Why transparency matters in combating the college cost explosion

We’ve all seen the staggering figures: nationwide, student debt has surpassed credit card debt. Americans owe more than $1.5 trillion in student loans, and college tuition has increased at twice the rate of inflation. Where, exactly, is all that money going?

While policymakers sound alarms about the crisis of runaway college spending and crippling student debt, there is little consensus on solutions. Exploding college costs erode public confidence in higher education, calling into question how effectively institutions are managing their resources, and casting doubt on whether the college journey is really worth it for many of today’s students.

One trend is clear: The number of administrators has grown much faster than faculty, to the point that administrators and support staff now outnumber faculty members on many campuses. A bloated bureaucratic staff adds little academic value and possibly even diminishes it, as professors are saddled with more administrative requirements to navigate and more hoops to jump through. On the consumer side, when student borrowers graduate with an average of over $37,000 in loan debt, how bright a future will they face after subsidizing all of that administrative bloat?

To counter the college cost explosion, policymakers need transparent access to financial information that historically has been difficult to obtain. One new free resource, HowCollegesSpendMoney.com, enables visitors to instantly compare administrative and instructional spending at nearly 1,500 public and private colleges and universities nationwide. It also allows users to compare a college’s spending history to that of other institutions, especially those in its peer group. By unveiling a wealth of financial data, the site offers insights into a college’s commitment to what should be its primary mission: educating students. With such benchmarking tools, college spending patterns and potential red flags can be made visible for all.

At Pomona College, a look at its administrative cost ratio in 2016 shows 48 cents spent on administration for every dollar spent on instruction. By contrast, the rest of the Claremont Colleges, including Scripps, Claremont McKenna, Harvey Mudd and Pitzer, spent only 36 cents on administration for every instructional dollar. In plain terms, Pomona spent an average of $7,430 more than its peers on administration per student in 2016 — in fact, it has far outspent them every year since 2009.  Armed with such information, policymakers and interested citizens can probe such patterns further to diagnose just what is driving higher costs at this institution.

As more colleges face tough financial decisions, administrative bloat is often at the core of the problem, yet it typically goes unnoticed. Without access to transparent financial data, underlying issues can go unaddressed and grow into larger problems.

While it is urgent that colleges and universities rein in costs and improve academic outcomes, this can only happen when institutions hold themselves accountable to the public. Data will be the indispensable guide to ending the college cost explosion. And the dialogue about solutions should be inclusive: the public, policymakers, faculty and higher education leaders must all be informed and active participants.

Erik Gross is a communications program associate at the American Council of Trustees and Alumni (ACTA), a nonpartisan nonprofit promoting affordability and accountability in higher education.