Higher ed has become much more expensive over the past few decades (Baumol and Bowen referred to this rise as “cost disease”); we created Noodle Partners to improve it while lowering its cost. To do so, we needed to understand where those costs came from, so we reworked each institution’s published financial data into a simple income statement for a single undergraduate student.
Welcome to the Noodle College Cost Calculator. We hope this sparks a useful conversation among your board members and administrators, and look forward to helping you solve a very difficult problem!
A large part of rising tuitions can be explained by reduced state subsidies and increased financial aid.
But the rest is trickier. It’s not really teaching (Baumol’s prospective culprit); the cost of instruction is usually 20% of the total expense, and it doesn’t appear to be rising dramatically. It’s also not lazy rivers or the mythical palatial dorms; these are often gifts and depreciation and amortization do not seem to be rising quickly.
It appears that much of the increase in costs is in the systems that support learning, eg. guidance, recruiting, placement, and administration. This is not shocking given a more diverse student body and a higher regulatory load.
Trying to create a simple income statement is anything but simple; IPEDs and university financial statements are organized around the various cross-subsidies of most universities.
So we have used a variety of calculations to massage the data. Click any line item within the generated income statement and we’ll explain our methodology (e.g. how we split costs between undergraduates and grad students).
STEP 1Select a school
STEP 2Select up to 5 peer institutions
STEP 3Generate an income statement
Context This section includes variables that provide institutional context for the revenue and expenditure data. We derived most variables from IPEDS data.
Revenues Revenues are allocated on the basis of a single residential undergraduate. All revenues and expenses for 2005 are adjusted to reflect inflation.
Expenses This section breaks down institutional spending into categories, again on a single residential undergraduate basis.
If you have any questions or suggestions (including refining our numbers for your school, please email our Senior Vice President of University Relations, Scott Levine at firstname.lastname@example.org). If you’d like to dig deeper into your expenses, you should contact the Academic Benchmarking Consortium.
If you’d like to use technology to address costs, we’d love to talk. Rather than focus on lowering the cost of instruction (student:faculty engagement correlates to better outcomes and it’s not the driver of cost increases anyway), we’ll help you raise capacity and streamline the systems that support instruction. Together, we can lower the cost of higher ed significantly while raising engagement.