RALEIGH – With dozens of state governments facing sizable fiscal deficits next year, many public university systems are going to respond with protestations about how parsimonious they are with taxpayer money. Many will also seek to raise tuition.
As you read and hear these claims, it’s worth keeping several facts in mind. First, don’t put a lot of stock in published tuition rates that don’t factor in the value of scholarhips, grants, and subsidized loans.
This Christian Science Monitor piece includes a useful graphical depiction of the impact of discounting on real college costs. For example, during the 2008 campaign Gov.-elect Beverly Perdue argued that North Carolina should make community college tuition “free” for large numbers of students. Politicians have made similar proposals in other states. But when you take grant and tax benefits into consideration, the average tuition to attend a state community college is about $100. If students live at their parents’ home, the marginal cost of room and board is also pretty low.
At the university level, net tuitions are also lower than you might expect. While the published rate for an in-state student is $6,590, the net tuition rate is really about $2,850. Obviously, the large majority of public university education is funded by the general taxpayer, not students or their families. For private universities, the sticker prices are much closer to the actual cost of delivering the service — $25,140 for the average four-year private college. But again, after adjusting for grants and tax breaks, the net tuition cost is $14,930.
The second fact to remember is that state systems like the University of North Carolina have business interests far beyond the original, core service of educating undergraduates. As I wrote in a recent National Review article on higher education reform:
Make no mistake: Higher education is a huge, lucrative industry. You can’t get its measure by looking at the average pay for English professors or tracking expenditures at student stores. American universities have become business conglomerates with preferential tax treatment and diverse interests in recreational services, business incubation, health care, contract research, broadcasting, real estate, and semi-professional sports. In 2004-05, expenditures on research, hospitals, auxiliary services, and other non-instructional operations made up about one-third of university budgets, and even this statistic understates the research budget — it leaves out the full cost of the physical plant and the salaries of many highly paid professors who, while classified as instructors, spend little time in the classroom.
Any decisions that the North Carolina General Assembly and other state legislature make about university funding will be difficult and fraught with controversy. But before you draw any hasty conclusions, I recommend doing a little homework. This website is an excellent place to begin your inquiry.
Hood is president of the John Locke Foundation