Category Archives: Education (higher ed)

Deciphering Higher Ed Statistics

Last week at a State Council of Higher Education for Virginia (SCHEV) board meeting, board member Heywood Fralin launched into an impromptu digression on a topic of great frustration to him: the claim that for every dollar the General Assembly has cut in state support to higher education, state colleges and universities have increased tuition by two dollars.

“Reports about tuition increases lack perspective,” said Fralin, a successful businessman and former head of the University of Virginia Board of Visitors. The two-for-one claim might reflect reality if you pick 1996 as a starting date, he said, but if you select 2001 as the starting date, you would see a one-for-one match between state cuts and tuition increases.

Fralin was correct in pointing out that it matters which start and end dates are used in making a statistical analysis. But was the year 2001 any more reflective of reality when analyzing the impact of state budget cuts on tuition than the year 1996?

The two-for-one claim likely originated in a presentation by fiscal analyst Tony Maggio at a House Appropriations Committee retreat in November 2016. At that event, Maggio shared the following chart:

Translator key: UG = undergraduate, GF = General Fund, FTE = Full-time equivalent, T&F = tuition & fees, I/S = In-State, O/S = Out-of-State. Maggio’s bottom line: “Essentially, in-state tuition grew $2 for every $1 loss in General Fund.”

By Maggio’s calculation, state support per in-state student (nobody is terribly concerned about out-of-state students) shrank by $1,634 inflation-adjusted dollars between 1996 and 2015. Over the same period, average inflation-adjusted tuition & fees increased by $3,186, almost twice as much.

Legislators picked up this factoid during the 2017 General Assembly session. During a press conference highlighting several bills designed to reign in runaway tuition increase, Sen. Bill DeSteph, R-Virginia Beach, declared, “For every dollar we cut, they raise tuition two dollars.” The claim was repeated in newspaper ads paid for by Partners 4 Affordable Education (a Bacon’s Rebellion sponsor). I’ve repeated the number myself on this blog.

A March editorial in the Virginian-Pilot, cited by Fralin, took exception to the two-to-one meme.

When an advocacy group recently placed newspaper ads and op-eds asserting that Virginia colleges raise tuition $2 for every $1 dollar of state funding cuts, it was the wrong thing to do. It was misleading to the point of being false.

Over the 15-year period since 2001, there has been roughly a 1:1 correlation between state funding cuts and tuition hikes.

How do you get a figure of $2 in tuition increases per $1? By including cuts made between 1996 and 2001.

It could have been far more useful to evaluate the 15 years between 2001-2015. That would include the last two recessions, along with corresponding budget cuts and tuition increases.

It is interesting to see the Virginian-Pilot accuse the newspaper ad of being “misleading to the point of being false” for picking a start date that fit its narrative while the editorial writer did precisely the same thing! The table below (also prepared by Tony Maggio) shows how a starting date of 2001, when state support was highest, would include the cuts in state support that followed and exclude the increases that preceded it, thus biasing the findings in a totally different direction.

This graph, prepared by House of Delegates staffer Tony Maggio, shows General Fund support per in-state undergraduate student at Virginia’s public four-year institutions using a starting date of 1996. The yellow highlight (which I added) shows the starting date proposed by a Virginian-Pilot editorial writer.

The Pilot editorial writer did raise one interesting point: Perhaps comparisons should take into account the fiscal impact of the business cycle. In the writer’s view, it was important to “include the last two recessions, along with corresponding budget cuts and tuition increases.” Continue reading

Probing the Limits of Tuition Hikes at VCU

VCU is going where no Virginia university has gone before: high tuition, needy student body, low financial aid.

VCU is going where no Virginia university has gone before: high tuition, needy student body, low financial aid.

Virginia Commonwealth University is pondering a tuition increase of between 3% and 5% — over and above a 2.8% increase for the current academic year — to compensate for an $8 million reduction in state appropriations and a 3% salary raise authorized by the General Assembly, reports the Richmond Times-Dispatch.

Meanwhile, the university plans to hire a firm to recruit more international students to bolster revenue with lucrative out-of-state tuition payments. (The total cost of attendance for an out-of-state student is about $19,000 higher than for an in-state student).

