Universities Are Greedy

We tend to give big-time research universities a free pass regarding their financial decisions because of all the perceived good they do for the world.  That’s unfortunate, because much like a CEO whose primary goal is to raise the company stock price, many universities don’t have the public’s best interest in mind. Instead of providing the best product at the lowest possible price, most universities are concerned with maximizing their appeal to donors and future students (rather than current students.)  All of this is apparent in Kevin Carey’s Washington Monthly piece (and his follow up blog post) on the  spanking new, uber-thrifty University of Minnesota-Rochester campus.

The whole thing is run on a one-time $6 million increase to the University of Minnesota’s annual budget. The marginal cost of expansion all comes from tuition.

That’s because UMR doesn’t spend any money on stuff like student housing, sports teams, theaters, gymnasiums, libraries, and other expensive things that tend to accumulate at older universities over the years. When nearby Winona State University decided it needed a new library a few years ago, it spent $18 million on a brand-new building staffed by 17 people and filled with 220, 000 books. UMR hired one librarian and installed wi-fi in a room full of comfortable chairs.

As nice as the UM-Rochester story is, the Winona State example is the norm because fancy libraries and athletic championships attract sweet sweet donations.   The cost is then passed on to students, the majority of whom would surely prefer a decrease in extravagant buildings if it was accompanied by a decrease in tuition.  Life would be a lot easier if students could keep their money and decide how they want to use it to improve their lives at college.

(I realize this is the argument conservatives make about our entire tax system. The difference is that the government can arguably use it’s size and organizational ability to create economies of scale and provide services that no other entity could. A majority of people may in fact get more than a dollar worth of benefits for every dollar they pay in taxes.   The same argument cannot be made for college students reaping the benefits of a new football stadium. And although  many of these big expenses are specifically earmarked in donations, at some point that money would have ended up  in university coffers, 100% unappropriated)

One final point. When I was a freshman first-year students were required to purchase a meal plan. The most popular plan was the “points” plan. For $1800 a student could purchase 1600 points. At any campus dining location points were interchangeable with dollars.   One point equaled one dollar. The school was effectively forcing freshman to spend money purchasing a smaller amount of an equivalent currency. Why? So they could add another hidden tuition cost. Universities will do whatever they can to get their hands on more money.

We don’t tend to think of universities as “evil” in the way we do about mega-corporations. But they are.  They just happen to use a high percentage of their spoils from evil deeds for good causes.  Until people begin demanding accountability, tuition will continue to fund extravagant projects with benefits dwarfed by the costs they impose on students.

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