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What Are You Really Paying for at College

September 12, 2020 by Charles Leave a Comment

It’s no secret that college tuition has increased dramatically over the last few decades. People today pay far more for both public and private college than they did only a few decades ago, even accounting for inflation. However, even with the more public attention on college costs, it’s common for people not to really know what their money goes toward. When you pay for college, what does your tuition actually pay for? Here’s what you’ve been looking for.

What Does Your College Tuition Actually Pay For?

The Breakdown Per $100

Although colleges don’t usually give this information to students directly, they do still report it to the United States Department of Education. The Department of Education then makes that information public so people can analyze it and understand a little bit more about how these colleges work.

When you start to look through this information, you’ll be able to get a better understanding of the way this money works out. Here’s the breakdown in terms of how much colleges spend per $100.

For every $100 in tuition, on average $61.46 goes to expenses that more traditionally correspond to educational services. This is the breakdown of that $61.46:

$15.81 – Salaries
$11.47 – General Instruction Expenses
$9.61 – Auxiliary Student Enterprises
$8.26 – Academic Support
$8.15 – Institutional Support
$4.75 – Student Services
$3.41 – Grants and Financial Aid

This means, then, that on average $38.54 of every $100 goes toward elements of the collegiate experience that don’t necessarily contribute directly to college expenses. Here’s the breakdown of that number:

$15.58 – Hospitals and Healthcare
$11.66 – Research
$6.25 – Other, Including Taxes and Liabilities
$4.52 – Public Services
$0.53 – Independent Operations

Differences in Costs Between Private and Public Colleges

As you probably already knew, public and private colleges have vastly different prices. The College Board reported that for a full-time student to attend an in-state public school, it costs on average $21,950, room and board included. The same arrangement for a private college, however, is $49,870 on average.

You can see this reflected in the way the tuition costs break down. At a public college, about $5,987.96 of your overall tuition will go to salaries. At a private school, that figure nearly triples to $15,315.08. The differences are starkest in salaries, healthcare costs, institutional support, and research.

Tuition As Part of Operating Costs

Another interesting element of tuition has to do with the percentage of a budget that tuition makes up at a college. Colleges typically can’t cover all their expenses through tuition; public colleges usually get additional government grants, while private colleges often have endowments.

In 2000, on average, public higher education establishments covered around 29.2% of their costs with tuition. However, in 2018, tuition had increased by more than 25% and public higher education establishments covered on average around 46.6% of their costs with it.

Conclusion

There are a lot of interesting things to learn about how college works in the United States from this information. With more and more people campaigning for reduced tuition and many students openly expressing frustration at the situation, it could be that people are interested in changing things up. Maybe sometime within the next few years, college will be more affordable and available for everyone.

To read more on topics like this, check out the Finance category

Filed Under: Finance

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Hey, it's Charles! And I'm the scribbler behind The Lead Belly. You might know it by its former name, Bar Belly. But since the place is inspired by the great singer, we got creative with the name. Do you remember those scenes in the movies where the theme is set to be sad and it's cold and raining outside with a slow sad song playing in the background? Yes. Read More…

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Hey, it's Charles! And I'm the scribbler behind The Lead Belly. You might know it by its former name, Bar Belly. But since the place is inspired by the great singer, we got creative with the name. Do you remember those scenes in the movies where the theme is set to be sad and it's cold and raining outside with a slow sad song playing in the background? Yes. Read More…

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