News

February 12, 2002

The leading association for college business officers unveiled on Monday a new methodology that colleges can use to better explain their costs to the public and to policy makers.

The National Association of College and University Business Officers has spent the past three years developing a uniform methodology that would allow any college -- regardless of type, size, or control -- to show in a clear way how much it spends to educate its students. The group's leaders undertook this effort in response to a 1998 report by the National Commission on the Cost of Higher Education, which called on colleges to disclose to the public more-detailed financial information, as a way of helping people understand why institutions charge what they do. The commission was created by Congressional leaders in 1997.

"By increasing the understanding of their finances, colleges and universities can create a clear context in which to explain tuition adjustments and call attention to rising costs and/or changes in government support," James E. Morley Jr., NACUBO's president, said at a session of the American Council on Education's annual conference, which is being held here through today. "Absent such information, students, parents, the media, policy makers and the public will continue to be uninformed, and, even worse, they will make their own assumptions about what's going on."

The business-officers group developed a single-page form that colleges can use to record their financial information. In addition to asking colleges how much they charge and how big their enrollments are, the form asks colleges to report on how much they spend per student on various items, which are broken out into three major categories: instruction and student services, including faculty salaries; institutional and community costs, such as college sports or the upkeep of campus facilities; and student financial aid awards.

In a study of the new methodology, conducted at 150 colleges, the association found that almost all colleges spend more to educate their students than they charge in tuition. Of the colleges that the group examined, the community colleges spent $3,000 to $7,000 per student more than they charged their students; the public four-year colleges spent between $4,000 and $11,000 more than they charged; and the private four-year institutions spent up to $20,000 more than they charged.

"This result is no surprise to anyone who has looked at the finances of higher education, who know that even those who pay full tuition are receiving some support from their colleges," Mr. Morley said.

The group also found that the greatest costs that colleges incur are in the category of instruction and student services. At community colleges and four-year institutions, instruction and student services comprised 85 to 87 percent of total costs, while at private four-year colleges, that category comprised about 70 percent of total costs, primarily because many of these institutions provide significant sums of student financial aid.

Speaking at the same conference session, David L. Warren, the president of the National Association of Independent Colleges and Universities, praised NACUBO's work, saying that it will "help position us positively" in discussions with lawmakers over college costs."

Mr. Warren acknowledged that he, and many of his colleagues, had qualms when the business-officers group first started working on the project. He said that he had worried that the information learned would be used by policy makers or the news media to make inappropriate comparisons between colleges with very different missions. "I came with a significant skepticism about this," he said. "I think what we have here is a narrowly drawn, carefully developed methodology, which, in my view, will tell us a good deal, especially about like institutions, like missions, and like resource bases."

Mr. Morley said that his association is hoping that colleges will use the new methodology, but said that it would not browbeat them to use it.

The full text of the announcement can be found on The Chronicle of Higher Education chronicle.com.