My dad once said, “The marker of wealth today is not whether you can buy a house, but rather pay for your children’s college tuition.” Having heard the same thing from John Childs in a recent talk at Duke, I only now think my dad may have been onto something. According to the Bureau of Labor Statistics, without adjusting for inflation, college tuition increased 297 percent from September 1990 to September 2012. In another blog post, Alan Fredendall put up a neat little counter of just how much cumulative student debt is growing by the second! He also compiled a lot of great financial data from different universities here. But I only learned about these facts after my research. The real motivation of this article began with one simple, nay naïve, thought that popped into my head while in the shower one day:

“Where does my money go for PT school, and why do they need more of it?”

I also want to make clear that this article is not suppose to demonize any particular school or administration. There are some cold hard economics at work in the education industry where universities feel (albeit feel) they have to play by the rules to survive. Although a counterpoint to this statement could be the fact that schools with the highest-earning president's saw student debt rise 13% faster than the national average. But regardless, what are these rules? How can they be changed? That is what I wanted to find out. Now, to the economics lesson!

First off, everyone interested in this topic should go read "The Tuition is Too Damn High" series from Dylan Matthews in The Washington Post (I made a Google Doc for the links of all 10 article here). He does a great job at breaking down the different elements at play in rising tuition and is where I learned the most about this topic. One of the theories he researched came from the late President of Grinnell College, and economist, Howard Bowen. In his book "Costs of Higher Education," Bowen explains his theory in five general principles:

1. "The dominant goals of institutions are educational excellence, prestige, and influence."
2. "There is virtually no limit to the amount of money an institution could spend for seemingly fruitful educational ends."
3. "Each institution raises all the money it can."
4. "Each institution spends all it raises."
5. "The cumulative effect of the preceding four laws is toward ever increasing expenditure."

What compounds this issue is the fact that the perception of quality is tied to a university’s tuition. Instead of worrying about cutting costs for the consumers (students), universities are utilizing their increased revenue to put right back into the school, in order to bolster its prestige, justifying its high tuition rate, and attracting more students in the process. Although not pertaining to physical therapy school directly, room and board costs at universities have almost tripled since 1990 helps illustrate this point. But attracting students, particularly those with favorable qualifications, can also be directly tied in the act of increasing tuition itself. One article explains that schools increase their tuition in order to help “shape” the incoming classes. Essentially it boils down to students who can afford to pay the full price of admissions help subsidize those who cannot; the higher that full price is, the greater ability for that school to subsidize tuition for others. Adding more of these subsidizes through scholarships allows schools to have a greater selection of the type of student they want. Obviously this isn’t the only reason why tuition increases.

In broad terms, tuition increases for two reasons: schools increase their spending, as in public research-focused universities, or they need to shift the cost to students due to a decrease in revenue from other sources, as in private universities who aren’t focused on research. And while looking at these general trends was beneficial, I wanted to find some more specifics of where all of this (re: my) money is going in universities. To do so, I used an online database produced by The Delta Cost Project, an organization that compiled financial and enrollment data from the Department of Education’s Integrated Postsecondary Education Data System. For my research, I created three different graphs: an overview of tuition total costs/revenue, a breakdown of costs, and breakdown of revenue from two different schools. I chose the University of Washington and Regis University, because they fit into the examples above and have physical therapy programs (I posted the raw reports here). From the data (reported in 2012 dollars [CPI adjusted], per FTE student), it does appear that cost shifting happened at both schools, seeing how different revenue streams dropped in 2009 and remained low, with Regis’s shift perhaps being relatively larger. It is also interesting to note that spending stayed somewhat stagnant and “instruction” (definitions from the reports can be found here) remained the highest cost for both schools, something that may not be the case in general.

Despite all of this great information I found on tuition, it really only applied to undergraduate programs. Because of this, I decided to email the dean of my program at Regis University, Dr. Mark Reinking and talk specifics.

