Arak Journal

The Fear of Becoming Irrelevant

By Timo Jeyarajah

How far will non-profit higher education institutions go to make a dollar? Today, colleges and universities are investing heavily in new athletic facilities and STEM buildings to pursue higher rankings on Forbes and U.S. News as means of “prestige” and “excellence” while simultaneously cutting education costs by wage reduction and curriculum digitization in efforts to maximize profits. While both of these tools are byproducts of the growing corporatization of higher education in the United States, we will be discussing what colleges seek in pursuing “excellence,” and what goes into the large and seemingly ambiguous bucket of “educational spending.”  What are the true costs of all of the money that universities are spending, and what is included in educational spending? Competition between universities is now analogous to an Arms Race, which the Oxford Dictionary defines as “a competition between nations for superiority in the development and accumulation of weapons, especially between the US and the former Soviet Union during the Cold War.” The growing corporatization of higher education has led to an arms race of competition and, more importantly, an economic crisis; this is evident in the spending habits, allocation of capital and resources, and distribution of the economic burden of college institutions.

Educational spending has long been an ambiguous term, especially at a time when institutions use tuition money in many more categories beyond education. In Christopher Newfield’s, Unmaking the Public University, he articulates that private institutions can spend ten times as much per student than public institutions (3). However, this statement is inherently vague because Newfield doesn’t define educational spending. In an analysis of the growing stratification between the wealthiest and poorest academic institutions in the country, Professor Nick Hillman outlines the different categories of university spending to show its association with success and economic mobility. He articulates that Education and Related (E&R) expenditures include instruction, student services, academic support services, and other core expenses inside the classroom, and they exclude research, auxiliaries (non-academic such as athletics and residence halls), and public services (Hillman 4). While people typically assume that college spending on E&R is similar between institutions, data from Hillman’s analysis show that there is a wide variation between spending at highly selective and broad access schools; “Highly selective research universities in both the public and non-profit sectors spend the most per [student] of any institutional type: $32,156 and $75,919, respectively. And public community colleges and comprehensive (BA/MA) institutions spend the least, ranging from a low of $12,747 to a high of $16,157” (Hillman 8). These differences in E&R expenditures stem from “selective colleges competing for faculty and providing robust student support services, both of which drive up college costs” (Hillman 8). While E&R-specific expenditures are driving up the cost of attending university, they’re not the only field where institutions are allocating their funds.

Universities are now in an arms race, synonymous with the Cold War, to provide the best of everything for everyone, regardless of what the cost is. As outlined in “The College Arms Race: How It Is Destroying Higher Education in the United States,” “Colleges… are spending hundreds of millions of dollars on amenities for students in order to increase their applications, enrollment, prestige, and national rankings’” (Varga 378). The demand for amenities as well as a pursuit of the most advanced facilities have created a new culture that compounds itself; as colleges increase spending on study abroad programs, athletic stadiums, and residence halls, other colleges have no other option but to respond with their own set of new, lavish expenditures. Colleges that fail to keep up with admissions, enrollment, and spending trends fear becoming irrelevant (Varga 385). Even while total college enrollment is decreasing across the country, colleges have seen a sustained increase in spending habits, even in times of recession. This scramble to stay relevant, if not to become more prestigious, is driving a stratified wedge between the most elite institutions and the larger population of broad-access institutions that can’t afford to keep up. As a result, most universities are going to their main revenue sources for the money.

The college arms race is being funded by individual students. As outlined in Varga’s work, the two main sources of university revenue are student fees and tuition, and so major increases in spending have been injected into the cost of attendance. An article from the Wall Street Journal, “Colleges Spend Like There’s No Tomorrow. ‘These Places Are Just Devouring Money,’” emphasizes how universities accommodate for their spending habits by forcing the costs onto their students. Specifically targeting public universities, whose original purpose was to educate its students at more affordable rates than their private counterparts, the article illustrates several cases in which schools are funding their lavish expenditures through the students. One notable example includes the University of Oklahoma, which “hit students with some of the biggest tuition increases, while spending millions on projects including acquiring and renovating a 32,000-square-foot Italian monastery for its study-abroad program” (Korn). Another “example of a drastic increase in tuition includes Arizona State University, which saw a  216% increase in tuition from 1999 to 2015” (Varga 380). Arizona State is not the only one at fault. In fact, “adjusting for inflation, public four-year institutions’ tuition and fees are 3.22 times higher in 2015-16 than they were in 1984-1985” (Varga 379-380). While significant spending increases are less concerning at private universities that have support through large endowments, they can be detrimental at public universities whose purpose is to educate  at a more affordable price tag.

