Yep, probably true. Generally not hard to figure out actual spending for many schools, I expect the operating budgets of all public schools must be publicly disclosed.
I donât mean to be contrary, but actually, I think that schools with more money DO offer better educations/experiences. They can pay their faculty more, thus attracting better and more faculty (so smaller class sizes), they can offer their students more opportunities (meaning, funded summer travel and the like), they have well maintained state of the art facilities (which probably mean more in the STEM fields). Better, more interesting speakers and cultural events. Way better financial aid (Williams, at the top there, not only has eliminated loans in their financial aid packages, theyâve eliminated work study requirements too. Plus they give money for travel to and from the school). I could go on and on!
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Spending numbers are probably somewhere in IPEDS data. I recall a web site that made those and other data more visible, but do not remember what it is.
I also recall that spending numbers were often much higher at colleges with medical schools.
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You are not being contrary - what you are saying is true - my kids are both at top schools with large endowments and I see the benefits! It is a clear privilege. But, I also know that not every student can attend one of these schools, and can still have excellent educational experiences.
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Totally agree, especially your last sentence.
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If you google something like â[college name] financial statementsâ, you can usually find a financial statement that contains information like their operating budget and operating revenues.
A few things to note.
This doesnât include capital expenditures, which of course is a significant part of the value (the buildings and facilities and such).
When a institution has a medical center, it can be trickyâyou just want to make sure you are not including revenues that are spent on medical services, just net revenues that are free for other institutional expenses.
Finally, if an institution has graduate and professional students, ideally you would break them out separately, but usually this is not possible.
But still, you can at least get a comparative idea between generally similar sorts of institutions. And yes, the wealthiest institutions tend to spend far more in just operating costs per student (which again doesnât even account for campuses and such) than they charge even for full pay, and that is at least one potential reason to actually see them as more valuable.
But my two cents is like most things, this is probably subject to a diminishing marginal utility. Meaning if College A is spending $X/student to provide a solid education, College B spending $2X might add some value, but probably not twice as much.
But this IS a very common issue. Like, if Family A spends $Y to get a modest but comfortable family home, then Family B spending $2Y in the same market might get some more value, but probably not twice as much. And so on.
So, if you are the sort of family who would be full pay to begin with, you are likely facing these sorts of choices all overâyou have all the basics covered, you still have financial means left over, and basically any way you spend it (holding aside giving it to a small charity, perhaps, where the marginal utility might be pretty high actually) will have diminished marginal utility.
Which is fine, at that point you just pick whatever you like best. And if that is spending more on college, that is not necessarily worse than other ways you could spend that money.
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Your point is a good one - but there are families that would be âfull payâ, but are actually not covering college with left over financial means. Students are taking loans or parents are borrowing from retirement accounts. These are families in the âdonut holeâ, and trying to decide how much a college education is âworthâ both to them and overall. Our NPC varied so widely from school to school - some were astronomical, honestly when we first starting this process with our oldest, we were shocked. And it was those less selective, private schools that we thought might offer merit that were so pricey. They would offer these scholarships, but the bottom line was still more than we wanted to pay, significantly higher than the more selective schools. It is so difficult to determine âvalueâ when looking at college education - it is an investment in our childrens growth, it is an experience of self-discovery and it provides career preparation. Impossible to quantify, yet also such a substantial investment that we have to detemine how we âvalueâ it. Yet, using the âKohls cashâ model, seems manipulative and seems to be a trick colleges are using to attract higher paying and higher stats kids, not a trick that lowers anyoneâs tuition bill.
Iâm not coming to this in a judgmental mannerâŠfor a majority of students budget is their number one factor/limiter in choosing a college. Many full pay families have a choice to pay less (e.g., attend in-state publics, merit hunt, etc.) I do agree that itâs hard to figure out which schools might give a lot of merit, which is why we see merit hunters applying to a higher than average number of schools.
It does lower tuition bills for some. The average net cost of college has declined over the last decade, because the average discount rate is in the mid 50% range now.
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Absolutely, but that means they must be spending, or planning to spend, or both, their financial resources in some other way, and that will likely also involve some sort of diminishing marginal utility.
And normally this is a form of opportunity cost question. Meaning do they want to use their financial resources for a more expensive college or something else, where they canât afford to do both. And I am definitely not saying they are wrong to choose something else, it is a very personal question.
The one thing I do think is worth knowing, though, is that sometimes paying more out of pocket leads to an even bigger subsidy. This is normally only going to be true if you get an offer from a very wealthy college, although might work out with merit at some other colleges.
So for example, Pitt in FY 2023 had about $2.8B in operating expenses spread across about 29.5K students, so about $95K/student. In-state direct COA was a little over $33K, so that was a little under a $62K/student subsidy, and again this doesnât include capital costs. So not bad.
Duke, though, had operating expenses of about $3.44B, which across about 16.8K students is about $205K/student, which was about $122K subsidy even at full pay (direct costs) of about $83K.
OK, so on the one hand, Duke full pay was $50K more/year than Pitt in-state. However, not only did Duke return that extra $50K in operating expenses per student, it added another $60k or so of additional subsidies (in these terms). And again this doesnât include capital costs.
But is whatever Duke is buying with all that extra money worth $110K more/year in actual value to the student? Or even $50K more?
Very personal decision, of course.
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I agree with your points. We ran into a situation with our youngest - offered full ride (all expenses, housing, books) at honors college in a state college in neighboring state with highly ranked program in their area of interest. They were excited, but then they were offered admission into a highly selective LAC that meets need, and gave them an offer that we could afford without debt or hardship. 
