The Relationship Between Institutional Spending & College Student Persistence: Where Should Universities Spend Their Money?

As any U.S. university student can attest, college in America is expensive. Because of this, there has been much public scrutiny over how universities spend their money. Between 2010 and 2022, average institutional expenses at not-for-profit colleges increased from $21,462/student to $35,324/student, accounting for inflation (NCES). It doesn’t help that at the same time, states have been struggling to increase their funding for higher education at the same rate that enrollment has been increasing, there being a 10% drop in real state funding per student between 1987 and 2018 (Ma et al., 2019). The increase in university spending has been pegged by the media on a host of things- higher teacher salaries, “administrative bloat”, and scope creep in the services colleges are expected to provide to students all being examples (Goodkind, 2024; McGurran, 2023; Weinstein Jr, 2023; Woodhouse, 2015). Of particular ire has been increased spending on lavish amenities, such as infinity pools and lazy rivers, to draw in prospective (and ideally wealthy) students (Korn et al., 2023; Valhouli, 2015; Woodhouse, 2015).