Clarification on the expenses of college

Last week I summarized a talk by Glenn Reynolds on the High Education Bubble. Someone sent me an email asking about this line in my summary:

"At about minute 44 he references Bob Samuels of UCLS as reporting on research that the direct teaching costs for public school is about $1456 per student per year at a public school, and a little over $2500 per student per year at private schools."

The question was raised that maybe I had made a typo. Maybe I had meant "$14,560 per student per year at a public school and a little over $25,000 per student per year at a private school."

No, I captured exactly what Glenn was saying.

The point Glenn was making is that for the classroom education experience, seating in the chair, listening to the teacher, and all of that core basic education, the cost per student is around $1500 to $2500 per year. Factored into this are the costs for the building, the salaries to the teachers who really teach, and so on.

This is part of what the bubble is all about. There are many areas where higher education organizations choose to spend money that have little benefit to most students. For example universities have super expensive sports programs that provide little benefit to most students, and these programs lose tons of money. So factored into the tuition is a large chunk of money that goes to the sports programs. Each student is subsidizing the sports programs with highly inflated tuition. Another area is many universities take a large fraction of tuition and "invest" it into research, which may be good for the university, but again does little for most students.

This is an important part of the higher education bubble. The real cost of the true benefit to the student is the $2500 a year for the education they receive. Most of the rest of the tuition they are charged is of questionable benefit. Glenn suggests that more and more students and parents will step back and re-examine the value of over inflated tuition. At some point we'll hit a tipping point. Then the bubble will pop and we'll have some kind of readjustment.