If the VCU board of visitors OKs the tuition hike, Virginians will get to observe an interesting experiment in higher-ed economics — how high can a second-tier university push tuition before diminishing enrollment? Is there an upper bound to the cost of attendance at which point students say, “No more!”?

VCU has increased its tuition aggressively over the past decade. By the 2015-16 academic year, the Richmond university had the second highest in-state cost of attendance of any public, four-year institution in the state: $26,700. That was higher than the University of Virginia’s and second only to the College of William & Mary’s. Likewise, VCU’s out-of-state cost of attendance, at $48,500, was the third highest. (I draw these numbers from the SCHEV’s higher education database.)

Two Virginia universities with stellar national reputations, the University of Virginia and the College of William & Mary, arguably have the latitude to boost their tuition & fees should they choose to do so. Perceived as near-Ivy League in quality, they likely could get away with charging near-Ivy League prices. Virginia Tech is not quite in the same league, but its undergraduate engineering school is one of the top rated in the country, so the institution probably has some pricing leeway, especially considering that its cost of attendance is lower than the state average.

Although VCU has a rising reputation among state universities, it has not reached the rarefied atmosphere where it can charge top dollar. Demand for a VCU education is more “elastic,” meaning that students are more sensitive to price increases. Here’s my question: Will higher prices at VCU push down enrollment by discouraging students from applying?

The chart below compares VCU to two peer institutions — big research universities located in large metropolitan areas — George Mason University and Old Dominion University — and adjusts the sticker price by the amount of financial aid provided.

“Financial aid per student” was derived by dividing total in-state financial aid by total in-state undergraduate enrollment. All numbers are for undergraduate students.

VCU is not a bargain: Its net cost of attendance per year is almost $2,500 higher than George Mason’s and about $11,000 higher than Old Dominion’s.

Now consider that VCU draws from a less affluent demographic base than, say, UVa or W&M. Sixty-eight percent of its students graduate with debt. Indeed, 29% of VCU students receive federal Pell grants reserved for lower-income students. Needless to say, these students are highly price sensitive.

How much in higher expenses can VCU’s less-affluent demographic absorb? At what point will enrollment numbers start declining? VCU’s board of visitors seems determined to probe the outer limit. Continue reading

What Does SCHEV Do? More than You Think.

Think of SCHEV as the Commonwealth Transportation Board of higher ed -- but with bigger staff and more responsibility.

Think of SCHEV as the Commonwealth Transportation Board of higher ed — but with bigger staff and more responsibility.

Someone asked me the other day what the State Council of Higher Education for Virginia (SCHEV) does. It monitors and coordinates the state’s public universities, I said. But what does it actually do, my friend said. Well, I replied, it puts together a strategic plan for higher education, and it maintains a lot of databases, and conducts a lot of analysis. But does it actually have any power, my friend persisted.

Well, I’m just a couple of months into covering higher education as a beat, and I’m still learning. But during a board meeting held at the Virginia Military Institute in Lexington, I learned yesterday of at least one substantive power SCHEV exercises. Colleges and universities wanting to implement new academic programs must obtain SCHEV approval. And the organization does not rubber stamp requests.

Three proposals came before the Council yesterday — two were approved but one, an Old Dominion University request to launch an M.S. program in sports management, was kicked back to the university for re-tooling.

The Council approved a request by Tidewater Community College to establish an Associate of Fine Arts degree.  The degree is designed specifically to ease the transfer of TCC students to Virginia Commonwealth University’s Bachelor of Music Program. The new degree will allow students to complete their bachelor’s degree with an estimated 124 credit hours rather than the 144 that would have been required otherwise. Those 20 credit hours represent a significant savings in time and tuition to the transferring student, and the program advances SCHEV’s goal of providing a lower-cost pathway to a B.A. degree than a full stint at a four-year institution.

The Council approved a similar J. Sargeant Reynolds Community College program providing an Associate of Science degree to community college students seeking to earn a science degree at a four-year institutions. The logic was similar: to grease the transition between community college and four-year college.

