Where Does Tuition Money Go?

The answer to that question, “Where does tuition money go?”, may seem obvious. It is spent to procure those resources necessary to deliver an education. It pays for professors, instructors, laboratories, classrooms, and libraries.
Right? Well, sometimes. Sometimes that is where the tuition dollars go.
But sometimes the obvious answer is not the real answer. Or, at best, only part of the answer.

The Chronicle of Higher Education recently (June of 2019) dove deeply into the financial statements of every university in the country.
Essentially, the Chronicle asked the question:

"Do Universities use their tuition revenue to educate students, or do they use it to pay for administration and other non-educational purposes"

They then published a tabulation of which Universities charged more in tuition than what they spent educating students (and used the excess tuition charges to pay for non-educational administration expenses), and which Universities actually spent more on education than what they charged in tuition (with the difference being paid for with public funding, endowment spending, etc).

In most cases, Universities spend just about as much educating students as they charge in tuition.... which makes intuitive sense, in a reasonable world.
Penn State University, however, does not always live in a “reasonable world”.

Let’s take a look at the Chronicle’s findings, which you can find here (free subscription required) :

For the twelve Big Ten Public Universities, not including Penn State, nine Universities spent more on education than what they charged in tuition, while three spent slightly less.
The figures ranged from:

Rutgers University:
Which spent $189 Million more dollars educating students, than what the collected in Tuition Revenue.


Indiana University:
Which spent $114 Million less providing education to their students, then what they charged in tuition.

With one HUGE outlier.
Penn State University:
Which brought in $364 Million more in Tuition than what they spent educating students - with those $364 Million of tuition dollars, charged to students, being transferred to covering non-educational administration expenses.

On average, Big Ten Universities charge $54 Million per year LESS in tuition, than what they spend educating those students.

Penn State charged $364 Million MORE in tuition, than what the spent educating students.

What does that all boil down to, with respect to Penn State's tuition charges?

If Penn State simply "hit the average" for Big Ten Universities, Penn State could reduce tuition by over $400 Million dollars per year. Penn State charged $1.8 Billion in tuition for the year, which means a $400 Million reduction would reduce each student's tuition bill by 22% in one fell swoop.

  • Simply bring Penn State in-line with its Big Ten peers, and student tuition bills are cut by 20%.  Tomorrow.

Unfortunately, no one seems to care.

Certainly not the Administrators.   They clearly do not care.
Why would they? They are precisely the folks benefitting from the status quo and the administrative bloat - both in their personal bank accounts, and in the status of the bureaucratic empires they can build.

Certainly not our Trustees.  They are, ultimately, the responsible parties when it comes to fulfilling Penn State’s mission of providing an affordable, quality education. And they have failed miserably in that duty for years and years.
But, why don’t THEY care?

That is a question for another day.