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What, you thought I was talking about the “Greenies” again?


The cost of tuition and fees (sans living expenses and other non-instructional related costs) at our University is $43,926 for the current academic year. A full load of courses for our students is 8 courses per year, amounting to $5,490.75 paid per class per year. For those of you inclined to think that there is a higher education bubble (I’m not there yet, because I don’t believe that students are buying higher education, but something else. So calling it a higher education bubble would be like calling the current boom in flat-panel TV sales a bubble), consider the following.

Across the five courses I taught this year (ranging from Freshmen econ to an upper-level seminar), I have approximately 650 students, not including my Teaching Assistants, Independent Study students and internship sponsorships. So my average class size was about 130 students. This is admittedly much larger than the average class size at my university, which is likely closer to 25 (universitites typically play games with the way it is computed, so don’t trust reported average class size statistics). But take my example as an illustration, remembering that I may be an awful teacher but one thing I have never been honestly accused of is not being available to our students. My goal as a professor is to make those classes of 130 work more like a class of 20 would. And I think this is possible for the time being.

At an expenditure of $5,490.75 per student, then each class I teach generates $713,797 in tuition-fee revenues. I hope it is clear that such revenues far exceed the fully-loaded costs of employing me. If you add up the cost of my salary, benefits, implied cost of my office space, materials and technology usage and my share of the facilities on campus, you might find your way to saying I cost $150,000 for the university.

If I were the Marxist like I am supposed to be, I would be screaming right now that the U of R is exploiting me as slave labor to the tune of over a half-million per class per year (remember I teach at least 5 classes, so really I am being exploited to the tune of two-and-a-half million). But that is not my objective. It is simply this. What do you think the students are getting for this expenditure? I try to do a great job on my classes, but there are clearly much better classes offered by professors at other schools. Ignoring that, where does the remaining $563,000 that is being spent in my class go? Even if you assume the university chooses to “rebate” half of that in the form of student scholarships and grants, that still means that over $280,000 is being spent per course, in fact well more than this since all of my expenses can be paid out of a portion of just one course’s revenues. So, just about twice as many resources are being consumed by the university on things other than me the instructor for each of the classes I teach, in fact in my case this is an understatement.

Where does it all go?

Do students and parents think they are getting $280,000 per class of value outside of what I am doing for them? How do I feel about all of this? Does it impact what and how I teach?

How sustainable is the spending on all of those resources?

In future posts I hope to explore some of them. Of course there are some necessary administrative expenses that are helpful to running a university, particularly record keeping for grades, and staffing an admissions office, etc. But remember those costs are being spread over the thousands of courses we offer. A substantial portion of that $280,000 per class remains to be explained. And yes, the typical class sizes are smaller than mine, but that too is part of the point we will ultimately make.

Just think of that. $5,490.75 per course. Each course is 28 meetings since most professors prefer to teach only two days a week. Some professors give two midterms, in-class of course, during the term. And my guess is that on average one full class is wasted on going over the syllabus and other administrative items or even outright cancelled because the professor has other commitments for that particular day. So my estimate is that on average students get 25 classes in a full course. They usually choose the skip the one near breaks too, but ignore that for now. So, students and their families are paying $219.63 for each lecture that is actually delivered to the student. Would any of you pay $219.63 to attend one of my lectures, chosen at random? I wouldn’t.

9 Responses to “Unsustainable”

  1. Andrew says:

    I guess the first thing to check is how much is being returned to students through financial aid mechanisms.

  2. ZT says:

    “Would any of you pay $219.63 to attend one of my lectures, chosen at random? I wouldn’t.”

    No, but I wouldn’t pay $1000 for $1000 worth of random car parts either. The analogy isn’t perfect, but I really think that university lectures significantly compliment each other.

    We’re also paying, of course, for the signalling value of college, and I think the case can also be made that we’re paying for a major commitment device. Most of the knowledge I’ve learned in college I could probably find on my own, but I couldn’t make myself commit to spending four years learning it, including all the less-fun parts, in sufficient depth– reading the Wikipedia article on Giffen goods is easy; getting proficient with the nitty-gritty of utility functions and indifference curves isn’t something I’d do on my own. Maybe in a world without hyperbolic discounters, college would be very different. (As I’m writing this, I have yet to start the ECO 271 homework due in 12 hours, so enjoy the irony.)

    And, lastly, let’s not forget the random experiences we get from being in college. I don’t just mean “biology” and “neurochemistry”– I’ve had random encounters and conversations with professors and grad students and even other undergraduates that were far more valuable than 95% of class lectures. Students going to college creates the kind of environment where this can happen, and I can’t think of a similar way to replicate it.

