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New Report Offers a Common Language to Describe the Cost of a Degree

June 4, 2009

During his remarks to the Joint Session of Congress, President Barack Obama asked every American to commit to at least one year or more of higher education or career training. He also voiced a specific goal: “by 2020, America will once again have the highest proportion of college graduates in the world.” The American Recovery and Reinvestment act of 2009 assigned more than $50 billion to higher education as a first step toward reaching this ambitious goal. Before determining whether this spending will actually produce new college degrees, a more immediate question is: how much does a college degree cost? Currently, there is no generally accepted method of calculating how much it costs each state to produce new baccalaureates.

According to a new report by the Delta Project, “while there has been considerable effort invested in analyzing college costs, no consensus or common language has emerged to describe how the cost of a degree should be measured.” The Project’s study, "What Does a College Degree Cost? Comparing Approaches to Measuring ‘Cost per Degree’” uses actual spending data from two public university systems to present several ways to describe bachelor’s degree production costs.

The “catalog” cost is the cost to provide the credits required for most bachelor's degrees. Using spending data from the State University System (SUS) of Florida, the average bachelor's degree cost for the 2005-2006 fiscal year is $26,485.

The “transcript” cost is the expenditures for courses that the typical student actually takes, including failed courses and credits beyond the minimum requirements of a degree. According to Nate Johnson, the author of the study, this measure does a better job of reflecting how students actually maneuver through institutions. The average freshman who entered the Florida university system and graduated in 2003-4 attempted 131 credits. Converted to 2006 dollars, the average cost would be $33,672.

The “full-cost attribution” is the cost of all instruction in an institution or system (including courses taken by students who transfer out or do not graduate) divided by the number of degrees awarded. The average 2005-06 cost in this case is $40,645.

The report also estimates the full cost of a bachelor's degree at four-year public institutions nationally by using a regression analysis of U.S. Department of Education data. The result ($30,780 for fiscal year 2006) is similar to the costs derived using the “full-cost attribution.”

Is one of these measures better than the others? The answer will vary depending on the policy motivation and context for the question. The “full-cost attribution” measure is the closest answer to the question of what would it cost to increase the number of graduates and achieve the goal posted by the president.

The report also addresses the costs associated with student attrition rates. Data from the SUS suggest that attrition accounted for 15.6 percent of spending on undergraduate instructional costs (direct and indirect) in fiscal year 2007. According to the report, “the estimate is lower than what might be expected, considering the sizable attrition rates in higher education.” This could be explained by the fact that students who do not graduate tend to take fewer credits. Moreover, those credits also tend to be earned in lower-level, less-expensive courses and in lower-cost disciplines. 

The new study is available here.

NACUBO staff resource is Santiago Merea