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A Taxing Situation

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"I reckon there's a law of economics missing in that somewhere. Usually having more customers allows you better economies of scale by filling up your classes and distributing fixed costs among a larger pool of people. It would be really odd if havin' more students increased da per-student costs."




Economies of scale works well if your capacity is greater than demand, but when demand outstrips capacity, you either need to increase capacity, reduce quality, or fail to meet demand. Colleges and universities, especially state/community run schools, are loathe to limit capacity, mostly because the big elephant in the room is an expectation by legislatures, governors, and the people that demand WILL be met. Parents and students won't put up with a reduction in quality, so schools increase capacity.


On the surface, it seems to make sense that if more students are admitted, there is more money brought in, and that should cover the cost. Unfortunately it's not that simple. Per student costs often increase with the addition of new students. Utilities are used longer, more cleaning supplies used, more infrastructure is needed, etc. etc. etc. and there is no one for one proportionality involved.


Example - say you have a required course taught by one professor - his capacity is 300 students - after 300, quality goes down. But, you have 550 students who need to take that course - so you need to hire another professor. This 2nd professor's capacity is also 300 people, but s/he's only teaching 250 students. If both professors make the same amount in salary and benefits, and 300 students pay enough to cover one professors salary, you have to make up for the "missing" 50 students somehow - in order to do that, you need to raise the tuition rate on all 550 students taking that class in order to meet the demand. You've just lost the economies of scale and won't achieve that again until 600 students are taking the course at one time.


Use that same priniciple for everything else the College needs to provide. If capacity is 1 nurse for every 1000 students in your health center, and you have 1500 students, you now have 2 nurses - who makes up for the "missing" 500 students? If Wi Fi is $1,000 per month for every multiple of 1,000 students ($1.00 per student), and you have 1,500 students and have to pay an additional $1,000 per month, you're now paying $1.33 per student for WiFi - you have to make up that 33 cents per student somewhere.



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Yah, sorry Calico, that's just not da way it works, eh?


The most expensive classes and hardest to schedule or handle economically are singleton courses. When yeh have multiple sections and instructors, your overhead and costs go down, not up. Universities love big intro courses with lots of sections and students. They're cash cows. It's da small graduate seminars that are expensive.


To reframe your example, if you have one section of a course with a capacity of 100, you might have a regular professor teach it, and you might not be able to fill it because you can only offer it at one time which may conflict with other courses. If you increase to five courses each with a capacity of 100, students will have lots of choices when to take the course so you get maximum usage, you can pay a regular professor to lead the course and use graduate students or adjunct faculty for less cost to teach additional sections.


When yeh only have two courses, a 50-student missed projection of enrollment means you're 25% under capacity. When yeh have five, it's only a 10% under-capacity situation. More efficient, eh?


On the utilities side, electricity costs from turning the lights on for more classes is a variable cost, eh? Of course if yeh add students your variable costs go up, but those are paid for by the extra students' tuition. Heating the building, depreciation on the building, general maintenance, central administration and such are fixed costs. The more students you have to distribute the fixed costs, the cheaper it is. So if you pay the university president $200K and have 100 students, that's 2K per student. If you have 200 students, that's 1K per student.


Combine distributing the fixed costs wider with having a higher % capacity usage (and the possibility of usin' less expensive staffing) and yeh find it's significantly cheaper per student when yeh have bigger programs.


Now at some point if you're addin' capacity you have to add a new building. What yeh need to understand is that generally speakin', capital funds like adding a new building come from different sources of revenue than operating funds. In a lot of ways, capital funding is easier to obtain. So that doesn't really "count" when you're lookin' at operating costs.


This is the same in any business. I reckon in education yeh get fewer economies of scale, but it still applies.


Of course, all this is a bit theoretical, eh? We really haven't had a big increase in higher ed capacity nationwide like you're talkin' about.



(This message has been edited by Beavah)

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In 1970, according to the US Census Bureau, 8,581,000 students attended college that year.


In 1980, 12,097,000 students attended college that year.


In 1990, 13,819,000 students attended college that year.


