Glenn Harlan Reynolds

Administrative bloat at American colleges and universities is out of hand.

One calculation shows college tuition increased from 1978 to 2011 at an annual rate of 7.45%25.

Now colleges and universities are actually facing declining enrollments%2C and even credit downgrades.

"Why am I paying so much tuition to people whose job seems to be telling me to call someone else?"

That was my daughter's lament last week as she tried to pry an essential form out of her college's labyrinthine bureaucracy, but it's a question that many Americans should be asking. Administrative bloat at American colleges and universities is out of hand, and it's probably the biggest cause of the skyrocketing tuitions that afflict students and parents today.

Everyone knows that tuitions have skyrocketed, though many may not appreciate the full extent of the problem. As University of Michigan economics and finance professor Mark Perry has calculated, college tuition increased from 1978 to 2011 at an annual rate of 7.45%. That far outpaced health-care costs, which increased by 5.8%, and housing, which, notwithstanding the bubble, increased at 4.3%. Family incomes, on the other hand, barely kept up with the Consumer Price Index, which grew at an annual rate of 3.8%.

That has led many students (and sometimes their co-signing parents) into a nightmare of debt, as student loans have been used to fill the gap. Now colleges and universities are actually facing declining enrollments, and in some cases even credit downgrades as their ability to endlessly raise tuition comes into question. But why has tuition risen so fast?

Some commentators blame lazy, overpaid faculty. But while faculty teaching loads are somewhat lower than they were decades ago, faculty-student ratios have been quite stable over the past several decades, while the ratio of administrators and staff to students has become much less favorable. In his book on administrative bloat, The Fall Of The Faculty, Johns Hopkins professor Benjamin Ginsberg reports that although student-faculty ratios fell slightly between 1975 and 2005, from 16-to-1 to 15-to-1, the student-to-administrator ratio fell from 84-to-1 to 68-to-1, and the student-to-professional-staff ratio fell from 50-to-1 to 21-to-1. Ginsberg concludes: "Apparently, when colleges and universities had more money to spend, they chose not to spend it on expanding their instructional resources, i.e. faculty. They chose, instead, to enhance their administrative and staff resources."

And when they had less money to spend, they did the same thing. Ginsberg comments that even during the recession, "Colleges reined in spending on instruction and faculty salaries, hired more part-time adjunct faculty and fewer full-time professors and, yet, found the money to employ more and more administrators and staffers. "

A simple stroll through most campuses will underscore this change. The number of buildings devoted to administration is much greater than in past years. Priorities show in other ways, too: While more and more actual teaching is outsourced to low-paid adjuncts who lack job security or, often, benefits, the work of administration never seems to be outsourced this way. Who ever heard of an "adjunct administrator?"

At many schools, administrators now outnumber teaching faculty, often by significant margins. According to the New England Center for Investigative Reporting, "Part-time faculty and teaching assistants now account for half of instructional staffs at colleges and universities, up from one-third in 1987, the figures show. During the same period, the number of administrators and professional staff has more than doubled. That's a rate of increase more than twice as fast as the growth in the number of students."

And according to a 2010 study by the Goldwater Institute, administrative bloat is the largest driver of high tuition costs. Using Department of Education figures, the study found administration growing more than twice as fast as instruction: "In terms of growth, the number of full-time administrators per 100 students at America's leading universities increased by 39.3% between 1993 and 2007, while the number of employees engaged in teaching research or service only increased by 17.6%."

Colleges and universities are nonprofits. When extra money comes in — as, until recently, has been the pattern — they can't pay out excess profits to shareholders. Instead, the money goes to their effective owners, the administrators who hold the reins. As the Goldwater study notes, they get their "dividends" in the form of higher pay and benefits, and "more fellow administrators who can reduce their own workload or expand their empires."

But with higher education now facing leaner years, and with students and parents unable to keep up with increasing tuition, what should be done? In short, colleges will have to rein in costs.

When asked what single step would do the most good, I've often responded semi-jokingly that U.S. Newsand World Report should adjust its college-ranking formula to reward schools with low costs and lean administrator-to-student ratios. But that's not really a joke. Given schools' exquisite sensitivity to the U.S. News rankings, that step would probably have more impact than most imaginable government regulations.

But government regulation is probably coming, too. President Obama has already spoken out against high college costs, and in his 2012 State of the Union speech he threatened to withhold federal funding from schools that fail to control tuition, though that hasn't happened so far.

Democratic Sens. Elizabeth Warren, D-Mass., and Dick Durbin, D-Ill., among others, are promoting legislation to claw back financial aid from schools that have too many graduates who are unable to pay their student loans, which would provide some incentive to keep tuition, and student indebtedness down. (I have proposed something similar, making student loans dischargeable in bankruptcy after a number of years, as they used to be, but leaving the schools on the hook for a percentage of the discharged debt. That would provide a greater incentive.)

But the biggest challenges facing overpriced and bloated institutions will come from technology and the market. With lower-priced alternatives appearing online just as buyer resistance to increased tuition is taking off, colleges must adapt. Purdue University President Mitchell Daniels remarked recently, "Why, in 10 or 15 years, will students still find it wise to pay lots of money to go and live somewhere for four or more years, when a host of competitors are offering to bring them excellent teachers and instruction in the inexpensive comfort of their own homes?" Daniels went on to note that many other industries have seen sudden declines when consumers found better alternatives.

He's right. Smart higher education leaders around the nation will be asking his question, and looking at ways to cut administration and costs, before it's too late.

Glenn Harlan Reynolds is professor of law at the University of Tennessee and the author ofThe New School: How the Information Age Will Save American Education from Itself. He blogs atInstaPundit.com.

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