But the ODU sports management program encountered heavy skepticism in SCHEV’s Academic Affairs and Planning Committee, and that committee recommended that the program not be approved at this time.

ODU has long offered a physical education degree with a concentration in sports management. But the university wanted to expand the concentration to a standalone program because sports management needs a pedagogically distinct curriculum. Additionally, claimed ODU, there is a strong industry demand in Hampton Roads for master-level graduates in sports management.

But SCHEV staff concluded otherwise, primarily on the grounds that no documentation exists of the proffered demand in the Hampton Roads sports industry. Moreover, a 2015 study of sports management master’s degree programs generally found that not only were sports management graduate degree holders earning less than other graduate degree holders, but they were earning less than those with a bachelor’s degree.

Rather than rejecting the request outright, the SCHEV board asked ODU to re-try to strengthen the program. (For details, see the SCHEV board’s March agenda book, beginning page 26.)

Thus, dear reader, while Virginia does maintain one of the most decentralized systems of higher education in Virginia, the state oversight body is far from toothless. Colleges and universities can not create expensive new programs, departments and schools without SCHEV’s blessing. Staff analyzes the student demand and market demand for each request and examines possible duplication with programs at other institutions to ensure that the investment of resources is justified. In that way, the Council is comparable to the Commonwealth Transportation Board, which has the final say over transportation funding projects.

Furthermore, SCHEV’s powers and prerogatives will expand this year thanks to 12 new responsibilities assigned it by the General Assembly. Most are arcane items that would mean little to the general public. But at least one will give the Council a significant role in economic development: developing the Commonwealth Research and Technology Strategic Roadmap. This planning tool will identify research areas worthy of economic development and institutional focus. Priority projects will receive grants from a $2.8 million funding round this year from the Commonwealth Research Commercialization Fund.

Every arrangement has its advantages and disadvantages. Virginia’s decentralized model of higher ed certainly has  flaws — and I will not hesitate to point them out when I encounter them. But by common estimation, Virginia has one of the best, if not the best, systems of higher education in the country. The SCHEV model of measuring, monitoring and lightly regulating Virginia’s colleges and universities has much to recommend it.

Virginia Higher-Ed System Rated Tops in Country

Virginia is the best state for higher education in the United States, according to a ranking by Smartasset, a financial website. Last year, Virginia ranked second, behind California. States the website:

Virginia … effectively educates its students. It has one of the highest average graduation rates in our study (70%). And the average 20-year return on investment for graduates is $442,660. That’s the fourth-highest ROI in our study. For 2017, both the University of Virginia and the College of William & Mary rank among the top 10 public universities in the nation, according to U.S. News & World Report.

The survey uses multiple metrics, including the undergraduate graduation rate, the average net price, the 20-year return on investment, and the student-faculty ratio. Because each factor is weighted based on each school’s total undergraduate enrollment, larger schools have a greater impact on the overall average in every state.

Bacon’s bottom line: While the flagship institutions of UVa and William & Mary obviously contributed to the high score for Virginia’s system of higher education, the ranking methodology counted the big schools the most, and that’s a credit to Virginia Tech, George Mason University, Virginia Commonwealth University, and Old Dominion University.

This blog tends to focus on the failings of Virginia’s colleges and universities, especially on the metric of affordability. Surveys like this provide a useful reminder that higher education systems across the country have their imperfections, and that Virginia’s flaws, as glaring as they might seem to us, are less grievous than those in other state systems.

That’s really damning with faint praise, isn’t it? OK, I’ll come out and say it, despite its blemishes, Virginia’s system of higher education is actually p-p-p- — hold on, I know I can get it out — p-p-p pretty good.

For-Profit Colleges and the Student Debt Apocalypse

Graduates from for-profit colleges account for a disproportionate share of student loan defaults.

Graduates from for-profit colleges account for a disproportionate share of student loan defaults.

Tressie McMillan Cottom worked as an enrollment officer at two for-profit technical colleges before she went on to earn a PhD., join the faculty of Virginia Commonwealth University, and write a book, “Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy.”