Yes, itâs more expensive than free - but we are comfortable with the decision and they are having a wonderful experience. We know what we are paying for, and clearly see the value - having nothing to do with rankings, prestige etc⊠The day to day experience has been exceptional for my student.
Every family has to decide for themselves how to spend money, but the thing that bothered me about this article was what I said above - it seems like the schools are trying to âtrickâ families, into assigning value or prestige to the school that is trying to build a brand, rather than actually saving families money. When we first started looking at schools, people suggested that we âchase meritâ, because we had a clear budget - but we found it seemed like a rabbit hole, not what was promised, and our kids found better âbargainsâ in other ways. I understand that some people have different experiences and do find value in the âmeritâ available from these schools. There is a path for everyone
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Yes, totally agreed. Iâm fairly unromanticâsome would say cynicalâabout the economics of college, so to me it largely does not matter what they call a discount off full list price. And I do think it is good to know that if you are a competitive applicant for some pretty selective colleges, there are probably quite a few somewhat less selective colleges that might offer you a substantial discount, sometimes even stackable with need.
But then you should definitely put aside any labels and just try to understand what you would be getting for how much, and then pick whatever you see as your best offer. Which may not be what someone else would pick in your shoes, and that is totally fine.
Indeed, the big differences in average spending per student can be worth knowing about, but colleges also decide to spend their resources in different ways. So if College A spends $150K/student, but only like $50K in ways you would care about, and College B spends $100K/student, but more like $75K in ways you would care about, of course you could choose College B. Indeed, you might well pay more out of pocket for College B.
And although that is a pretty cold way of putting it, to me this is actually the fun part, figuring out which colleges prioritize the things you (or your kid if you are a parent) would actually value the most. And then you apply to a balanced list of those, get some affordable offers, and pick your favorite. And if you have done the work up front, hopefully they are all good choices.
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One of my kids was accepted to a LAC that offered $25k/year merit and to fly them out for an accepted students event. I was so impressed with that generous offer about the weekend on the school. It made me feel like the school really cared about the students. Many of the students at the event did not end up choosing that school and it seemed like Skidmore was the preferred choice of many.
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Of course, most prospective students are choosing between colleges that spend more like $10k to $20k per student, not $100k to $150k per student.
These spending analyses often devolve into an examination of how many angels can dance on a pin. Restricted funds (at some colleges, a very significant portion of the endowment)- you canât spend money on more faculty in Fine Arts from a fund set up to support foreign language or nanotechnology. A college with an arboretum which is not adjacent to campus- that benefits the botany majors, but most students will never step foot in the place, and indeed, are surprised to discover (often once theyâve graduated) that it exists. Medical education is expensive; business schools are cheap. Divinity schools are cheap; grad programs in library science and social work are cheap. So comparing average spend-- how does that help?
I find these discussions not as helpful as prospective parents want them to be. And yes, the disclaimer âyou should research whether the spending is in areas which will benefit your own kidâ. But then why bother comparing apples to kiwis to bananas in the first place? These averages really donât tell you much.
And then the entire bucket of capital spending⊠a public U which uses bond funding for construction of new dorms or a stadium vs. a private U which gets a multi-year gift of $50 million for a new dorm- which is âbetterâ? Does it matter?
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Absolutely. And in many cases still providing a fine education for willing students.
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So although I agree one has to be cautious, one possible reason to look at something like average spend per student would be if you donât in fact know what you will want to be doing in college (what major, what activities, what housing and dining plans, and so on). There can be exceptions, but the higher-resourced colleges tend to spend at least a lot on most things that will help them compete for some students. A lower-resourced college may have to make more tough choices about whether to really be competitive in various different ways.
But again if you have a clear idea of at least the plausible range of things you care about, you can then make some choices. Like a competitive engineering program can be expensive, so if you donât care about engineering, you can be free to look at colleges with little or no engineering. Although maybe some will be wealthy enough overall it doesnât matter. And so on.
I agree that comparing Southern CT State to Yale will reveal big differences in spend per student. But I donât think many people need to do the heavy lifting on the finances to figure that out.
And the contortions to compare Dartmouth (with a med school) to Princeton (no med school) is- in my mind- not worth the trouble. A- because the differences in student experience in these places has nothing to do with money, and B- because a student with a strong preference for one or the other is not likely to be swayed by the spending analysis.
There are MUCH better things to look at IMHO, which most people canât be bothered to doâŠ
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What do you see as the most important things to look at?
What is required to graduate with honors⊠research paper with a faculty supervisor or just a solid GPA? Or does everyone have to do a senior thesis to graduate? College touts a consortiumâŠhow many students actually manage to schedule classes at the other colleges? College touts a combined Bachelorâs/Masters programâŠhow many actually complete it, and are these students actually taking graduate level courses in the last year or just racking up more credits without an increase in rigor? College brags about the number of study abroad programsâŠare these courses taught by actual faculty in an actual overseas university, or are they âletâs explore Florence togetherâ courses taught by locals who happen to be fluent in English? Etc.
And Clery reporting. What does the student newspaper say about a recent allegation of sexual assault and did the university involve law enforcement or try to sweep it under the rugâŠ
To me, these are meaningful data points. The fact that Swarthmoreâs endowment is bigger than Bryn MawrâŠI think itâs somewhat irrelevant.
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