Dr. Reinking started off by saying that our school mainly gets its revenue from student tuition, about 85%. Because Regis is a relatively young program (beginning in 1994) it makes it difficult for us to receive funds from other sources such as alumni support or research. Dr. Reinking then went on to say that the biggest cost to the program is personnel. He said that about 80% of our costs go directly to staff and faculty. And this is the biggest challenge in running a DPT program he feels. CAPTE has salary data for all types of faculty and Dr. Reinking said you have to stick very close to those averages as a minimum. This is mainly due to the fact that there are approximately 325 open positions in the 233 accredited programs right now. Right now! And with about 30 new programs opening soon, this number will only increase. So staying competitive is the highest priority when hiring new faculty. This means benefits, salary raises, etc. Dr. Reinking also said that the only way you can afford staff raises is to increase tuition, at our school in particular. Simple math.

Dr. Reinking also said something that was interesting to me. Our program gives roughly half of our revenue to the University and sees the dean of a DPT program as more of a mid-level manager. He makes his recommendations on how much tuition should be raised to Regis’s board of trustees but it is ultimately their decision. However, this is not to say that Dr. Reinking isn’t doing anything about rising tuition. Currently, he is working with the board to only raise the tuition every other year for DPT students. Dr. Reinking feels this is important because he wants his students to have some stability when determining the total costs of their education at Regis. But who is this illuminati-like board of trustees? For that, Dr. Reinking put me in touch with Regis University’s Chief Financial Officer, Dr. Salvador Aceves.

Dr. Aceves explained to me that Regis’s board of directors consists of about 35 individuals, although the number of board members can vary throughout the years. They typically comprise of community members, alumni, presidents of other Jesuit Universities, mission officers, and sometimes individuals interested in donating funds for a new building or scholarship for Regis. A board member will serve for around 3 to 4 years and can be invited back to serve multiple terms, but it is not considered an indefinite position. Dr. Aceves explained that the board of directors really have the fiduciary responsibilities and set the direction of the university. He also talked to me about some of the current financials at Regis.

Dr. Aceves told me that 97% of Regis’s revenue comes directly from tuition. Ninety-seven percent! And two-thirds of Regis’s total cost is personnel. So when two people leave Regis’s IT department for an approximate 60% increase in their salaries, what is Dr. Aceves suppose to do? Buildings require updates and technology is ever changing, so it can be tough to balance the rising cost of keeping an university updated while also keeping tuition low. He also explains that there have been new costs to run an university that simple were not seen until recent years, such as keeping up with student compliances (shoutout to Complio [ugh...]) and marketing the university itself. Although Dr. Aceves sees the latter as a good thing. “Finding the right fit is an important thing for students today, so it is good we have to market out,” He says.

But perhaps the most important thing Dr. Aceves told me was after this interview. As I thanks him profusely for this Thursday interview at 4:30pm, Dr. Aceves simply said, “of course.” He acknowledges that university administrations in the past were not so transparent but he feels, especially at Regis and its reliance on student tuition, that he and this administration need to be as open as possible to students and be able to answer any questions they may have.

And while I hope these interviews shed some light on tuition and imbue some sympathy for school administrators, the fact reminds that things need to change. So what is being done? Well a few years ago the University of Oregon President tried to contain the unpredictability of state funding in a radical proposal to use one billion dollars of state bonds to put into an endowment that the university could use to invest at their discretion. However, this did not go over well with Oregon’s State Board of Education and ultimately got the President fired, among other reasons. Others have looked at the delivery of education itself and are trying to leverage technology to drive down costs. Massive Open Online Classes, or MOOCs, are examples of this idea. The theory is pretty obvious. If universities can reach thousands of students online, without a physical presence, then the inherent costs of running a classroom should diminish. Some issues arise if this is implemented into an entire degree program however. Studies have shown that a social environment can positively impact one’s academic performance, commonly known as peer effects. San Jose State also tried to implement MOOCs on a larger scale but ultimately decided to put the plan on hold due to poor student performance. But the promise of this technology is too great to ignore and that is exactly what Evidence in Motion and South College are betting on right now with their two year DPT program. And thanks to the passing of RC 11, the APTA will be taking a harder look at the financial impact of student debt from school.

 As for what students can do right now, Dr. Reinking gave some good advice: live as simply as you can. I will add to that with what the entire point of this article is: know where your money is going and investigate if you don’t.

For questions, comments, and/or rants, email me at bourdo.ryan@gmail.com