Delta Cost Project: Trends in College Spending

AIR is working with the Delta Project on postsecondary education costs, productivity, and accountability to examine a rarely studied aspect of higher education finance: how colleges and universities spend money. Numerous reports, commissions and articles decry rising tuitions but very few efforts have focused on postsecondary spending and how it changes over time. The Delta Cost Project believes in the importance of studying college spending and that spending can be controlled while still maintaining access and quality.

In January 2012, AIR became responsible for conducting the analytic work of the Delta Cost Project, a nationally recognized effort for monitoring and identifying revenue and spending trends in public and private higher education.

AIR works with the Delta Cost staff in developing the reports about the trends in college spending. AIR staff are also working on alternative schemes for classifying higher education institutions and on disaggregating undergraduate and graduate spending.
 

Key Findings

Findings include the following:

• The shift away from public funding of institutions continues, with most of the new money in higher education coming from tuition and fees, private gifts, and grants and contracts. Much of the new revenue is restricted by the donor, and is not available to pay for core educational programs.
• From 2002 to 2006, total spending on education and related services declined for all types of institutions except research universities. Educational spending dedicated to classroom instruction declined at all types of institutions, but spending on academic support, student services, administration, and maintenance increased.
• Students are paying more of the total cost of their education at all institutions except private research universities.
• The fastest enrollment growth is occurring at the institutions that spend the least per student and have seen little or no total spending growth over the most recent five-year period.
• At public research universities, nearly all of the revenues from student tuition increases were used to offset revenue losses from other sources, primarily state appropriations. At public master’s institutions and community colleges, all of the revenues from increased tuition during this period replaced losses from other sources.
• At private colleges and universities, tuition increases fueled increased spending.
• Over the past decade, spending per completion (certificates or degrees) has remained fairly steady at public colleges and universities, despite modest year-to-year fluctuations. From 2002 to 2006, spending per completion rose at private research universities, and declined or remained stable at private master's and bachelor's institutions.