments that pay endowed chairs, capital improvements, scholarships. $14M is circling the drain, in a death spiral because they can’t do the things you need to do to attract paying students. $14m is like when you go into a store and realize they won’t be around long because they can’t afford enough stock to make the place seem full.

20

As for me, having gone to a small school in a small town, I have a hard time imagining why someone would want to go to a huge state school. :slight_smile: Or rather, I can see why both have their pluses and minuses. But I can see the appeal of being part of a friendly, close-knit community as opposed to being surrounded by throngs of strangers, and of taking small classes with professors who know you personally as opposed to sitting in a lecture hall with hundreds of other students, being talked at by a professor who will never know your name and thinks of undergraduates as a necessary evil, or by a graduate student with an impenetrable foreign accent.

The nice thing about the American “system” of higher education is that there are a variety of different types of colleges and universities. The kind of school that’s a good fit for one person won’t be for someone else.

You inspired me to look it up online. It looks a little nicer than you made it sound. (For instance, Wikipedia says there are three classroom buildings, not one. And being in Michigan, there probably isn’t all that much need for AC, except during the summer, when you were there but the students weren’t.)

Wikipedia also told me that “Approximately 99% of students receive some sort of financial aid.” Not particularly surprising. Nor is it surprising that (as I see on their website) they have a big capital campaign going on to try to raise money for the school. I still suspect they may be struggling. These are not easy times for small colleges in areas of the country where the college-age population is declining.