Does Undergraduate Tuition Subsidize University R&D?

Do Virginia Tech undergrads subsidize this research lab? Or does the lab subsidize undergraduate education? Does anyone really know?

It stands to reason that there should be a rational nexus between the cost of providing a college education and the tuition charged to pay for that education. If the cost goes up, tuition needs to go up as well…. And costs have been going up. Reported per-student educational expenditures at public four-year universities increased 16% from 2005 to 2015 in inflation-adjusted dollars, according to the Daily Caller News Foundation.

But Richard Vedder, director of the Center for College Affordability and Productivity, told the Daily Caller that financial information reported by universities is a “purposeful misrepresentation” of the true cost of educating students. “Universities are fundamentally overstating instructional expenditures and fundamentally understating research expenditures,” he said. Continued the Daily Caller:

Only 27.2 percent of full-time faculty at public universities spent nine or more hours a week instructing students in the classroom in the 2014 academic year, down from 39.4 percent in the 1989 academic year, according to a 2014 survey by the Higher Education Research Institute.

“Research is systematically favored over teaching, so it is not surprising that teaching loads have been falling, or that the time freed up is used for research,” the Center for College Affordability and Productivity wrote in a 2010 report. …

Charles Schwartz, a professor emeritus at the University of California at Berkeley, also believes departmental research has a significant impact on the cost of undergraduate education.

His calculations indicate that the actual cost to educate an undergraduate student in the University of California system is $7,500 per year, far less than the $13,222 in tuition and fees charged to in-state students in 2013-14.

Bacon’s bottom line: If the Vedder/Schwartz critique is correct, undergraduate students are subsidizing university R&D activities to the tune of billions of dollars per year. In the process, they are taking out ever bigger student loans, selling themselves into debt peonage, and stoking one of the nation’s great social crises.

While it very well might be true that undergraduates are subsidizing R&D — there is no question that the highest-paid faculty are teaching less — I don’t know that to be the case. At meetings of the State Council of Higher Education for Virginia (SCHEV), I have heard the opposite argument being made, that university research subsidizes general education. To the extent that federal grants provide funds to cover research “overhead,” there may be truth to that view.

Here in Virginia, we are schizophrenic on the issue. We want our kids to get the best and least expensive undergraduate education possible. At the same time, we look to our research universities to contribute to economic development through R&D and the local jobs and investment that spins off from that R&D.

Here’s the problem: We can’t hope to strike the proper balance if we don’t know who is subsidizing whom. Higher-ed accounting is a specialized discipline and opaque to outsiders. We are fumbling in the dark. We need more information. The higher-ed establishment has no interest in providing that information, which can only lead to unwelcome calls for change. Only the General Assembly can made Virginia colleges and universities cough up the data. But, sadly, most legislators don’t know what they don’t know, and none of the bills submitted to the General Assembly this year (that I’m aware of) are calling for more cost and accounting transparency.

(Hat tip: Ken Cuccinelli)