Organization: The Center for Culture, Organization, and Politics of the University of California at Berkeley’s Institute for Research on Labor and Employment
Summary: As state appropriations for higher education have declined, the average cost of tuition and fees has escalated. Students are borrowing more to pay for their education, and colleges are borrowing more to finance capital projects to stay ahead in the amenities arms race.
A group of economic-sociology graduate students centered at the University of California at Berkeley asserts that the combined total of student debt, institutional debt, and equity investments in for-profit colleges hit $45-billion in 2012—a figure that was more than double, in inflation-adjusted dollars, what it was just 10 years earlier. While instructional spending remains flat, colleges are spending the largest share of their money on amenities in hopes of attracting students who can afford to pay full freight. Ultimately the burden falls on all students, the authors maintain.
“All of this financing comes at great cost, in the form of either interest payments or profits earned to satisfy equity investors,” the report says.
The report relies on figures obtained from the Education Department’s Integrated Postsecondary Education Data System as well as research on college costs conducted by a number of scholars.
Bottom Line: Vast growth in the servicing of student-loan debt and institutional debt, as well as equity investments in for-profit colleges, is consuming as much as 9 percent of all higher-education spending in the United States.