Feel like college is too expensive? Wondering if it’s really worth it? You’re not the only one — discussions about the soaring cost of a college degree have dominated recent media reporting. The average student debt in 2011 was $23,300, causing some to question the true value of a college degree. Although rejected by most economists, speculation about a “higher education bubble” abounds. Some thinkers encourage young people to forego an undergraduate education, while others maintain that the investment is well worth the price. But what is it exactly that makes higher education so darn costly?
This course, taught by the U-M Provost and Vice Provost for Academic and Budgetary Affairs, will provide you with some answers, by taking a detailed look at how universities finance their activities. Using the University of Michigan as a case study, we will examine the priorities of universities, and how universities manage their resources to achieve those priorities. We will discuss the sources of revenue, the drivers of cost, and the factors that influence tuition rates in universities. We’ll cover general principles of university budgeting, and discuss how the challenges of the current economy impact college affordability. Along with topics such as financial aid and the connection between the budget and the university’s mission, we will discuss the sustainability of this model of university financing, and what the future of higher education looks like. The university is no ivory tower, somehow distinct from “the real world.” In fact, the challenges of higher education funding offer a complex case study in economics, policy, management, and politics that is central to the future of American society and the global world.