Cottom says that for-profit colleges get one important thing right: They invest resources in the front-end process of helping students enroll: everything from applying for financial aid to having their textbooks waiting for them on the first day of class. But she, like many other critics of for-profit education, is concerned by the high indebtedness and high default rate of students. Those who attend for-profit colleges represent only 26% of all borrowers but account for 35% of federal loan defaults.

The high default rate is a sign of the trouble graduates have finding quality, high-paying jobs, Cottom told Karin Kapsidelis, higher ed writer for the Richmond Times-Dispatch. For-profit colleges are a varied lot. While some deliver value for the students’ investment, others are marketing machines designed to enroll students and collect revenue with little heed to results. “The profit motive changes everything. It means that instead of helping students, you’re selling students.”

The industry took off when the financial sector figured out how to make money from it, Cottom says. Wall Street underwrote for-profit educational enterprises to “monetize” peoples’ aspirations and their faith in education as the way to improve their lives.

Writes Cottom in the introduction to her book:

Lower Ed refers to credential expansion created by structural changes in how we work, unequal group access to favorable higher education schemes, and the risk shift of job training, from states and companies to individuals and families, exclusively for profit. Lower Ed is the subsector of high-risk post-secondary schools and colleges that are part of the same system as the most elite institutions. In fact, Lower Ed can exist precisely because elite Higher Ed does. The latter legitimizes the education gospel while the former absorbs all manner of vulnerable groups who believe in it: single mothers, downsized workers, veterans, people of color, and people transitioning from welfare to work.

Bacon’s bottom line: No question, the high default rate is a huge problem — student indebtedness is creating a new class of Americans who have little hope of paying back their tuition and, as the law stands now, little chance of discharging their debts through loan forgiveness or bankruptcy like overextended homeowners can do. But I am concerned by how many people, including, Ms. Cottom, it seems, blame the problem on for-profit institutions and the profit motive.

As the Kapsidelis story points out, for-profit colleges account for 35% of all federal loan defaults. But 65% can be traced to non-profit colleges! The driving force behind high defaults isn’t the for-profit status of the school, I would suggest, but the socioeconomic status of the student. Students from poor families are more likely to drop out and default on their debt than students from better-off families. Historically Black Colleges and Universities (HBCUs), which are non-profit, have high default rates, too, as do institutions that cater primarily to lower-income whites and Hispanics.

For-profit institutions are motivated to accept marginal students in order to fill seats and generate revenue. But guess what, so are many non-profit institutions. They, too, have expenses to cover, salaries to pay, and bonds to finance.

The problem, I would suggest, isn’t for-profit versus non-profit, it’s the erosion in lending standards. Anyone who wants a student loan can get one. Because the repayment risk is transferred to the federal government, the college (be it for-profit or non-profit) has no skin in the game. If a college student is unprepared for college, defaults after dropping out, or fails to find a job, the institution suffers no ill consequence. Why would we expect any other result?

 

In Defense of Out-of-State Students

There are reasons to value foreign and out-of-state students over and above the tuition revenue they bring in.

There are reasons to value foreign and out-of-state students over and above the tuition revenue they bring in.

As recently as the 1990s, the Commonwealth of Virginia did something that would be considered unthinkable in today’s political environment — it subsidized 25% of the tuition of out-of-state students enrolled in Virginia’s public colleges and universities. Legislators believed there was a value to attracting bright young people to the Old Dominion.

In two-and-a-half decades, says Peter Blake, director of the State Council of Higher Education for Virginia (SCHEV), public policy has done a U-turn: Now legislators demand that out-of-state students underwrite the education of Virginians. Students from beyond the state line pay in tuition about 160% of what it costs to educate them.

The treatment of out-of-state students has always been a prickly public policy issue, especially at Virginia’s elite, highly selective universities that turn away many Virginians. Every slot given to an outsider is one less for a Virginian. As tuition at state institutions of higher education has ratcheted ever higher over the years, making the cost of college increasingly burdensome, out-of-staters are valued for the revenue they generate.