Poorly managed spending has also driven universities into a budget crisis. An analysis from the Wall Street Journal article found that “much of the increase in outlays showed up in the hiring process, for administrators, faculty, coaches and finance experts… Salaries and benefits, which usually eat up more than half of operating budgets, rose by roughly 40% at the median flagship since 2002” (Korn). However, this information contradicts the growing trend of universities to decrease wages among professors, prioritize part-time instructors, and employ non-tenure faculty as vehicles to cut costs (Bousquet 41-42). One explanation for this overall increased spending on wages even as teaching wages decline is the rise of the college administration. “The University of Florida in 2022 had more than 50 employees with titles of director, associate director or assistant director of communications, roughly double the number it had in 2017. The school also employed more than 160 assistant, associate, executive and other types of deans last year, up from about 130 in 2017” (Korn). From these numbers, an increasingly ambiguous nature of “educational spending” becomes evident. As athletic coaches get paid nearly the same as professional coaches and universities multiply the number of “administrative” positions, the burden of their spending is piling up. At schools where athletics are prioritized above other fields, the pursuit of the next NCAA trophy has driven spending beyond the potential profits of these athletic departments. One prominent example is the University of Connecticut, which won the 2023 National Basketball Championship and yet “has received more than $35 million annually in student fees and university subsidies to stay afloat” (Korn). “Overall, the University of Connecticut’s spending rose by 73% between 2002 and 2022, far faster than enrollment grew. Much of that was driven by personnel costs, with spending on benefits more than tripling” (Korn). While the national trophy from March Madness has brought them fame and glory, this success is ephemeral, but the burden of its cost is not. Colleges are failing to turn a profit on expensive athletic programs, even when they’re successful. While Hillman’s work more clearly defined educational spending, the nature of these costs remains vague. “Schools use their own discretion to categorize spending on audited financial statements, making precise comparisons at a single school over time, or among different schools, extremely difficult. Colleges, for example, sometimes classify professors’ salaries as instructional spending one year and as research expenses the next” (Korn). Because schools have little accountability for how they track their budgets, they can mask their spending on recreation centers and athletic programs easily.

All of the new spending patterns of universities, specifically investment into new amenities, are ultimately leading towards a carefully curated “college experience.” With lavish lawns and nationally ranked football teams, universities are pouring more money into cultivating the “best four years of one’s life.” However, this notion, bolstered by commercialized practices, tends to deviate from the actual experience. In an increasingly corporate landscape where the cost of tuition is seen as an investment in oneself, students treat education as job training. In a linear framework of getting a good grade to complete a class, to finish a major, and to ultimately get a degree, there is little incentive for academic exploration. The field of higher education has seen the demise of certain academic disciplines because of growing corporatization. As Bill Readings emphasizes in The University in Ruins, departments that fail to conform to the corporate vision of an institution “can be eliminated without apparent risk to the system. This has been, for example, the fate of many classics departments. It is beginning to happen to philosophy” (Readings 33). Because universities are seeing more investment by private money than public money, they are incentivized to provide financial returns. This private funding for schools has incentivized corporate behavior, and the new university is judged by its economic contribution (Newfield 9). Rather than focusing on culture, the arms race has forced a stronger emphasis on a need for economic creation.

The economic crisis of higher education can be synthesized into two main contradicting forces. On one hand, the arms race between universities to spend as much money as it takes to remain as relevant and prestigious as possible in a transient environment has created a romanticization of the college experience through opulent amenities. However, this romanticized narrative is disconnected from the grueling truth of the college arms race: the burden of the immense spending lands on the students. Despite this, the arms race is further bolstered by the students, too. It is easy to forget that because of the increasing costs, students provide the main demand for all of the amenities (Varga 383). Varga’s work articulates just that; if students will be paying astronomic prices, why not have a nationally ranked football team and a new multi-million dollar STEM research facility? Many things that students enjoy for “free” are already calculated into the cost of attendance, and the nature of the “prestige” that they hope to obtain is bolstered by their aggregate demand for amenities. In the arms race, universities are using applicants and potential students as devices to create this so-called prestige. Driving down acceptance rates and artificially targeting specific factors to strengthen national college rankings creates a sense of prestige that in reality seems a lot more empty than one might previously think. This arms race has provided a need to reevaluate the purpose of higher education in the 21st century (Varga 387). Are we to be consumers of a corporatized education that is marketed to be the most grand and palatial experience, or are we seeking education to improve ourselves and society? Once college education is completely corporatized, we will see consumers (the students and those paying for it) assigning intrinsic value to an education that in actuality, is empty without the students themselves. This corporatization might as well be described as commodity fetishization, in which we ascribe “magic qualities” or, in this context, prestige, to a service once it has been associated with monetary value. Whether or not this description is far-fetched from the truth, the strategic marketing of institutions as they engage in an economic arms race has led universities to dump the cost of the race on their students. In exchange for an inaccurately advertised experience, the students (and potential students) provide the grunt work as prestige-building prosumers to help universities in their ultimate pursuit of capital gain and relevance in an ever-evolving, transient world.

Works Cited

Bousquet, Marc. How the University Works: Higher Education and the Low-Wage Nation. NYU Press, 2008. JSTOR, http://www.jstor.org/stable/j.ctt9qgfqr. Accessed 3 Nov. 2023.

Hillman, Nick. Why Rich Colleges Get Richer & Poor Colleges Get Poorer: The Case for Equity-Based Funding in Higher Education. Third Way, 2021. JSTOR, http://www.jstor.org/stable/resrep41752. Accessed 1 Nov. 2023.

Korn, Melissa Et al. “Colleges Spend Like There’s No Tomorrow. ‘These Places Are Just Devouring Money.’” The Wall Street Journal. Aug. 10, 2023. https://www.wsj.com/articles/state-university-tuition-increase-spending-41a58100

Newfield, Christopher. Unmaking the Public University: The Forty-Year Assault on the Middle Class. Harvard University Press, 2008. JSTOR, https://doi.org/10.2307/j.ctv1cbn3np. Accessed 3 Nov. 2023.

Readings, Bill. The University in Ruins. Harvard University Press, 1996. JSTOR, https://doi.org/10.2307/j.ctv1cbn3kn. Accessed 3 Nov. 2023.

Varga, Matthew, and Scott L. Lingrell. “The College Arms Race: How It Is Destroying Higher Education in the United States.” Counterpoints, vol. 517, 2018, pp. 377–90. JSTOR, http://www.jstor.org/stable/45178185. Accessed 1 Nov. 2023.