In 2000, 15,313,000 students attended college that year.


Projected for 2010, 17,927,000 students attending college that year.


Since 1970, that's an increase of 8,716,000 students attending college - per year - an increase of 101% in just 40 years.


From 1970 to 2000, the number of college students increased 78%. During that same time period the number of colleges increased from 2,837 in 1970 to 4,182 in 2000 - an increase of 67%. Clearly capacity has lagged behind demand.




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Just a thought: How many within that huge increase would have been better served to have been guided into a trade or other occupational training? It seems to me that we put far too much emphasis on "everyone" going to college. Reality is that many do not want to, are not really able to succeed, and so waste money and time which could have given us more tradesmen, an area in which we are critically short.



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When my daughter decided to study culinary arts (2 years), many people critizied the decision and said she should get a bachelor's in business and study culinary as a minor. My Eagle son will go to boot camp next year and many people are telling him that is a mistake. He should get a degree first. Why are we telling our children to go thousands and thousands of dollars into debt for a degree? A degree in business will not help my daughter get a job in a restaurant or catering business. She does not want to start a company or run a business, she just wants to be a chef, not a restaurantuer. My son plans to go to college, but not until he can pay for it. He does not want to spend most of his adult life paying for a degree.


Too many students are told the only way to succeed is to go to college, but that is not the path for everyone. Yes, education is a good thing, but university is not the only way to success.

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Unfortunately it's getting to the point where the BA or BS degree is the new high school diploma. The days of finding a decent job right out of high school are over. My older brothers did Distributive Education in the late 70s. While that was great initially, and they thought me going to college was silly and that I should find a real job after HS, in the long run I did the wiser thing. Brother #2 eventually did go college via night schoolfor 7 or 8 years and is doing well. Brother #1 has repeatedly tried to go back to school, but something always comes up and he drops out. And brother #1 had years of sales experience, was a department manager for Macy's, and could sell a refrigerator to an Inuit if given the opportunity. But nowadays the sales jobs want people with degrees, not experience.

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We're kind of drifting away from Eamonn's original topic and I don't want to get too focused on higher ed here. But on the topic of paths to success, yes of course there are many ways to be successful and not all paths lead through a 4 year university/college. Also some people really are not ready at age 17-18-19 to make the sort of commitment that success in college requires, and they would be better advised not to waste their time and (somebody's) money.


On the flip side, I know from having been an adult student, and from teaching a lot of adult students, that there are serious costs to waiting, too. One thing late teens and early 20-somethings do tend to have in their favor is a lack of other commitments in their lives. About the military folks, I've noticed they tend to be fine students but their patience for some of their more traditional classroom peers who don't have much life experience is often (understandably) lacking. And of course those folks who come back from the military in bad shape (physically or mentally) can really face some challenges when it comes to schooling.


sheldonsmom, good for both of your kids that they've found a path that suits them.


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Yep; junior college straight out of high school, and had to live away because I was from the middle of the desert. Barely a C average, 2.01 for 60 units after being near top of HS class. Went in service and got out at 25 with G.I. Bill and back to college. Dean's list and B average overall. Grad school after 2 more years, married, full time job, and still a 3.75. Maturity and responsibility seems to have made a difference, at least in my case. Have seen far too many drop out of college early because they were just not ready. Our school counselors might be wise to not push some to hard too soon.


It seldom hurts a just out of school teen to work for a living at a menial job. Often, it will focus them in the long run.



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In reading all these posts it is astounding to me how American has gotten away from the concept of "getting what you work for". The prevalent idea in our society today is "I'm entitled to..."


Take our kids: 30 years ago, you want a cell phone or car, you were told get a job and pay for it. But today kids EXPECT their parents to provide a cell phone or car.


Society mimics this. Today Americans EXPECT healthcare. They EXPECT a higher education. They EXPECT immediate higher wages. They EXPECT...somebody else to pay for their "needs". You tell people something is "free" people will line up to get it without a thought as to who is paying for it.


Politicians are only telling, and giving the people what they want. Things for free. Sadly that is the reality of America today.




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