But there are non-pecuniary reasons for recruiting non-Virginia talent. Students from other parts of the country and even overseas bring diverse perspectives that enrich the educational experience of home-grown students — what economists call the “peer” effect. They also tend to have higher SAT scores, which boosts the average SATs for the student body, lending prestige to an institution.

And now they bring in more tuition revenue than they cost. Indeed the impulse to recruit out-of-state students is so strong that universities reduce tuition through the back door — by providing financial aid to lower income students — to entice less-affluent students. The average amount of aid granted to out-of-staters exceeds the average amount awarded to in-state students at every public four-year institution by a wide margin, inspiring bills in the General Assembly to cap or limit that aid in the hope of providing tuition relief for Virginians. State law already prohibits colleges from using revenue from in-state tuition to fund aid to out-of-staters, but measures proposed (but not yet passed) by the legislature would enact even tighter limits.

The logic for capping aid to out-of-state students is self-evident: It would free up resources to make higher education more affordable for Virginians. (I discussed this issue in the previous post.)

Reasons for supporting financial aid to out-of-staters are more subtle. Think of higher education as an industry and degrees as a product, suggests Blake. “Higher ed is a great export product.” Out-of-state students pump money into the Virginia economy.

Another advantage is that many out-of-state students stay in Virginia. Some 20% stick around at least 18 months, according to a study conducted several years ago. Higher ed is a great tool for recruiting human capital to the state, says Blake. “Virginia’s economy doesn’t end at the border.”

Virginia is part of a complex, inter-connected national economy, adds Tod Massa, SCHEV research director. “We can’t think strictly in isolationist terms.”

More Fun with Higher-Ed Numbers: Financial Aid

Financial aid per student at Virginia's public, four-year colleges is higher for out-of-state students than in-state. But given high out-of-state tuition, their need is greater.

Financial aid per student at Virginia’s public, four-year colleges is higher for out-of-state students than in-state. But given high out-of-state tuition, their need is greater.

Last month I published tables showing that public Virginia colleges and universities give considerably more financial aid per student to out-of-state students than in-state students. While acknowledging that out-of-state students pay higher tuition & fees and may have greater need for assistance, I raised the question, “Shouldn’t it be the other way around? Shouldn’t Virginia universities be giving more assistance to Virginia students?”

Nothing is ever as simple as it seems. Peter Blake, director of the State Council of Higher Education for Virginia (SCHEV) invited me for a sit-down meeting to discuss the topic of financial aid with his staff experts. In light of what I learned, the story gets more complicated. I’m not sure the bottom line changes, but it’s always good to understand what goes into the data.

The figures I published last month represented “gross” financial aid provided by Virginia institutions from their own funds (not including federal grants and loans or private scholarships). But that “gross” number lumps together several types of assistance. It includes loans that students must repay (which, though helpful, is not as beneficial as a grant or scholarship). It includes work arrangements, in which students actually earn their aid. And it includes athletic scholarships and waivers for military personnel. In terms of impact, the latter two categories of aid are the most important.

As a rule, universities hand out athletic scholarships to recruit top talent regardless of where the athlete is from. “If you’re trying to get the best athletes, you’re residency blind,” says Lee Andes, SHEV’s assistant director for financial aid. Because out-of-state students pay higher tuition than in-state, an athletic scholarship for an out-of-state student is more valuable, and it inflates the numbers for out-of-state aid. But athletic scholarships are doled out by coaches, not admissions officers.

Also, federal law mandates that colleges across the country provide in-state tuition to military personnel, even if their official domicile is in another state. For accounting purposes, these tuition breaks are classified as “waivers,” and they are counted as out-of-state financial aid.

For purposes of comparing in-state versus out-of-state financial aid, SCHEV calculates what it calls “net” Cost of Attendance (COA). Taking into account aid that college admissions have discretion over, SCHEV excludes scholarships, military waivers, loans and work.

Let’s walk through the numbers step by step so you understand where they come from. First we have the Gross Cost of Attendance. This “sticker price” is usually what you see quoted. Here is the breakdown by public, four-year institutions for the Gross Cost of Attendance for one year:

Just as many auto buyers don’t pay the full asking prices, many college students don’t either. Here’s the annual Net Cost of Attendance at each institution after adjusting for institutional financial aid. (These are average numbers. Some students will pay the full freight and others will pay significantly less, generally based upon their financial need.)

