Zero Sum: college costs and public support of higher education

Written by: Stephen Hsu

Primary Source: Information Processing

College tuition has increased faster than the rate of inflation for some time now. But the issue is more complicated than this simple observation suggests.

1. The increase in tuition cost at public institutions is mainly due to cuts in state support (see figure below), as opposed to enlargement of the overall budget.

2. The average amount paid per student is typically less than full tuition, due to financial aid. Redistribution is taking place, from families that can afford the full rate, to those that need assistance. The year to year rate of increase in the average tuition paid has typically been less than the increase in full tuition per student (“sticker price”).

Below are the specific numbers for Michigan State University — full tuition in 2012 for Michigan residents was ~ $12k.

Here’s more data (thanks to Dave Bacon) supporting my claim for public institutions of higher learning: total expenditures roughly constant, tuition changes related to internal cost shifting. Note, though, that private research universities are an exception: they’ve been raising both tuition and expenditures in recent decades.

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Stephen Hsu
Stephen Hsu is vice president for Research and Graduate Studies at Michigan State University. He also serves as scientific adviser to BGI (formerly Beijing Genomics Institute) and as a member of its Cognitive Genomics Lab. Hsu’s primary work has been in applications of quantum field theory, particularly to problems in quantum chromodynamics, dark energy, black holes, entropy bounds, and particle physics beyond the standard model. He has also made contributions to genomics and bioinformatics, the theory of modern finance, and in encryption and information security. Founder of two Silicon Valley companies—SafeWeb, a pioneer in SSL VPN (Secure Sockets Layer Virtual Private Networks) appliances, which was acquired by Symantec in 2003, and Robot Genius Inc., which developed anti-malware technologies—Hsu has given invited research seminars and colloquia at leading research universities and laboratories around the world.
Stephen Hsu

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