Students and the general public exercise significant oversight over universities, primarily because of the profound impact they’ve on society. The ideas they support often make their way into politics, economic policy, and even your local coffee shop.
Therefore, the subject of how much money universities are wasting comes up pretty often. People want to know where student debt is going and if it is really necessary.
What Do Numbers Say?
According to the National Center for Education Statistics (NCES), the average annual tuition and charges for a a four-year public university in the US is $10,560 in 2019-2020. For a four-year private university, the price is $37,650. That’s quite a lot of money for most people, particularly considering that many students even have to pay for housing, meals, books, transportation, and other living expenses.
To many people, particularly those in business, that sounds reasonable. But where did all this money go? Well, according to a report by the American Institutes for Research (AIR), only about half of the income from tuition and charges goes to instruction. The rest goes into other categories that don’t have anything to do with training.
You may think it is okay. After all, universities need cash for research, academic support, varietyand basic maintenance of their amenities.
However, other categories are more questionable. For example, the amount of money that universities spend on institutional support (including administration and management), is commonly very high. They can even spend quite a lot of money on the operation and maintenance of factories (including buildings and land), particularly if they want to remain “prestigious” in the eyes of business and society.
According to the AIR report, institutional support accounts for 13% of total spending by state universities in 2017-2018. That means that for each $100 of tuition and charges paid by students, $13 is used for administration and management. Private establishments clocked in at 15% percent, making the case for ERP application management service even stronger.
Another category that has attracted attention is facility operation and maintenance. According to NCES data, public universities spent an average of $2,790 per full-time equivalent student in this category in 2018-2019. For private universities, the figure is about 20 percent higher.
Why Do Universities Spend So Much Money?
Yes, partly because of the need to provide a comfy and attractive environment for students and faculty. Professors specifically expect a pleasing place to work with all the facilities and conveniences they could desire. (If they do not get one, they may change universities, which can affect the reputation of the establishment). After all, who does not love seeing sparkling new amenities and impressive architecture while visiting a campus?
This phenomenon is more widespread than you might think. For example the University of California Merced (UCM) which opened in 2005 as the newest campus of the University of California UC system, spent $1.3 billion in the initial construction phase, which includes 101 buildings on 815 hectares of land. The investment is clearly not just to attract students. It’s all about status.
