According to a comprehensive analysis by the Wall Street Journal, universities in the United States have been prioritizing new buildings, amenities, and sports programs over addressing the nationwide student debt crisis. Despite the fact that students in the U.S. collectively owe a staggering $1.6 trillion in federal student debt, universities have been raising tuition prices, thus burdening students with even more financial strain.
The study by the Wall Street Journal focused on the financial statements of the 50 flagship universities in each state, taking into account inflation from 2002 to 2022. It revealed that the median flagship university experienced a 38% increase in spending and more than doubled its revenue from undergraduate and graduate tuition during this period. Additionally, enrollment at these universities has generally increased over the past two decades, while spending per student has risen by a median of 15%.
While public universities often cite reduced state funding as the reason for tuition hikes (which three-fourths of states have done), the Wall Street Journal’s analysis suggests that they have raised prices beyond what was necessary. For every $1 lost in state support, these universities have increased their tuition and fee revenue by nearly $2.40.
The upward trend in spending by higher education institutions can be attributed to various factors. One motivation is the desire to improve their national rankings in publications like U.S. News & World Report, which has experienced a decline in significance as some universities opt out of the list. Additionally, universities aim to attract wealthy students by offering extravagant amenities. Notably, spending on athletic departments has seen a 27% increase in the past 12 years, with athletic coach salaries rising nearly 50% between 2010 and 2022.
The lack of standardized expense tracking among colleges allows them to exercise discretion when categorizing their spending, contributing to the overall increase. Moreover, universities compete for top students, resulting in higher fees and prices for the average student, along with a larger population of out-of-state peers paying higher tuition rates.
Examples of excessive spending include the University of Oklahoma’s investment of $14.3 million in an Italian monastery for a study-abroad program, complete with a beautifully renovated structure and amenities. The University of Kentucky, despite being located in one of the poorest states in the country, spent $805,000 per day for over a decade to upgrade its campus. Even Pennsylvania State University, one of the most expensive public universities in the nation, is facing a budget crisis because its spending decisions were not based on need or changes in enrollment.
As the American population struggles to repay student loans, the Biden administration proposed a $10,000 student loan forgiveness program, estimated to cost taxpayers around $300 billion. However, in June, the Supreme Court ruled that the executive branch does not have the legal authority to provide federal loan forgiveness without clear authorization from Congress.
Overall, the analysis by the Wall Street Journal sheds light on the concerning spending habits of universities in the United States, which have ultimately placed a heavy burden on students in the form of increasing tuition and debt.
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