Consider this: in the last 30 years, college tuition has risen more than five times the rate of inflation. The current price tag for an undergraduate degree is staggering: University of Michigan is $50,000/year, University of Chicago is $60,000/year, Oberlin College is $57,00/year, Reed College is $55,000/year. Schools might be able to justify the cost if all that money were going toward improving the quality of the instruction their students receive. But as a recent article in The Economist points out, spending on instruction at universities has risen more slowly than any other category.
So we started wondering: how wealthy are universities, and what do they spend their money on?
Many university endowments took a hit during the last year, but over 70 of them are still valued at over $1 billion. Here’s the top ten:
|3||University of Texas||$17.1B|
|7||University of Michigan||$7.8B|
To help put that in perspective, only four universities in Europe have an endowment worth more than $1 billion, and the University of Cambridge (UK) tops the list at $4.3bn.
If you want to be a millionaire, lavishly entertain guests, and travel the world, then you should consider becoming a college or university president! At private institutions, the median presidential salary is about $400,000, and over 30 presidents made more than $1m. At public schools, presidents make slightly less, but E. Gordon Lee of Ohio State University tops the list with a total compensation package of $1.9m. In addition, the Dayton Daily News has discovered that the university spends about $23,000 per month for Lee to entertain guests at Pizzuti House, the 9,600-square-foot mansion where he lives alone (pictured above). The university furnished the mansion with artwork worth about $673,000, as well as a $572 shower curtain in the guest bathroom.
To attract new students and maintain their ranking, universities are spending increasing amounts of money on infrastructure and amenities. Alumni centers, luxurious dormitories, dining halls, student unions, recreational facilities–in today’s college market, these are the things that distinguish one school from its competitors. Universities see construction and development as a good long term investment, even if it means going into significant debt. NYU’s debt, for instance, is currently $2.8bn. All that money could really help students who need financial aid. (NYU costs just shy of $60,000/year.)
These figures may be surprising, but they shouldn’t be. Modern universities operate like major corporations, with high-paid CEOs, well-appointed campuses, and big expense accounts. MOOCs have the potential to change this model by educating students remotely and turning campus amenities into luxuries. But if they succeed, then enjoying those luxuries will be all that distinguishes attending Michigan or Oberlin from living at home with mom and dad.