Continue reading

Tech, Carilion Launch VTC Innovation Fund

The VTC Innovation Fund will build the innovation ecosystem centered on the Jefferson College of Health Science.

The VTC Innovation Fund will build the innovation ecosystem centered on the Jefferson College of Health Science.

Virginia Tech and Carilion Clinic have teamed up to form a $15 million venture capital fund in the hope of accelerating the growth of biotech companies taking root around Blacksburg and Roanoke, reports the Roanoke Times.

The VTC Innovation Fund aims to close seven to 10 deals over the next 10 years. By leveraging its money from other financial sources, managers hope the average startup will be able to raise between $2 million and $10 million. About 60% of the deals will be in life sciences. Although the main focus will be the Roanoke-Blacksburg area, the fund will consider investments elsewhere in Virginia or enterprises with strong ties to Tech or Carilion.

“When we looked at our grand vision going forward, we see that the innovation ecosystem has a few holes in it,” Virginia Tech President Timothy Sands said. “One is in the venture capital area. It’s not the only one, but it’s one we identified that we could do something about.”

Virginia Tech and Carilion are partnering to build a medical school and research institute in Roanoke, the Jefferson College of Medical Sciences, which stands at the center of what they hope will evolve into a biomedical industry cluster. Tech also is building a cutting-edge interdisciplinary program in neuroscience.

The Tech/Carilion duo is following a parallel path to Inova Health System in Northern Virginia, which is collaborating with George Mason University and the University of Virginia to build an biomedical cluster at the Center for Personalized Medicine. Inova has pledged to put $100 million in to venture capital in support of the innovation ecosystem there.

A third partner in the VTC Innovation Fund is Middleland Capital, a Washington, D.C.-based investment firm, which will manage the Roanoke fund and invest $500,000 to $1.5 million of its own capital, reports the Washington Business Journal. Connections with experienced Washington-area venture investors likely will provide a depth of expertise and access to outside capital that entrepreneurs in the Roanoke-Blacksburg area previously lacked.

“We want to focus on the absolute best and the absolute brightest and the shining stars of the region,” said Scott Horner, managing director of Middleland. “We want groups from outside the region to be able to look here and say, ‘Yes there is good stuff in the region.’”

How Much in Tax Breaks Does Harvard Really Need?

Harvard, which has a $36.5 billion endowment (2015), is the biggest beneficiary of any university of the U.S. tax code.

The 281 public universities studied by the Nexus Research and Policy Center received $7,000 a year per student in state support on average over the past three years. But that sum pales in comparison to the indirect support, in the form of tax breaks for endowments, enjoyed by the larger private universities.

Gifts to university endowments are exempt from taxation as are earnings of the endowments themselves, wrote Mark Schneider and Jorge Klor de Alva in a Washington Post op-ed last week. Over the past three years 52 private universities with endowments of over $1 billion have received an average annual taxpayer subsidy per student amounting to more than $26,000 — almost four times as much.

Not only do the wealthiest private schools (and a handful of richly endowed public institutions such as the University of Virginia) receive the biggest tax boosts, the riches are far more likely to be bestowed upon the offspring of America’s highest-income families.

Write Schneider and de Lava:

Students from families in the top 1 percent of the income distribution are 77 times more likely to attend the most elite universities (the eight Ivy League colleges, plus four others) than are students from families in the bottom 20 percent of the income distribution. …

One consequence of that disproportionate flow of taxpayer dollars to the elite private universities is that last year, according to federal statistics, the billion-dollar-plus campuses were able to spend over $41,000 on instructional services for each student. In contrast, regional campuses spent only about a quarter as much ($10,700) on instruction per student.

Bacon’s bottom line: Liberals and progressives focus on the U.S. income tax code as a tool for income redistribution and economic leveling. The problem is that raising income tax rates engenders tax-avoidance behavior, creates disincentives to work, and does not result in the hoped-for gusher of tax revenue. Perhaps egalitarians should redirect their attention to the portion of the U.S. tax code that favors university foundations instead.

