Curbing Higher Education Cost Starts with Smart Expenditures


The University of Maine is the premier public institution of higher education in the state of Maine. As part of the University of Maine System, it has offered many Mainers with the opportunity to further their education, and has laid the foundation for students to begin working from the ground up after graduation. Without it, many Mainers would not be where they are today.

But, many Mainers also earned their degrees in a different era of higher education. That era was much more affordable, and the quality of education was much greater as well. Over the years, the cost of college has skyrocketed, and its overall value has shrunk tremendously. Since 1990 alone, the cost of tuition has gone up nearly 160 percent.

The harsh reality of higher education is that it’s no longer affordable like it was in the past. Students can’t work an entire summer and pay their way through school (I’ve tried thrice, to no avail). If you come from a middle-class background, you’re likely tens-of-thousands of dollars in debt just from student loans.

The method in which we fund higher education now is broken, and has created much of the turmoil students my age go through on a yearly basis when filling out FAFSA documents and other paperwork required to attend college. Between federal and private loans, the increasing costs of tuition, bloated administrative salaries and tenure for professors, funding higher education is truly a daunting task. Unfortunately, it becomes more expensive for students almost every year.

Students can borrow money for college through the federal government or from private companies like Sallie Mae or Discover if their Federal Stafford Loans do not cover the cost of attendance. The current interest rate on federal student loans is 4.29 percent. When borrowing from a private company, interest rates range from 2.25 percent to 10.125 percent, but can reach as high as 12.875 percent. For students without other options, this is the only viable route to pay for higher education.

The reason the federal government subsidizes loans is very simple — the money they make from loan repayment allows them to further fund useless government programs and expand the size of the federal government.

In 2013, the federal government made $41.3 billion in profit from federal loans, the third highest profit level of any entity in the United States behind Exxon Mobil and Apple. That figure of $41.3 billion only counts profits the feds made from student loans. If that doesn’t scare you, I’m not sure what would.

The profit the federal government made from student loans in 2013, according to a USA Today report, is enough to give the maximum Pell Grant of $5,645 to 7.3 million college students in the U.S. Now, I don’t believe in this type of subsidy for college students who don’t deserve it, but it’s a great benchmark to analyze just how much profit the government is making from student loans.

Even during the recession of 2008 when companies like Exxon Mobil and Apple were a step behind with the rest of the economy, colleges continued to expand. Enrollment was up, but completion rates depleted, likely due to their inability to afford another year. However, the original subsidies these universities received from the federal government through student loans allowed them to keep spending money and keep expanding their campuses as well.

You should be able to see a cycle, here. Federal subsidies allow colleges to spend money and expand, and the money fronted to students by the feds allows them to grow the size of government upon repayment.

But let’s return to the local example. For public institutions under pressure like UMaine, the funding equation can become tricky, as it has for the last few years. In 2014, a $9.7 million budget shortfall required UMaine to eliminate 61 positions and use $5.3 million in savings to account for its losses. In November of last year, President Susan Hunter announced that the university expected the budget gap to hit $7.2 million this year.

However, the school still has “priority” areas it must fund, including $2.8 million in contractual employee compensation increases, investments and research in emerging fields, and a $2 million boost in financial aid to retain more students.

Meanwhile, the university currently employs approximately 150 professors and almost 50 administrators at or above $100k a year. About 25 of those administrators make more than $125k a year. But, enhanced salaries and administration costs are among the top reasons that the cost of college has expanded so substantially in recent years.

The Delta Cost Project, a nonprofit group that analyzes data reported to the federal government, released a report showing that, in the decade leading up to 2011, the largest cause of increase in cost per student for college was in administration, including academic, research and institutional support, as well as student services.

For public institutions that are in trouble financially, it’s time they cap administrative costs and do more to add value to a student’s education. They must assess their own bureaucracy, find overlap and eliminate administrative positions that only directly add cost to students. They also need to bring value back to students by offering courses throughout the calendar year. Luckily, UMaine made this change last year.

The solution to making college more affordable isn’t by allowing the federal government to dump more money into higher education. The fed’s involvement in higher education is how we arrived at this junction to begin with. Making college affordable starts with eliminating waste, curbing expenditures and offering a product year round that is of great value to the consumer. When all public institutions are conducting themselves under this model, the pricing trends will begin to reverse.


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