    I can’t speak for other students, but I can say given my financial aid package and the anticipated opportunities from my majors, college seems sustainable. I also suspect that students who feel they’re getting screwed are a lot louder than the ones who are satisfied.

    • Brian says:

      “I’ve had random encounters and conversations …” I find this sad. Has the quality of teaching gone downhill since i graduated 40 years ago? I certainly attended some very boring lectures, but more often than not I found lectures educational and often fascinating. My professors often made the effort to explain how the theoretical applied to the real world, which seemed to make the subject much more interesting. My daughter is currently a sophomore and many of her professors do seem rather uninspiring. Teaching seems to have become a route to a paycheck rather than a desire to spread knowledge.

      • ZT says:

        It’s not an issue of teacher quality; it’s an issue of format. You learn some things from one-on-one conversations that you simply can’t learn in class. One type of learning isn’t “better” or “worse” by itself; they’re highly complimentary goods. And it’s precisely *because* the professors are inspiring that students engage academically outside of class.

  3. RIT_Rich says:

    As you pointed out, they are not necessarily purchasing the material you deliver in the class. They are purchasing that, plus some additional benefits, which MAY, in fact add up to much more than that.

    I never bought the “higher ed bubble” concept being circulated in primarily libertarian/conservative circles these days (and some of this is driven by what I perceive to be anti-intellectualism among some conservative circles). Firstly because the evidence that the return from higher-ed degrees has far outstripped the price/rise of price in acquiring the degree. As something becomes more valuable, and in fact necessary, its price ought to rise as well. Why is this surprising?

    Secondly, because besides the upward-pressure on prices from the provision of cheap loans from government agencies, other government agencies have placed downward pressures on the price of college educations, public college in particular. U of R may cost 43k, but Geneseo a few miles away costs maybe 1/5 of that. Certainly the product they deliver isn’t the same, and it can’t be the same despite the fact that an Econ professor at Geneseo may teach the exact same material, from the same book, as you. But why is Geneseo 1/5th the cost? Maybe prices are TOO LOW in these institutions?

    And third, because the importance and growth of higher ed makes “sense” from an economic point of view. It is difficult for a prospective employer to gauge the assets of a fresh entrant into the labor market. It is exceedingly expensive for them to play trial and error and eat the costs of bad hires. Even if we assumed away the fact that a good portion of university degrees DO provide very rare and valuable skills to their students (for example, engineering schools etc.), even in their absence, the selection and recognition of the right candidates is a very expensive and imperfect job.

    Therefore, third-party “ranking” firms (i.e. universities) arise that remove the upfront cost from the employers, reduce the uncertainty considerably, provide a quality check of the prospective employee which is backed up by the reputation of the university. They place the cost up-front on the student, and the employer pays the student (now employee) back through higher wages. This, in my opinion, is what the students are paying for.

    Now a lot of libertarians will say that is is a “waste”, or somehow a negative created by “government” (because what is not government’s fault, according to some?). But I see this as a very positive economic function that allows for more efficient matching between employer and employee precisely at that first stage where no prior history exists.

  4. blink says:

    Some of the examples are telling. For instance, do students prefer in-class midterms or out-of-class midterms and additional lectures? If a professor cancels a class, do students despair or cheer?

    The litmus test: How much would you pay for a full four-year UR program but no credential? How much would you pay for an authentic UR degree but no actual education? Compare.

    For those of us spending hundreds of dollars on roses and chocolates this week, these are timely considerations.

  5. Brian says:

    I had an introductory course in economics with professor Alchian 40 years ago. He really liked teaching and as head of the department I am sure he didn’t have to teach an introductory course if he didn’t want to. He was very inspiring and introduced his students to a way of looking at the world was both fascinating and made sense, at least to me. I changed my major from engineering to economics and have never regretted it.

    Professor Alchian said that universities weren’t selling education, that they were selling status. He went on to say that the price would keep increasing until the buyer’s quit buying and the universities, particularly the less perestigous ones, would probably fail as they would be burdened with costs that they could no longer cover. He felt that at some point innovation would occur in the form of the best lecturers giving video lectures at a greatly reduced price and education could be greatly improved. We seem to be getting close to the point where buyers of education are balking at the price. The Khan academy, et all seem to be growing in popularity. The rent seekers ( the universities) are demanding that for profit competitors be shut down by the government. It all seems to be playing out as predicted. It is sad students may not have direct interaction with great teachers in the future, but the current system rarely provides it anyway.

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