Because of the tight correlation between income and SAT scores, the nation’s top universities cater largely to the “one percent.” Graduates of elite institutions enjoy not only the advantage of higher family incomes than other Americans,  better high school educations, and the opportunity to forge relationships with the plutocrats of the future, they attend institutions where massive tax privileges lavish them with the richest of academic and campus experiences.

Consider this: Harvard’s $36 billion endowment (2015 numbers) has the capacity to generate $2.2 billion a year in income (assuming a modest 6% return on investment). Assuming the top corporate tax rate of 35%, that amounts to a tax subsidy of about $750 million a year. That is comparable to the $844 million in state support Virginia provides to UVa, Virginia Tech, Virginia Commonwealth University, George Mason University and Old Dominion University combined. And that doesn’t include the tax breaks — a double-dipper benefit — for the alumni and philanthropists who donate to Harvard!

As Malcom Gladwell observes in his widely downloaded “My Little Hundred Million” podcast, a handful of elite universities receive the lion’s share of donations and benefactions. Gladwell’s focus is on the philanthropists, as opposed to the tax breaks they enjoy, but the point is much the same. An extra $100 million donated to Harvard or Stanford will create a tiny incremental gain to society. But the same gift donated to a middling institution can have a tremendous impact.

Why does U.S. tax policy encourage the continued showering of benefits upon the cognitive/income 1%, while the institutions catering to the rest of America are left scrounging for  crumbs? If liberals and progressives — and conservatives, too, because we don’t like to live in an oligarchy any more than anyone else — want to even the playing field, I would suggest that it makes far more sense to target tax breaks for rich endowments.

Virginia Colleges Spend Millions on Federal Regs

Federal regulations add measurably to the cost of running Virginia colleges and universities.

Federal regulations add measurably to the cost of running Virginia colleges and universities.

The University of Virginia estimates that it spends $20 million a year complying with unfunded federal mandates, just for its academic division, reports Karin Kapsidelis with the Richmond Times-Dispatch. The College of William & Mary estimates its compliance costs at $4.5 million to $6.7 million, and Virginia Commonwealth University puts the number at $13 million.

The estimates come in response to a Congressional request for information as part of a review of federal review of unfunded mandates. Higher ed institutions say the costs were likely underestimated due to the short turnaround time for providing the figures.

While universities have blamed federal regulations in the past for pushing up the cost of higher education, Virginia institutions are not necessarily eager to roll them all back. Reports Kapsidelis:

“There are rules that if no one else put them on us, we would put them on ourselves,” said Samuel E. Jones, W&M’s senior vice president for finance and administration.

“There are some requirements we might want to take a hedge clipper to and not an ax,” said Gary Nimax, U.Va.’s assistant vice president for compliance. …

“We’re just waiting to see what might change,” said Nimax. … . “The idea of having fewer regulations is an attractive one.” But U.Va. would like to see the focus on cutting “the non-value-added pieces of these requirements,” he said.

Prime offenders are the Clery Act, which requires extensive reports on campus crime statistics that run nearly 1oo pages long, and Title IX, which forbids discrimination on the basis of sex in higher ed. The initial focus on campus athletic programs under Title IX has expanded to the regulation of student sexual behavior.

Bacon’s bottom line: For purposes of comparison, the University of Virginia generates roughly $500 million a year in tuition revenue and gets another $150 million in state support. The $20 million regulatory burden amounts to 3% of those two sources of revenue. An argument can be made that federal regulations do contribute to the mushrooming costs of higher education, but insofar as universities’ priorities mirror those of the federal government — how many institutions would dismantle their Title IX bureaucracies? — it would be unrealistic to expect that deregulation would save much money.

Update: In an article about the growing self-censorship of faculty members due to fear of transgressing some politically correct taboo, the Wall Street Journal quotes Dale Carpenter, a Southern Methodist University law professor:

Universities have developed entire bureaucracies to combat the problem of discrimination and a hostile environment. Those bureaucracies are needed but the also tend to feed on their own momentum.