Tuition and Administrative Bloat: Examining the Economic Principle of Cost Disease

Why University Tuition Fees Keep Going Up

College fees for students have risen much faster than the costs of things like foods or rents over the past 30 years. Such a drastic increase is attributable, among other things, to the so-called "cost disease." This academic term is used to explain the phenomenon in which prices keep going up in certain kinds of areas, such as education. Here, we're going to try to figure out the reasons fees for tuition increased so much, how it might be affecting students, and what someone would do about this increase in price.

What Is Cost Disease?

Cost disease is an economic concept introduced by two economists, William Baumol and William Bowen. It happens in industries that need a lot of skilled workers, like education and healthcare, where technology can't easily replace people. Unlike other industries that can use machines to increase productivity and lower costs, universities still need real people to teach, advise, and support students.

As wages go up in other jobs—like technology or finance—universities must also raise salaries to attract and keep talented staff, even though the work itself hasn’t become more efficient. This means that universities must charge students more to cover these higher costs, which is why tuition fees keep rising.

Why Are University Costs Going Up?

A significant part of tuition fees hikes may be attributed to the growing number of hired administrative workers. They are employing more personnel for marketing, student support, and campus services. These services are supposed to enhance the life of the student, although catering to all of them does raise the running costs of a university. Here are a few examples found around the world.

The United States

In the U.S., tuition fees at public universities increased by more than 250% between 1980 and 2020. During this time, the number of administrative staff grew much faster than the number of teachers. A study in 2014 found that administrative jobs at universities grew by 60% between 1993 and 2009, while the number of faculty members didn’t grow as quickly.

The United Kingdom

In the UK, tuition fees increased significantly after 2012 when universities were allowed to charge up to £9,000 per year (now £9,250). Although some of this increase was due to government policies, universities also spent more money on administrative tasks like compliance, marketing, and student services, which added to the rising costs.

Singapore

Singapore has managed to keep tuition relatively affordable compared to other countries, but costs have still gone up over the years. Public universities like the National University of Singapore (NUS) and Nanyang Technological University (NTU) have increased fees by about 15% between 2015 and 2023. One reason for this is the growing need for administrative functions, such as improving student services and international partnerships.

The rise in administrative expenses affects all subjects, including economics tuition in Singapore, which has grown by 12% more than the average increase. Although these additional services help students in many ways, they also make it more expensive to run universities, leading to higher tuition fees.

How Rising Tuition Fees Affect Students

More Student Debt

As the expense of tuition soars, many more college kids are forced to take out loans in order to enroll in schools that they can hardly afford; this debt is described to have surpassed the overwhelming total of $1.77 trillion in 2023 dollars. In the U.K., an average graduate has a debt of 45,000GBP. The debt is paid over time, and in some cases, it can be difficult for a graduate to achieve financial independence.

Fewer Opportunities for Low-Income Students

The increased cost of tuition in the tertiary level of learning makes it more difficult than before for financially needy students to be able to enter college. Regardless of how many scholarships may happen to be available to the financially needy, college expenses continue to rise today. Such a reality puts higher education beyond the reach of everyone, adding to economic inequality.

More Pressure on Governments

Governments are under pressure to find solutions to the rising cost of education. Some ideas include freezing tuition fees, forgiving student debt, and increasing funding for public universities. However, these ideas are expensive and not always possible due to budget limits.

Can Anything Be Done?

Although the problem of rising tuition fees is difficult to solve, there are some possible solutions that could help.

Reducing Administrative Costs

Universities could cut down on unnecessary administrative spending by focusing on essential services. Using technology to automate some tasks—such as student registrations or grading—could help reduce costs. However, some people worry that cutting services could negatively affect the student experience.

More Government Support

Some countries, like Germany and Norway, have low or no tuition fees because the government provides enough funding for universities. This model helps students avoid debt, but it requires a lot of money from the government, which may not be possible everywhere.

Combining Online and In-Person Learning

Some universities are trying hybrid models that mix online classes with traditional learning. This can reduce costs by allowing students to learn from home part of the time. However, some students feel that online classes aren’t as effective as learning in person.

Conclusion

The considerable increase in the cost of attending institutions of higher learning is a tangled issue caused mostly by the fact that universities have to be manned by educated people who must be properly compensated. Costs go on soaring as new services are added and students are attracted.

For students looking at options like economics tuition in Singapore or studying abroad, it’s important to understand why fees are increasing and what can be done to make education more affordable. Governments, universities, and students need to work together to find a balance between keeping costs down and ensuring a high-quality education for everyone.